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As consumers give internet videos the snap of Thanos, podcasts look at a comeback

​The growth of podcasts and spoken-word audio is similar to growth of aspen.

ET CONTRIBUTORS|
Updated: Aug 10, 2019, 11.51 AM IST
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Agencies
2019-08-09
There’s no dearth of content, and the maxim goes, when information is free, attention is expensive.
By Sreeraman Thiagarajan

Fads come and go, like catching Pokemon, or the more recent FaceApp Challenge where people flocked to showcase their looks thirty years in the future with AI-powered filters. But, some culture shift takes time to mellow, like the roots of aspen trees, which multiples underground for many years until a single shoot sprouts above ground.

The growth of podcasts and spoken-word audio is similar to growth of aspen.

Introduced a decade and half ago, Podcasts had reached a billion subscribers by 2013 on Apple iTunes. But, then suddenly something happened, the world pivoted to video, YouTube creators were all the rage, Google had just discontinued its ‘Listen App’ which was a part iTunes, part music player.

In the same year, institutional and independent content creators, and investors alike poured billions that led to the rise of MCNs (multi-channel networks which produces/distributes video on behalf of artistes). Vevo, an MCN, negotiated favourable terms with Google to get higher share of ad dollars. Vevo is the number one platform collectively owned by the big three record labels of music (Sony, Warner, Universal) which control the video distribution rights from the likes of Rihanna to Taylor Swift. Google, fearing that Vevo would defect to Facebook from YouTube, even acquired stake in the company through its parent, Alphabet.

This was all in 2013. The conifers had grown tall, leaving no ground for the aspen to sprout.

For the next half decade, spoken-word audio & podcasts appeared to appeal to the people who zig when the world zags. It was slotted as indie and its listeners as avant-garde. Podcasts were decimated like aspen, to live in the shadows and the underground when conifers of the video world were basking in the glory of the sun shining on them.

Until there was a forest fire.

By late last year, MCNs value plummeted. In 2014, the average valuation per monthly view for MCNs stood at $0.12, which halved by $0.06 in 2016 to finally $0.01 per monthly view in 2018. One of the major MCNs, AwesomenessTV, was valued at $650m in 2016 when Verizon acquired a stake. By July 2018, Viacom acquired it for as low as $50 million. A month later, 50% of staff, including CEO got pink slips.

Except the MCNs like Vevos of the world, none could sustain the momentum profitably, for they had to invest heavily to produce and distribute videos, and the unforgiving consumers, spoilt by choice, would skip video and the fortunes of the MCNs like a snap of Thanos.

Endgame
YouTube has over 5 billion videos that have generated 29 trillion views, but less than 0.64% percent of all videos have received over 100,000 views. Allowing YouTube to show ads on the content owner’s video being the primary earning mode, it is an unviable option for MCNs to survive, let alone scale. At $2 eCPM, a video maker stands to get $200 in earning if their video got 100,000 views. Imagine spending Rs 5 lakh to make a video and earn Rs. 14,000 from it. On top of it, the video creator cannot use any copyrighted music or lyrics from other companies, which may lead to suspension of the video or withdrawal of monetizing options.

The fall of data prices was like a wind kindling the forest fires, consumers got more choice, not just in videos, but the entire web was getting populated with content. About 15 seconds of fame and ample cleavage on TikTok, memes and parodies on Twitter & Snapchat, a perfect world seen through the camera lens of ten on ten models of Instagram.

The embers of the forest fire even ignited every online company to pivot to video. Facebook offered more than reprising your decade old photos, they were busy striking deals with LaLiga to bring live soccer. Fans liked it.

There’s no dearth of content, and the maxim goes, when information is free, attention is expensive. Our attention is how we pay for almost all the free content on the web. When you see and ad, that’s paying a price through your attention.

Soon there was more content, more ads, and of course, rise in ad blockers from consumers who are fatigued. This lead to the rise of two things, one was the rise of influencers, who would get paid by brands to feature their product natively. And second was the need for hands-free, screen-free solutions, which lead to the rise in adoption of smart speakers and voice assistants. The ear bud generation was paving the way for a new era.


If smartphones are a pocket version of trojan horses we carry around, smart speakers are the blind versions in our homes. Alexa Echo and Google Home have crossed a 100 million mark in the last 4 years since hitting the shelves. Consumers bring them home due to their ability to get things done as much as a smartphone, play media content, albeit without shoving ads.

Comeback of the underdog
All of this led to a moment of reckoning for the underdog, the rise of podcasts and spoken-word audio that can be consumed both hands-free, and screen-free during multiple moments in a day. This included the commute, doing domestic chores, meditating, walking the dog, or even at office desk where plugging in headphones is seen as being focused while watching videos is frowned by peers.

Market move where there's demand, and the big guys are back at it again, Google Podcasts were (re) launched in June 2018, and even support non-music creators around the world through their Creators Program. (who’d be the MCN of audio? I wonder).

Sundar Pichai in May 2019 announced that Google Search results will now include Podcasts. The next edition of Android Auto comes with podcast brands built-in. Spotify acquired Gimlet, an original podcast creating company and Anchor, a distributing tool for $340 million in February 2019. The aspen has sprouted.

Brands follow consumers. In the US alone, advertisers spent $700 million on Podcasts last year. In China, the industry is estimated to be $7 billion. And in India, according to PwC estimates there are over 40 million podcast listeners at the end of 2018. The report dated June 2019 also estimated that podcasts and non-music content is poised to grow at 34% CAGR to reach 76 million people by 2023. If we count Mann Ki Baat as a podcast, then the numbers would simply grow by a factor of 10.

Podcasts have gone mainstream and are the TV for the ear-bud generation. The likes of BBC, NPR, AudioBoom, Audible, and of course, our own platform aawaz.com, hitting a crescendo in 2019 is no accident, but a testament for the change in consumer preferences to do more in a day without surrendering to a screen. The aspen usually lives for 150 years since it sprouts.

Sreeraman Thiagarajan is co-founder of Agrahyah Technologies. He tweets at @sreeraman.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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