A Bit on Podcasting

In the fall of 2014, the first season of Serial was released. Overnight, everyone I knew began talking about a thing called podcasting. Prompted by this, Mike Mignano and I started discussing the phenomenon and eventually founded a company with a mission to democratize the creation of spoken audio.

It’s funny, thinking back one decade and recalling the number of people (notably investors and journalists) who asked us things like “What’s a podcast?” or “Isn’t Serial just a fad?” or “How will anyone ever get comfortable recording their own voice?”

Remember when people used to complain about the sound of their own voices? You don’t hear about that anymore.

Of course, it didn’t take long for the format of podcasting to become universally recognized and respected. It’s gotten to the point now where US presidential campaigns make podcasting a core part of their strategies. Wild! What’s that about Serial just being a fad?

A Bit on Audiobooks

Onto 2020, at Spotify, where I began to dig into the world of audiobooks. I learned of a striking number of similarities to the state of podcasting several years earlier. Like podcasts, audiobooks were hard to create. Like podcasts, audiobooks were supply-constrained. Like podcasts, audiobooks were… The list goes on.

My work at Spotify culminated in the launching of a brand new approach to audiobooks, redefining the competitive landscape, and enabling millions of people to consume the format.

(Back before we launched that, I would tell my team: “If we launch this, I will use it every single day as a consumer.” And sure enough, I still do.)

Are Podcasts Audiobooks? Are Audiobooks Podcasts?

In my role at Spotify, I would often speak to industry or press and be asked the same question: “What’s the difference between an audiobook and a podcast?” And more perceptively, “How will these formats differ in the future?”

We’ve historically placed these two format types into two distinct buckets. But as people familiar with their evolutions can attest, it’s becoming increasingly unclear where the boundaries lie. Today, entire seasons of podcasts can be released at once, behind a one-time purchase flow. If you squint, isn’t that an audiobook? And, today, audiobooks are occasionally released in sequential chunks, sometimes for free in ad-supported tiers. If you squint, isn’t that a podcast?

And so why do we continue to delineate between the two formats of audiobooks and podcasting, and how much longer will that delineation survive? In response to that question about the future of the formats, my response typically went something like this: “In the future there won’t be audiobooks or podcasts. There will just be audio.”

The forced separation of formats is not unique to spoken word. Consider video. Twenty years ago, all video was distinctly categorized into TV or movies. Ten years ago, streaming took off as a legitimate third category. Generally, all three formats had discrete distribution channels. TV was watched live (or recorded via DVR). Movies were watched in theaters, on VHS/DVD, or rented on demand. And YouTube was watched online. There was little crossover.

Today, when Netflix drops a four part miniseries, is that a show or a movie? When movies skip theatrical releases and are instantly available on YouTube, is that a streaming video or a feature film? When boxing matches are cast to 60 million home devices, bypassing pay-per-view, is that live sports or digital streaming? Talk about a convergence of formats. It’s dizzying trying to keep up.

The Law of Business Model Distribution

There are two fundamental questions to ask here:

First, why do these distinct formats emerge in the first place? Second, why do they ultimately converge?

The answer to both is what I refer to as The Law of Business Model Distribution. It states: Formats are defined by available business models. And business models are defined by available forms of distribution.

Content only survives and proliferates if creators are able to generate meaningful revenue. Feature films can justify their production costs because theaters can charge the price of admission. YouTubers can justify their production costs because of the ability to generate ad revenue. Content that cannot unlock monetization at scale cannot survive (a prime example being the short-lived live audio phenomenon that skyrocketed during the pandemic and disappeared just as quickly).

So that’s the first half of the law. Formats are defined by available business models. In our audiobooks and podcasts discussion above, two unique business models emerged independently of one another. For instance, there was the model of retail digital audio at high price points. What format fits that business model perfectly? Audiobooks, a translation of the printed word, an industry in which consumers are already primed to pay retail prices for individual units of high quality work.

Now we get to the second part of the law: Business models need distribution. Without the ability to reach an audience, a business model cannot unlock demand and therefore fizzles out. There’s survivorship bias here; the only content that we know about and can pay for is that which has managed to reach us as consumers. Business models needs distribution.

Podcasts offer a great example of this. The format of recorded digital audio has been available for decades. The business model of ad-supported audio has been around for a century (i.e. radio). And yet it was not until Apple baked the ability to consume RSS audio feeds into every iPhone that distribution was suddenly unlocked for hundreds of millions of people. It can’t be a coincidence that this was precisely when ad-supported podcasts took off as a business model for creators.

To summarize: Content needs business models to survive. Business models need distribution to survive.

Therefore, if the mode of distribution converges, so goes the business model. And if the business model converges, so does the content.

And that’s precisely what we’ve seen happen over the past decade in both video and audio. The channels of distribution are increasingly overlapping (streaming video, live video, on-demand video, podcast players, audiobooks players, subscription bundles, etc., etc.). And because of that overlap in distribution, we see an overlap of business models that were once unique (podcast platforms now offer ad-supported and paywalled content, audiobooks platforms now offer subscriptions and free ad-supported content, video players offer everything under the sun, etc., etc.).

With an overlap in business models, we see what were once entirely separate creators become one group. Podcasters and audiobook writers/producers were once on different islands; now they’re just audio creators. Filmmakers and streamers and TV producers were once on different islands; now they’re just video creators.

And elsewhere, writers and bloggers and newsletter creators also converge, and end up here, in your inbox.

One Last Thing

What’s the one thing you’ve always wanted to learn?

Several weeks ago, I announced Oboe, a company on a mission to make humanity smarter. If you haven’t yet signed up to be a beta tester once it’s available, just fill out this form! And if you know someone else who might be interested in learning about Oboe, please share it with them as well.