Opinion: For better measurement, give podcast apps a cut of the revenue

Whether it’s the AMP proposal today, or NPR’s RAD, or many other examples of analytics or enhanced functionality along the way, we often hear from the podcast industry expecting significant data from podcast players to be sent somewhere - either back to a hosting provider or an analytics company.

Enhanced consumption metrics are important for advertisers, who fund the majority of popular podcasts. However, those enhanced metrics require podcast apps to include instrumentation and data gathering.

The only people who can make this change are the podcast app developers. Without their work, we cannot see those improved metrics. Yet, app developers are the only part of the podcast chain that are not able to benefit financially from this work.

The inequity for podcast apps

This highlights a glaring inequity in the podcast business. The availability of podcasts through a podcast player allows podcast publishers to find new listeners, and - through advertising - allows podcast publishers to directly earn money from the consumption of a podcast. The entire industry is facilitated by podcast apps: yet, podcast apps do not earn a cent from the revenue that the podcast industry generates.

Podcast apps can charge for a monthly subscription fee, in-app advertising, or both. But, crucially, their revenue is not connected to consumption. It makes no difference whether a listener consumes 20 minutes - or 20 hours - of podcasts a week; the podcast app developer will typically not earn any revenue based on consumption.

Podcast app development is not without cost - but there is no incentive for podcast app developers to improve discovery of new shows, or to increase consumption. A significant part of the podcast industry is cut off from any benefit from increased consumption.

Additionally, requests for more consumption data by publishers place the podcast app developer at legal risk, requiring legal review and significantly complicating approval processes in app stores.

Proposals to get more consumption data from podcast apps mean that their developers must shoulder the burden of significant cost of additional development and to open themselves to legal risk around privacy law. And they do so without any financial return.

This is part of open podcasting - the open RSS feed that helps every podcast app out there connect to our content, and keeps podcasting open to the world. But it’s not sustainable to demand podcast app developers spend time working on features that do not directly benefit their users, without some form of revenue in return.

Verified consumption data is valuable

Buyers discount podcasting because downloads are a faith-based metric. We know that not all downloads are listened-to. We also know that not all ads are listened-to either. It’s isn’t unreasonable to try to give advertisers more visibility of whether their ads were heard - especially as podcast ads move into brand advertising, where measurement is harder than simply sales of things with a coupon code.

But, that valuable data is hard to get hold of: especially with the wide ecosystem that podcasting enjoys.

Using OP3 data, Podnews has identified that more than 36% of RSS downloads are not from Apple Podcasts or Spotify. Independent podcast apps - whether Pocket Casts, CastBox, Podcast Addict or AntennaPod - are a large part of the way our listeners are consuming podcasting.

It’s imperative for the industry’s future that “wherever you get your podcasts” includes a) HLS delivery, and b) adequate consumption data. However, podcast apps have little incentive to retool their apps to add HLS delivery, and no incentive at all to add the instrumentation required for player-side consumption data.

As a consequence, if we’re not careful, we could be heading into a future where ad-supported podcasts are deliberately only distributed on platforms which give that consumption data. “Wherever you get your podcasts” turns into “find us only on YouTube, Apple or Spotify”. After all - why support the other 30% of apps if you don’t get the consumption data back?

The value of this consumption data is obvious. What’s not obvious is the value to those who have the data right now: the app developers.

A more equitable suggestion

Apple Podcasts has announced that, later this year, it plans to take a cut of all podcast advertising delivered via HLS. For the sake of argument, let’s call this a flat fee of $1 CPM per ad served. ($1 per thousand ads served, in other words). We don’t know what Apple is asking for, but from discussions in the industry, we’d expect this figure not to be too far from the mark.

This fee by Apple Podcasts appears to have been tacitly agreed-to by the podcast industry. One of the top three richest companies in the world will share in the success of podcasting by taking additional revenue based on consumption. The more people use Apple Podcasts, the more revenue Apple will earn. In return, Apple Podcasts has tooled its app to use HLS delivery, which unlocks considerably better consumption data.

So, as a suggestion: the podcast advertising community offers that $1 CPM, say, as a cost of doing business, to any podcast app that delivers compliant consumption data to podcast advertising companies.

Support HLS and provide consumption data, and your podcast app qualifies for that same $1 CPM that the industry is paying Apple.

By sharing an industry-agreed $1 CPM throughout the podcast app ecosystem, rather than only delivering this to plays that occur on Apple Podcasts, it becomes in any podcast app’s interest to spend time and resources delivering a compliant data feed - since the data feed also becomes the method of billing.

It also focuses podcast apps on becoming even more successful.

A share in our success for the first time

If an app drives more podcast consumption, a $1 CPM ad fee means they share in the success of the podcast industry. It allows podcast apps to fund themselves properly - and rewards them for any form of increased consumption they are able to deliver.

Making this $1 CPM available to any podcast developer on a fair, reasonable and non-discriminatory basis would drive innovation in podcast app development, too.

We’ve often heard creators claim that “podcast discovery is broken” - however, a podcast app that drives 20% higher consumption would therefore earn 20% more revenue, so there is significant incentive for them to experiment with new ways for people to find new shows.

It allows podcast apps to experiment with new forms of UX - whether it’s an entirely new interface based on location, or discovery based on topics or people. If it increases consumption, then they win.

And, on the other side, this drives HLS takeup and consumption data. If podcast apps elect not to share consumption data, or support HLS, then that’s fine: they do not earn any revenue.

How much might this be worth?

Assuming an average CPM of about $20, that suggests a $1 CPM might drive 5% of podcasting’s ad revenue to the podcast apps. (This is not dissimilar to the cost of a credit card payment: a cost many businesses absorb every day).

Podcast advertising is worth $6.7bn globally. 5% of that is $335 million.

Based on data from OP3, we estimate Pocket Casts to be 2.5% of all podcast downloads. This could drive them $8.3mn. Overcast could earn even more. The open-source AntennaPod project, which is around 0.7% of all downloads, could earn $2.3mn. Podcast Guru? Their 0.2% of all downloads could return $670,000.

And to keep everyone’s costs down: the industry could establish a podcast data clearing-house to collate the consumption data, and to function as a payment collection agency - much like how record companies operate across the world through collection agencies like SoundExchange, PRS for Music, and APRA AMCOS. That would mean podcast publishers deal with one contract, rather than the hassle of dealing with the 180 different podcast apps we see consuming shows in a typical week; and podcast publishers also have one set of data back in return.

It’s our future

Over the last 22 years, the existence of independent podcast apps has been a benefit to podcasting: allowing us to grow and become stronger (and forcing competition between apps to add features and raise the experience for everyone).

Podcasting is a weirdly unique industry - one where independent apps sit alongside the big corporates, and the same content is available to everyone.

The advent of HLS delivery and player-side consumption data is an opportunity to make the most of it, if we structure the business accordingly.

Here’s to a weirdly unique next 22 years.