Podcasting can potentially help marry both business interests and journalistic missions for newspaper managing editors and directors. We take a look deeper look at what potential exists for traditional newspapers to take advantage of this emerging platform.
Shifting from one dominant platform to another
Newspapers can take advantage of the next platform for delivering news into the homes of many.
The advantage that newspapers have in terms of arts organizations is that some aspects of the service can be easily translated. Other organizations struggle with adapting content to different platforms. It’s hard to shorten an opera or translate a feature film into short YouTube clips. However, podcasts provide flexible time and format set-ups that can be used to deliver various content – whether short or long form. Consider the New York Times, which has found a tremendous amount of success in their segment, The Daily.
The podcast focuses on a News Topics of the previous day and breaking news from the previous night, and is meant to provide similar level information as a morning brief with one in-depth take on an important issue. They are now launching a long-form multi-part series that will explore the investigative journalism of Rukmini Callimach, reporting on the Islamic State from Mosul.
Podcasts provide a new business model for news organizations struggling to attract customers and revenues. It gives them a chance to engage with their former existing consumer base in a new way, by utilizing a new communication channel that isn’t saturated. Podcasting through platforms like Apple Podcasts lets media companies compete in a new and less contested space. With Facebook and Google gobbling up most ad revenue in digital media and print subscriptions shrinking, can podcasting be a viable new business model? This paper will explore the concept further from an arts, media and business management perspective.
The Business Case For Podcasts
Acquisition to other subscriptions
Podcasts can provide an acquisition tool for news organizations looking to direct users towards their other subscriptions. By providing users with a free glimpse of what a subscription would provide, podcasts can be an acquisition tool for organizations trying to grow subscriptions or potentially ad revenues.
From a value proposition standpoint, newspapers are looking to offer the same high quality content and investigative journalism that they always do. National newspapers are able to dedicate more resources to these endeavours than smaller papers that have been struggling even more than large players in the move to digital. The similar value proposition of quality and trusted content is evidenced by platforms like Today, Explained, from Vox or the Daily from the New York Times which build out their content based on the day or week’s top stories. Not only are they delivering the same type of value – doing business in information and news, but content from the Daily uses information from stories that already appear in the print and online New York Times publications.
Figure 1 - Young audiences prefer mobile for news(Lu, 2017)
Using podcasts for these sorts of initiatives would be similar to having a free show for an arts organization to expose audiences to what they’re doing. Users that begin to regularly listen to certain podcasts from larger organizations may then be inclined to look at further stories from the same outlet in print or online.
Part of the Digital Content Strategy
Furthermore, podcasts can fit into a broader content strategy for news publications as they begin a shift to digital. Online advertising revenue alone can’t replace the gaps that shrinking print advertising has left. Yet younger adults and consumer prefer to increasingly get their news from mobile vs computers. Online mobile sites are one way to get this, as are apps created by news organizations; podcasts round out the experience for young consumers. Consider on top of this that Toronto has the longest commute time in Canada. These longer times lock users into a place where radio has traditionally been the main source of news available. Therefore public transit riders make ideal podcast listeners – because of limited WIFI underground and lack of radio access. Music is a viable alternative for both cars and public transit, however this is an entertainment play vs news content.
Where things get interesting for growing a podcast user base is the rise of smart vehicles and Bluetooth technologies in cars. Previously an adapter was needed and is still needed on older vehicle models – or were limited to luxury lines. Now however, models after 2012 or even value brands like Hyundai feature Bluetooth or built-in phone connectivity that makes podcast listening a more seamless experience in cars. This is important because commuting via cars is still the overwhelming majority in both cities like Toronto and areas of the southern US. While public transit is important in cities like New York – their market can be served directly through mobile devices. This is important because according to a 2015 Clammer podcast report – 66% of users listen to podcasts on mobile or tablet – of which iOS devices dominate, making up 82% of smartphone podcast listeners. However, growth of podcast listening in cars still remains marginal – with podcasts accounting for only 3% of what listeners in cars choose to listen to in 2018 – up from 1% in 2016.
From a customer experience standpoint it allows a fully mobile experience and based on trends identified by the Pew Research Centre, supports young adults to continue to experience their news through their mobile devices.
Rounding out the listening Experience
Interestingly enough, the Infinite Dial’s 2018 report showed that Listening to Podcasts at home is still where nearly 50% of podcast listening happens. This is followed by 22% in automobiles and 11% at work. While podcasts are increasing in cars marginally – an area dominated by radio, smart speakers provide a lot of opportunity in the home.
From 2017 to 2018 alone, home smart speaker ownership in the US went from just 7% in 2017 to 18% in 2018. In-dash entertainment systems have increased from 6% to 15% over the period of 2013 to 2018.
Newspapers got left behind in the shift from print to digital. Now a new medium for delivering content is popping up directly in the homes of their target consumers – creating content that can be tailored for these types of consumers is important for news organizations that are continuing to make their transition to digital.
Podcasts are being segmented into daily listening times and segments. Podcasts are also emerging that integrate into different daily rituals or habits of audiences. While longer form podcasts that initially existed were able to be listened to at user convenience, Nieman Lab highlights how the New York Times changed this when they shifted back to the idea of “day-parting” listening with their podcast “The Daily”.
They are able to tap into a daily commuter audience that may want New York Times content but don’t have the ability to either read it on the way to work it or access that type of content through radio programs. Other news outlets are jumping on the day-parted podcast landscape with Vox Media recently releasing “Today, Explained”. Where podcasts like “The Daily” and NPR’s “Up First” are vying for morning commuters, Today, Explained is not looking to compete directly and moving to an evening commute positioning. Given the rising number of podcasts that audiences are listening to, and the large following that podcasts like the daily have garnered, the move by Vox looks smart.
The model of day-parting has proven successful for the New York Times – with the production receiving over 100 million downloads within 9 months of launch and averaging half a million downloads daily. The success of Vox’s offering will point to broader replicable potential for success in the space and may open up further offerings for different times of day and uses, for example podcasts for the gym, even more short-form podcasts for catching up on news during the day and more.
Segmenting consumers is also important for management at newspapers as there is a profound difference in the listening habits of consumers that are most engaged with podcasts. The Knight Foundation calls these most engaged listeners “Super Listeners”. This group of listeners actually listens to podcasts on the go most often – 69% on the go vs 31% at home. They also listen to twice the content of a casual listener.
Source: (Knight Foundation , 2017)
Highly engaged segments like this shine an important light on making podcasts viable business ventures to support newspapers going digital.
Groups like these prefer in-depth content and are most interested in National News, followed by international news and then local issues. This interest lends itself well to large organizations like the New York Times, Washington Post, Globe and Mail or other national publications with the expertise and resources to deliver this type of content. Other organizations like CANADALAND have been able to provide similarly important stories at a national level through Patreon funding and advertising alone.
The success of smaller organizations that have undertaken investigative work and journalism points to broader trends of engagement which will be essential for any successful podcast revenue model.
News organizations moving into the podcast realm should look to engage with “Super Listeners” as frequently as possible. This means going mobile and creating national stories. This group also maintains a trust in podcasts that ranks only second to national newspapers. This segment is the exact group that national newspapers have looked to leverage since the Election of Donald Trump. Truth in news and the idea of ‘democracy dying in darkness’ have created what is referred to as the “Trump Bump” as these users are looking for trusted content.
Building out a new revenue stream may also potentially be possible for news organizations that can monetize podcasts with in-podcast advertising. Podcast listeners offer a valuable and sought after audience. Looking at podcast audiences in the US, they are more highly educated and affluent than the rest of the nation’s population. They also skew younger in age - which can be appealing for advertisers looking to connect with these millennial users who don’t own cable packages or watch TV and news. Even millennial sweetheart news organization VICE media couldn’t make their TV channel work.
For newspaper managers this is an important issue to be tackled in an age when “immersive experiences” are being championed. If ‘old’ business models are non-immersive then podcasts enable news and organizations to forge greater relationships with their customers. When listening they create a habit and also begin to gain a sense of familiarity with the podcast host. One statistic that may point to this unique relationship is the fact that “ads read within podcast episodes by the hosts perform better than ads pre-produced by marketing teams” according to AdWeek. This stronger engagement ties directly into revenue stream potentials.
Advertisers are looking to create experiences for customers that allow them to have a greater interaction with their brand. It is one thing to have an ad pop up on Facebook to get impressions or likes but different if someone you trust is recommending a product and speaking to how they use it themselves. Adweek describes the nature of the podcaster listener with regards to ads.
“Podcasters care deeply about their subjects, whether they discuss current events or completely improvised comedic worlds; and fans of podcasts care deeply about the hosts. In fact, ads read within podcast episodes by the hosts perform better than ads pre-produced by marketing teams.”
This is the same social media influencer theory realized through the medium of podcasting. This type of product promotion is not possible in digital or print written news articles as it would be too disruptive to the flow of reading.
What a deeper engagement provides to podcasts is a type of crowdfunding that is not particularly common in conventional or online newspapers. The Guardian is one prominent organization that has adopted a pay-what-you-can crowdfunding type of model to support their work rather than a paywall. However with podcasts, engagement allows users to donate directly to a podcast that they like in particular.
For example, consumers can contribute to a podcast that they listen to frequently or daily. Among ‘Super Listeners’, approximately 30% report donating to a podcast or radio station directly in the last 12 months. As we will see this model has showed it can work at some scales in different news podcasts as well as other categories.
While some organizations like the NYT don’t use crowdfunding, their podcast is able to leverage a similar type of crowdfunding mentality. Host Michael Barbaro lets users know that they can support the show by subscribing to the New York Times.
For an outlet like the NYT, with an $800 million digital revenue goal, subscriptions from digital play an important aspect to this goal, but also their overall revenue – as it outweighs online ad revenue. Podcasts can play in and help to support these goals and overall revenue goals.
Source: (Ember, 2018)
CANADALAND is worth a deeper look as they publish an annual Transparency report that discloses both where they spend their money and what their revenue makeup is - 60:40 ratio split between Patreon and commercial revenue. As of March 2018, CANADALAND revenue was roughly $21,000 USD per month (they’ve dipped below that at the time of writing). This equates to just over $250,000 USD annually. For CANADALAND, a company that would deal in Canadian dollars for everything they do (except raising Patreon funds) this equates to $320,000 CAD annually. CANADALAND also discloses for the first time in their 2018 report that revenue is made up of either Patreon contributions or “commercial revenue from ad sales, live shows, and our book deal”.
While the ratio fluctuates, as do monthly Patreon contributions, this would put total annual revenue for the organization at $350,000 US. The report also notes that the aggregate number of monthly podcast downloads was 407,614 downloads/month. This would equate to approximately 4.9 million downloads a year. If with regards to the corporate revenue, live events and the book deal are nominal, this would equate to a CPM of $49. This is a general metric where advertisers will pay you for ad space based on cost of 1,000 impressions. Impressions in the podcast case are based on number of downloads.
For the New York Times at double the CPM rate – at the high end of the spectrum – with 2 spots per show – they would earn $20 million for their 200 million downloads. This would represent 8% of their total digital ad revenue – and likely help to cover costs of producing the show – however not at the rate that Pacific Content, a Canadian branded-podcast publisher, has quoted – which can be as high as $30,000 for a half hour episode.
Business Insider reported in 2015 that Midroll, a company that acts as a media buyer partner for podcasts had a few star shows that garnered a $100 CPM, while a $25 CPM was most common. These numbers put CANADALAND somewhere in the middle - it being one of the most popular podcasts in Canada.
However while these numbers may seem impressive, it is important to compare them with the cost of the content they produce. Together these shows fund office overhead, as well as the funding to pay for 5 podcasts including a long form investigative podcast about corruption in Thunder Bay. Given the frequency of these podcasts, it is evident that they are able to produce the shows for much less than the $30,000 that Pacific Content put as a dollar figure on their own funds. CANADALAND notes that they do not mix their Patreon funded funds with commercial revenue ones – a breakdown is provided below.
Source: (CANADALAND, 2018)
Looking at the rest of the podcasts – the commercial revenue side and production of 2 podcasts, development of another and a guide to CANADALAND – 256 page book with diagrams, quizzes and more, it’s hard to say what the company is taking home as profit – that they can reinvest in the business. That being said, with the current shows averaging approximately $41,550 there would be little left after 2 podcasts are funded, in addition to development of a third- with a focus on food,through commercial revenue.
Outside of this, most news podcast advertising dollars were not made public or could be discernable. However it should be noted that there appears to be a growing ad infrastructure market – with company Midroll providing ad brokerage for over 230 programs. Midroll was acquired for $50 million in 2016 by E.W Scripps Co. Scripps also bought Stitcher – the podcast platform for $4.5 million in 2017.
The Intersection of Journalism and Business
Highly engaged audiences with trust in podcast hosts provide value for managers looking to leverage this for increased ad dollars. However they also raise issues in terms of the ethics and integrity of journalism. This issue was most recently brought to light at the local news level when it was reported on by Deadspin, where multiple local news anchors were forced to read a script about the dangers of fake news – alluding to reporters at large media outlets. This was not the first time this was done, and while the pieces were clearly marked as opinion pieces, one of the areas for concern was that because of the trust that viewers had in the local anchors – forcing these messages on the station as part of the ownership agreement was wrong. The most recent case that has drawn broad criticism of the Sinclair practices does have some parallels with using podcast hosts to promote products.
Figure 2 Social Media a huge channel for news
Any risks from aligning with a wrong brand or lack of transparency of products promoted should be monitored closely for newspaper and podcast managers to ensure that integrity is maintained.
Branded podcasts pose a similar question for journalistic integrity. Even CANADALAND has branched out into created branded podcasts, in creating DDX with Toronto’s Figure 1. The show is geared towards medical professionals and is already a chart topper. However it is interesting to see a company that is so critical of other media outlets open such a purely commercial side of their business. It’s an opportunity to fund the other parts of their operations and other podcasts like OPPO, however there is a fine line to this. This is similar to newspapers using native advertising to put forth sponsored content. There is a fine line in diluting the trust and relationship between reader and content provider.
It seems akin to theatres or ballets putting on commercial productions that do not push the envelope but are tried, tested and true. In this way podcasts are not immune to the challenges that face journalism, or arts and in general with business. It doesn’t seem like even the most successful news organizations are immune from the battle between journalism and business either - Digiday brought attention to the internal struggles that news organizations face when they reported on the leaked NYT internal innovation report. The internal report highlighted rifts between the newsroom and business units.
Competition for Audiences also now puts news organizations that previously competed in different channels in head-to-head competition.
Within the news media world in general, a political structure seems to be emerging across the industry. While I cannot speak to how organizations operated in the past, from a consumer perspective, different content was delivered through different mediums at different times. A consumer may read a daily news publication in the morning at work, listen to the radio on the way there and then watch a nightly news broadcast when the get home. This may be true for some Gen X or Baby Boomer consumers of news, but for others there is a dramatic shift occurring. However with trends and habits changing among millennial groups and other tech forward consumers, radio, TV, print, online and podcast media must now all compete against each other. Consumers are watching less TV news and shifting to digital sources to get their news.
It is increasingly common for consumers to get their news directly from Facebook or through other social media sites. This means that news organizations must now fiercely compete through multiple mediums in more forms than ever before. NBC is now producing shows for Snapchat for example. NPR radio got into the podcast space and now offers 24 podcasts in total. In a similar fashion, the New York Times’, The Daily is now translating their podcast into a public radio show – teaming up with American Public Media to potentially reach 20 million radio listeners. The new partnership puts the NYT podcast in even more direct competition with public radio powerhouse NPR’s
Figure 3 NPRs top rates podcasts - screenshot from NPR.org/podcasts
Strategic partnerships are important as part of any business model but newspapers are going to have to build strengths in these areas as they compete for audiences with more options for media than they can consumeAs podcasts become more and more popular, opportunities for collaboration may become significantly more important for smaller news organizations that do not have the financial capabilities to bring these types of productions in house. The Ryerson Review of Journalism points out that Pacific Content, a content production studio for branded podcasts, puts cost of production at $30,000 to $35,000 per half hour episode.
For managers, making a play into the podcasting realm is a decision that should be carefully weighed. Even a known name like the Globe and Mail can make a foray into the space without any guaranteed space. However the space is an area for growth and in particular, it should be popular for podcasters because of the platforms on which podcasts currently operate. Facebook, Google and other social media sites have captured the attention of readers looking for casual news stories and with them, a vast amount of ad revenues.
Podcasting platforms operate separately from the Google Search Feature and the Facebook platform, for now. This allows them to capture ad revenues here, but more importantly to capture audiences and engage with them.
The current CPM ad model works based on downloads, but this may change as more analytics become available to advertisers about podcast listening habits. Still, not every podcast will be able to amass the 200 million downloads of the Daily. These download rates are not enough to bring in meaningful ad revenues that can subsidize the rest of the business. Part podcasting would need to be supported in part by the rest of the organization, or else be break even operations with separate budgets. Having a podcast as part of a news organization would help consolidate some work and create an additional channel to share content.
Looking at the New York Times Revenue Model – it is digital subcriptions that are driving their business at the moment (see Appendix A for a graphical representation of this). Digital ads aren’t going to be a driver for papers that are going the subscription route and based on CPM revenue models for podcasts, the outlook does not look much better in terms of digital audio offerings. However digital subscriptions are on the uptick and now make up a larger digital revenue share for papers than advertising. Podcasts can play as an engagement tool to aid in subscriptions.
The New York Times internal investigation report cited more engagement as a key part of the business and podcasting could provide this means. Furthermore, podcasts provide an additional touchpoint for news organizations to strengthen their relationship with a future, existing or past reader.
The existence of media brokers like Midroll points to a fragmented market in terms of offerings. While operations like pacific content create shows for $30,000 per half hour episode, others like CANADALAND put out a year’s worth of offerings for approximately $45,000. The varying range that it requires to put on these shows and the availability of Patreon funding for upstarts, where loyal audiences can scale with podcast growth means there is a low barrier for entry. Additionally, there is no sure path to success in the crowded market. Discoverability is key for podcasts and for “Super Listeners” this is done through social media. However, social media is not a strong point for traditional newspapers. Because of these range of factors, newspapers should consider purchasing start-up podcasts that have gained sufficient traction and audiences through an initial launch and growth. The potential could be a win-win for newspapers and the upstart podcast hosts alike. While newspapers can gain new audiences, podcast creators get access to inside scoops on the latest breaking stories and the two organizations can work together to leverage resources for investigative journalism.
Acquisition targets should be those that resonate well with “Super Listeners” that are likely to recommend podcasts to their friends and be podcast evangelists – creating a word-of-mouth advertising campaign. These engaged users that support public radioand podcasts , and they have shown their support for valuing news in these contents and could also be prime subscription candidates for digital news subscriptions. Further investigation is required to determine what overlap exists between the “Super Listener” and digital news subscriber.
Podcasters represent the next wave of digital journalism. Newspapers must harness their power and ability to distribute existing content across an emerging channel. The channel is growing as technology such as smart speakers or in-dash-entertainment systems in cars, as well as strong mobile use make listening to podcasts in new places easier than ever. Revenues are not lucrative for podcast producers but provide enough to run an operation, yet teaming with a larger news publication can provide the best of both worlds to both parties.
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