The Sound of Resilience

The podcast industry defied expectations and kept its growth trajectory during Covid

• PwC predicts advertising revenues on podcasts will grow 22.8% (CAGR) from 2019 to 2024.
• Consumption of podcasts increased during the pandemic across multiple demographics.
• Growth in appeal also appears across multiple podcast genres.
• Customers are more open to advertising in podcasts versus other media.
• Spotify is closing the gap on Apple's lead and the triad that also includes YouTube is increasing its market leadership.

In 2019, the Digital News Report from the Reuters Institute for the Study of Journalism dedicated a section of its report to the state of podcast consumption in major markets in North America, Europe, and Asia. One of the most important takeaways of the study was related to where people listen to podcasts.

The report indicated that, even though most people listened to podcasts at home, consumption on the go was considerable: 30% and 24% of the people under 35 listened to podcasts on public and private transport, respectively (figure 1). Nielsen published an article on podcast consumption in February 2020 that presented an even more critical scenario in the American market. The ones that listen to podcasts every day hear more away from home.

Figure 1 – Location of podcast consumption

Source: Reuters Institute for the Study of Journalism, Digital News Report 2019. Countries analyzed: US, UK, Germany, France, Italy, Spain, Ireland, Norway, Sweden, Finland, Denmark, Belgium, Netherlands, Switzerland, Austria, Japan, South Korea, Australia, and Canada.

When COVID hit early in 2020, it was widely expected by analysts that the podcast industry was going to have its growth trajectory severely damaged. Nothing farther from what happened. According to PwC in its annual Global Media & Entertainment Outlook released in 2020, the podcast industry will keep, even with the pandemic, showcasing an upward trend in advertising revenue.

PwC expects global ad revenue for podcasts to grow 22.8% (CAGR) from 2019 to 2024 when it would be close to $1.7 billion. The main reason for this overall pattern, according to PwC, has to do with the media expanding to new segments of customers.

A multiplicity of studies published in the past few months analyzed patterns of podcast consumption in the US, the largest podcast market in the world, and the impact of the pandemic on the industry.

More, more diverse, and more engaged

Cumulus, one of the leading podcast publishers in the US, releases, two times per year, a study on podcast consumption called Podcast Download in partnership with research company Signal Hill Insights. The findings of the latest report, released in May, indicate that podcast listeners’ base is increasing while becoming more engaged and diverse.

The research numbers show that 28% of adults in the US listen to podcasts every week, 4 p.p. more than in the previous study released in September. Among the interviewed, 12% consume more than 6 hours per week and were considered as heavy users by Cumulus/Signal Hill, 3 p.p. more than in the previous report.

COVID was a vector of growth for podcast listening. In March 2021, 53% of weekly listeners reported spending more time with podcasts since the pandemic started, compared to 41% last July. The amount of weekly podcast listeners who are becoming heavy listeners also continues to grow. In March, 44% affirmed they belonged to the heavy group, five p.p. more than in July.

Podcast viewership is also diverse. When Cumulus/Signal Hill compares data from July 2017 with data from March 2021, it sees considerable growth in time spent from men, women, and people in both 18-34 and 35-49 demographic groups (figure 2). Nielsen, in its Podcasting Today report from last February, highlights that there is more diversity among podcast listeners than the overall American population as 34% of Americans are considered non-white compared to 41% among podcast listeners (figure 3).

Figure 2 – Average weekly time spent variation: July 2017 x March 2021 (in %)

 Source: Podcast Download, May 2021

Figure 3 – Podcast listeners by race

Source: Nielsen, Podcasting Report, February 2021

Race is self-identifying. The “other” category includes “other non-Hispanic”, “other Hispanic”, “American Indian/Alaskan Native”, or “multicultural” respondents.

A multiplicity of categories and genres

Cumulus/Signal Hill, Nielsen, and Magna Global/Spotify, the latter in the report Digital Audio Expansiveness, released in June, converge in picturing a trend related to diversity in categories and genres.

Entertainment and learning are presented by Cumulus/Signal Hill as the two top reasons to listen to podcasts, but there are a number of other reasons with considerable mentions (figure 4). News is the top category and, according to Cumulus/Signal Hill, every single category got more listeners in March 2021 compared to July 2020 (figure 5). Both Cumulus/Signal Hill and Nielsen converge when they analyze patterns by sex. Even though the news is the top category for both men and women, it’s more consumed by men. Categories such as sports, tech, and business place higher in men’s preferences, while health/fitness, kids/family, and true crime rank were higher for women.

Figure 4 – Reasons to listen to podcasts

 Source: Podcast Download, May 2021

 Figure 5 – Weekly podcast listeners by category

Source: Podcast Download, May 2021

An Openness to Ads

Magellan AI, a research company, aimed at providing market intelligence tools to support advertisers and publishers, identified 160 new podcast advertisers per week, on average, during 2020. Magellan AI also affirms that advertisers expanded to more niche podcasts over last year. Among the ten companies that spend the most in advertising in any media, six have increased their investment in podcasts during the past year, including the top 3 (Amazon, Comcast, and AT&T).

The expansion in advertising is not only justified by an increasing number of listeners. Podcast consumers are more opened to advertising in podcasts when compared to other media they consume. Moreover, the higher the heavier the consumption, the higher the acceptance for ads. Cumulus/Signal Hill questioned weekly listeners about how comfortable they are with ads. For a 15-min episode, total weekly listeners would accept 2.2 ads versus 2.9 for heavy users. For an hour shows, acceptance grows to 3.8 among total audiences and 4.2 among heavy users (figure 6).

Listeners overwhelmingly (82%) enjoy when hosts incorporate their own personalities with ads. More than three-quarters of weekly listeners affirmed they had taken action after hearing an ad.

One curious researched element that builds on this openness for ads is that an ad-free experience is not the major reason weekly listeners would pay for a subscription is not an ad-free experience (23%), but exclusive, original content (35%).

Different studies also point out how podcast advertising is more effective when compared to ads in other media. Cumulus/Signal Hill states that fewer people avoid ads in podcasts when compared to any other media, including TV, online video, and streaming (figure 7). Magna Global/Spotify indicates 43% were receptive to ads on podcasts, compared to just 17% on TV shows. 

Figure 6 – Ads acceptance: total listeners x heavy users by length of episode

 Source: Podcast Download, May 2021

 Figure 7 – Share of weekly podcast listeners that avoid ads (skipping, blocking, etc.) in podcasts and other media

Source: Podcast Download, May 2021

A Case of Screen Fatigue

One major reason why podcasts have been able to thrive during the pandemic is screen fatigue. Magna/Spotify asserted that 72% of the interviewed had screen fatigue. Among those that are suffering from screen fatigue, 79% attribute a higher consumption of digital audio at least in part to the fatigue.

Spotify x Apple and subscription models

Podcast distribution in the US is dominated by the triad Apple Podcasts, Spotify, and YouTube and the concentration is actually growing over time, according to Cumulus/Signal Hill. Weekly podcast listeners are accessing their podcasts on more platforms. Still, Apple, Spotify, and YouTube have a strong hold on being the most used podcast platforms and continue to grow at the expense of other competitors. In July 2019, 55% preferred one of the top three. This figure grew to 67% in March 2021.

 When Cumulus/Signal Hill interviewees were asked whether they accessed a certain distribution platform frequently, 42% affirmed they use Apple Podcasts, compared to 40% for Spotify, 37% for YouTube, and 26% for Google Podcasts, a more distant number four. It’s an interesting development to follow how Amazon is going to present itself in this competition. The company has been making remarkable movements recently, including the acquisitions of podcast network Wondery for $300 million, of hosting and monetization platform Art19, and of the exclusive rights to the podcast “SmartLess” for up to $80 million.

The gap between Apple and Spotify has been closing over time – the difference in July 2019 was 5 p.p. higher. eMarketer predicts that Spotify will indeed overpass Apple’s podcast listeners base by 2021’s end, reaching 28.2 million in the US, compared to 28 million from Apple.

Competition between Apple and Spotify has been escalating in the past few months. In April, Spotify launched a subscription podcast functionality April and was followed by Apple in June. It’s not a traditional subscription service where customers can be charged to have access to a whole set of functionalities in a platform. Instead, it’s individual publishers that can charge for the subscription.

There are several differences between both company’s subscription models. Apple will take a 30% cut from publishers in year one and 15% in year two, the same cut existent in the App Store. In Spotify, the first two years are cut-free and the company only plans to implement a 5% cut in 2023. In the Apple model, it’s up to publishers to charge any price starting at $0.49, whereas in Spotify the choice is limited to three plans: $2.99, $4.99, and $7.99. Advertising is also a point of difference.

Another difference has to with selling ads. In Apple, publishers need to sell their own ads and, thus, keep 100% of ads revenue. Spotify, on the other hand, announced alongside the new subscription plans, that it’s opening its audio marketplace, Spotify Audience Network (SPAN), to a select number of creators that use Anchor, the company’s podcast creation platform.

Summing up and perspectives on the future

After navigating the Covid-19 storm with resilience, the podcast industry looks ahead to a bright future as the media becomes an increasing part of people’s lives all over the world. As technologies, such as spatial sound, evolve and massify, the quality of podcasts in terms of production will increase even more. Fiction shows, in special, will benefit from that. Moreover, an avenue of media integration will open between podcasts and other media in the highly interactive experiences that will shape the future. The sound will keep echoing all over the world. Louder and louder.

 References

1.    Carman, Ashley. “Amazon buys Wondery, setting itself up to compete against Spotify for podcast domination”. The Verge, 30 Dec 2020. https://www.theverge.com/2020/12/30/22098312/amazon-music-wondery-acquire-buy-podcast-industry (Accessed 30 Jun 2021).

2.    Carman, Ashley. “Amazon is acquiring a podcast hosting and monetization platform”. The Verge, 24 Jun 2021. https://www.theverge.com/2021/6/24/22549391/amazon-music-art19-hosting-platform-advertisers (Accessed Jun 30 2021).

3.    Chann, J. Clara. “Amazon Nabs Exclusive Rights to ‘SmartLess’ Podcast”. The Hollywood Reporter, 29 Jun 2021. https://www.hollywoodreporter.com/business/digital/amazon-wondery-smartless-jason-bateman-will-arnett-sean-hayes-1234975233/ (Accessed 30 Jun 2021).

4.    Cumulus/Westwood One and Signal Hill Insights, 2021. “Podcast Download, Spring 2021”. https://www.westwoodone.com/2021/05/11/cumulus-media-and-signal-hill-insights-podcast-download-spring-2021-report-podcast-listening-bolstered-by-pandemic-subscription-services-and-clubhouse-cause-a-stir-and-listeners/ (Accessed 29 Jun 2021).

5.    Magellan AI, 2020. “The state of podcast advertising in 2020”. https://www.magellan.ai/resources/reports/the-state-of-podcast-advertising-in-2020 (Accessed 29 Jun 2021)

6.    Magna Global and Spotify, 2021. “Digital Audio Expansiveness: Growing Landscape & Opportunities”. https://magnaglobal.com/wp-content/uploads/2021/06/Magna-Spotify-Digital-Audio-Expansiveness-US.pdf (Accessed 29 Jun 2021).

7.    Nielsen, 2020. “The Nielsen Total Audience Report”. https://www.nielsen.com/us/en/insights/report/2020/the-nielsen-total-audience-report-february-2020/ (Accessed 29 Jun 2021).

8.    Nielsen, 2021. “Podcasting Today”. https://www.nielsen.com/us/en/insights/report/2021/podcasting-today/ (Accessed 29 Jun 2021).

9.    Perez, Sarah. “Spotify launches paid podcasts through new Anchor feature” Techcrunch, 27 Apr 2021. https://techcrunch.com/2021/04/27/spotify-launches-paid-podcasts-through-new-anchor-feature/ (Accessed 29 Jun 2021).

10. Perez, Sarah. “Spotify podcast listeners to top Apple’s for the first time in 2021, forecast claims”. Techcrunch, 2 Mar 2021. https://techcrunch.com/2021/03/02/spotify-podcast-listeners-to-top-apples-for-the-first-time-in-2021-forecast-claims/ (Accessed 29 Jun 2021).

11. PwC, 2020. “Perspectives From The Global Entertainment & Media Outlook 2020–2024: Pulling the future forward: The entertainment and media industry reconfigures amid recovery”. https://www.pwc.com/gx/en/entertainment-media/outlook-2020/perspectives.pdf (Accessed 29 Jun 2021).

12. Reuters Institute for the Study of Journalism, 2019. “Digital News Report 2019”. https://www.digitalnewsreport.org/survey/2019/podcasts-who-why-what-and-where/ (Accessed 29 Jun 2021).

13. Spangler, Todd. “Apple Launches Podcast Subscriptions Worldwide, After a Delay” Variety, 15 Jun 2021. https://variety.com/2021/digital/news/apple-podcast-subscriptions-launch-1234997114/ (Accessed 29 Jun 2021).