Independent Podcast Apps Will Probably Disappear.
Podcast apps like Castbox and Pocket Casts were instrumental in popularizing podcasts as a content medium. They had a simple business model: either charge a fee for using the software or serve ads intermittently in the UI. As the popularity of podcasts grew, so did these apps… well, at least for some time. Then two things happened.
First, Spotify went all-in on podcasts, buying Gimlet Media and giving a cool hundred million dollars to Joe Rogan to be a Spotify exclusive. Second, YouTube (and Spotify) realized the effectiveness of video podcasts.
But why did Spotify go “all in” on podcasts?
Giving 100 million dollars to Joe Rogan is actually a way for Spotify to save money. Spotify’s bet is that the more time you spend listening to podcasts on their platform, the less time you spend listening to music. Spotify has to pay the record labels every time you listen to a new song, but they only have to pay Joe Rogan once. Besides, most of the podcasts released on RSS feeds do not cost them anything. The push to podcasts, and even exclusive paid podcasts, is a way to move content costs from variable opex to fixed capex.
And how did we end up with video podcasts?
A few years ago, YouTube started optimizing for total watch time, which led to YouTube creators making longer and longer videos and basically stumbling into the video podcast format. Meanwhile, more and more podcasters started creating video content.
Where does this leave consumers and the podcast apps?
With Spotify and YouTube’s massive distribution advantage, fewer and fewer people are turning to independent podcast platforms. When I polled my friends on Instagram, I could not find even a single person who uses these apps anymore. With a decreasing number of users, these apps have to increase the revenue per user. And you know what that means? MORE ADS!!
This means the user experience is getting worse, and if they are already paying for Spotify, they would rather listen to podcasts there. I have personally started getting unskippable video ads on Castbox and have moved some of my podcast listening to Spotify.
The more users leave these platforms, the more desperate they become to squeeze revenue from remaining users, the worse the experience becomes, and the cycle continues.
It will be interesting to see what these apps do next. Can they beat Spotify or YouTube in the distribution game? Can they increase revenue while maintaining user experience? Or Will they do something different and innovative? Only time will tell.