Have we reached peak podcast?

The news that Emily Maitlis and Jon Sopel, two senior journalists, are leaving the BBC to launch a new podcast has led to many headlines about a talent drain from the BBC. But perhaps the focus should be in another direction: have we reached peak podcast?

The trend is strikingly reminiscent of the late 1990s when every financial journalist worth their salt was being offered the chance to join a dotcom start up, with the promise of a slice of the equity. Very few of these efforts succeeded and the share options were never exercised; perhaps they are now framed and decorate ex-employees’ walls. One day, there might be a market in the certificates as a historical curiosity like the Tsarist bonds that were repudiated by the Russian communists after 1917.

For the moment, the boom in the creation of podcasts shows no sign of stopping. On Spotify alone, there are more than 3.2m compared with just 700,000 in the final quarter of 2019. In the future, to misquote Andy Warhol, it seems that everyone will have a podcast for 15 minutes.

During the pandemic, supply and demand for podcasts may have been more artificially boosted. People on furlough, or working from home, had more time to listen to podcasts, and to create them. It is clear that there is a bigger appetite for the spoken word than can be satisfied by traditional media such as the BBC or National Public Radio. The same thing is happening to radio, as happened to TV after the advent of streaming services. People relish the ability to listen or watch what they want when they want it, rather than rely on the schedules set by the big broadcasters. Streaming services fill the gap.

And there is definitely money to be made from podcasting. Spotify relies on stars such as Joe Rogan to bring new subscribers on to its service. According to the Interactive Advertising Bureau, revenues from podcasts hit $842m in 2020, up 19% from 2019, with a forecast of more than $1bn for 2021. But even $1bn, split between 3.2m podcasts, equates to $3,000 each, not enough to keep Ms Maitlis and Mr Sopel in the style to which they are accustomed.

Of course, podcasts probably follow the kind of “power law” that exists in other industries, with the vast majority of listeners and ad revenues concentrated on just a small amount of output. Spotify’s most listened-to podcast of 2021 was a Joe Rogan interview with Elon Musk, an event that must have been the aural equivalent of catnip for a certain demographic. That explains why Mr Rogan is paid a reported $200m by the streaming service, despite (or perhaps because of) the controversy some of his interviews generate.

But the corollary of this power law is that most podcasts will barely generate any ad revenue at all. For those that make them, it is more of a hobby than a job. Since the supply of podcasts seems to be rising far more quickly than the amount of ad revenue, the number of unlucrative podcasts must be rising exponentially.

A shakeout seems inevitable. Ms Maitlis and Mr Sopel may want to reflect on the fate of their former colleague Katty Kay. Ms Kay left a lucrative job hosting the news on BBC America last year to join Ozy Media, a digital media company which produced newsletters and videos as well as podcasts. She had linked up with Carlos Watson, the boss of Ozy Media, when they co-presented a BBC podcast called “When Katty Met Carlos”. But almost as soon as Ms Kay joined Ozy, the New York Times published revelations that Ozy’s chief operating officer had impersonated a YouTube executive on a call with potential investors. The affair raised serious doubts about the size of Ozy’s audience. Ms Kay quit and Ozy quickly folded. Perhaps the saga will warrant its own podcast: “When Katty Left Carlos”.

It costs very little to create a podcast which is both an advantage and a disadvantage for those setting one up. It means that many people are tempted to create one; in the past, they may have had a go at writing a novel instead. But just as very few authors make a living out of fiction, earning a decent income from podcasting will be a vocation for the few, not the many. A lot of podcasters may find that they are just talking to themselves. Those who pay megabucks to hire journalists are taking a big gamble. Every announcement of a big deal is a sign that the peak is closer.

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Philip Coggan

Former Economist and FT columnist. Author of More, Paper Promises, The Last Vote and The Money Machine