Innovations in podcasting are happening at a rapid pace — new technologies such as smart speakers, AirPods and connected cars have made it easier than ever before for consumers to stream audio. There are currently more than 700,000 free podcasts available on the market, with thousands more being launched each week.
Why it Matters:
The continuing popularity and development of the podcast market is creating more revenue and opportunities for creators, and encouraging more high-quality audio content to emerge. As new tech platforms hit scale, the consumer team at AH Capital Management, L.L.C. (a16z) has been closely watching the podcast ecosystem for startup investment. In doing such, they’ve developed a kind of “market map” that provides a good outlook into the opportunities for podcasting throughout the rest of 2019.
Some of the key findings of the a16z market map deck include:
- Podcast consumption is growing rapidly; over the last 10 years, it has gone from a niche internet community to one-third of Americans listening monthly, and one-quarter tuning in weekly. 65% of these active listeners only began listening to podcasts in the last three years.
- On average, Americans listen to seven podcast episodes per week, consuming an average of just over six-and-a-half hours weekly.
- These podcast listeners do not fit into the “average American” demographics. About half have an annual income of $75,000 or more, most have a post-secondary degree, and nearly one-third have a graduate degree. Slightly more than half are male, though that gender gap is closing.
- Smartphones have pulled ahead of computers as the dominant platform for podcast consumption.
- Podcasts are listened to most often in users’ homes (48%) or in the car (26%). Smart speaker use for consuming podcasts has grown 70% year over year. A16z predicts that this trend and Bluetooth-enabled cars could change the mix of where podcast listening happens.
- There are many different apps for listening to podcasts, with little user differentiation or loyalty between them — though it is predominantly an iOS user behavior. The content itself is what’s important to listeners.
- There is an extreme power curve among podcast creators. The median podcast has only 124 downloads per episode, while the top 1% has 35,000 downloads.
- The monetization of podcasts largely mirrors that of the early internet, with revenue lagging behind attention. The market is still in a very nascent, disjointed state of monetizing. Ad revenue in the format is growing, estimated to hit over $500 million US in 2019, but still very tiny compared to the ad revenue of other content formats.
The Bottom Line:
a16z reports that today’s headlines about podcasts hail them as the next major content medium, describing them as “suddenly hot”, as the next battlefield for content, and as an “antidote” for the current news environment. Yet, this “sudden” popularity has been building over the past 15 years.
a16z believes that the most promising podcast players will focus on general audio content in a broad way, not exclusively podcasts; will take advantage of network effects; will offer high-quality differentiated content; and have monetization streams outside of advertising (i.e. subscriptions).
If you’re interested in getting a PDF version of the 68-page deck itself, you can sign up for the a16z newsletter to get a copy.