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    July 3, 2018, 10:34 a.m.
    Mobile & Apps

    Enough with the “Netflix for audio.” Podcast companies should take a cue from meditation apps instead

    There’s a lot that subscription on-demand audio gambits can learn from the increasingly formidable world of mindfulness apps.

    Editor’s note: is a weekly newsletter on the podcasting industry written by Nick Quah; we happily share it with AndroidForMobile Lab readers each Tuesday.

    Welcome to Hot Pod, a newsletter about podcasts. This is issue 167, published July 3, 2018.

    Quick announcement! Hot Pod . It’s very ~modern~.

    Premium promise. There are some questions that we’re fated to circle around and around, over and over again, until someday something sticks. Like, for example: “Will people pay for podcasts?” Which is a question the podcast industry has already been grappling with in a bunch of different ways, but still keeps coming back to one way or another.

    Last week, the podcast app company announced that it was launching a “premium subscription tool” designed to make it easier for podcast publishers to build a paywalled audio strategy through its app. If that sounds familiar to you, it’s probably because the Swedish podcast app company Acast, with which CastBox bears a striking resemblance, released a similar product in the summer of 2016. (Recall the infamous “crowdfunding is begging” quote.)

    Scott Porch covered , where he compared the new feature to and , the Otter Media-owned streaming platform that digitally distributes a number of over-the-top (OTT) video streaming services, including Nerdist’s digital video network, the art-house cinema VOD service Mubi, and the anime-focused provider Crunchyroll. It’s an intriguing picture, but the comparison isn’t all that appropriate. After all, at this writing, there aren’t really enough (or indeed, any) robust OTT-style on-demand audio services to warrant that kind of service structure.

    Rather, CastBox’s tool lets partners more easily build out “bonus content” offerings. One such partner happens to be Wondery, which is chiefly using CastBox’s tool to help roll out , a service where Wondery superfans, whoever they are, can pay $5 a month to access an ad-free experience, bonus material, and early downloads. In other words, it’s more of a premium membership program, a secondary product akin to or . (Semantics, semantics.) Wondery+ will be offered as a streamlined in-app purchase on CastBox’s app, but the premium membership program will also be available through all other available podcast distribution points, where Wondery will rely on the traditional method of generating special RSS feeds for members that must then be manually inserted into their own podcast apps through a pretty wonky process. You know, that’s been the go-to method for shops trying to build out such membership programs. This is the point where CastBox likely provides some added value.

    CastBox is a startup that remains pretty puzzling to me. A China-based company with offices in California, Castbox has raised $29.5 million in funding to date, including a $13.5 million Series B round back in April, . (Again, Acast is the appropriate comp: The Swedish company has raised a total of $35.2 million to date, including a $19.5 million Series B round last September, again .) All of its investors appear to be Chinese-owned investments firms (Qiming Ventures, IDG Capital, GSR Ventures, SIG China, and Zhen Fund), though its operational focus seems squarely planted on North America for now. Its core product is a souped-up free listening app, though the company has also begun financing original content in recent months, including shows from the Canadian shop Kelly & Kelly and , a digital video network specializing in YouTube stars that’s trying to expand into podcasting, presumably as a form of advertising. It also announced called “ContentBox” back in May, which claims intent to “decentralize the podcast industry.” CastBox does not appear to have any prominent revenue engines that are immediately visible.

    When asked about performance, a CastBox representative claims the app has 2 million global daily active users, defined as “users who use the app every day Mon-Fri.” I must admit: That number strikes me as suspiciously large for an app that’s been making a North American push for less than a year. I could see someone talking me into believing that number could theoretically make sense given a global context, but still…  ¯\_(ツ)_/¯

    All of which is to say that I don’t have a ton of certainty over where the company stands in the space, or how valuable any of its partnerships can eventually be. (Then again, if they’re willing to give you money with no platform-exclusivity requirements for your show, by all means, take the dough.) Sure, there’s the whole tech-boi mantra about how startups are organizations formed to search for a business model, but at some point, some effort should be made to discern between an intentional search process and a strategy made out of Hail Marys. And much of that discernment should probably be made within the context of knowing what, exactly, CastBox’s vision of the future actually turns out to be: Is its long-term strategy ultimately based on increasing its profile as the first-choice listening option for an increasing number of people, or is it based on ultimately spreading itself out to meet listeners wherever they are à la RadioPublic?

    In any case, startups come and startups go, so let’s leave CastBox behind and attend to all the things that this development evokes: Amazon Prime Video’s Channels, VRV, OTT distribution services — and, of course, Netflix. To put some alliterative spin on this baby: Let’s consider the Promise and Problems of Premium Subscription in Podcasting.

    Premium problems. The CastBox new tool announcement blurs definitions quite a bit, but I think it’s really important to separate the idea of a genuine subscription-first model — that is, a business truly in the vein of Netflix — from other support constructions that selectively deploy paywalls: memberships, direct support donations, listener-plus services, Patreon, etc. To state the obvious, those latter models are built on a completely different value proposition, one where publishers are working to be paid after delivering value to listeners, and it’s already been proven to be effective many times over as a revenue solution for podcast publishers big and small, independent and otherwise: from to , to , to . It’s an open universe of allegiances, causes, and identity; I think it’s probably safe to argue that the success of any such direct support campaign is a strong proxy for the strength of a given publisher’s brand. (Another stray thought on this: This post-experience payment relationship can be further expressed through other secondary means, like merchandising and live shows. Those things, too, directly reflect the strength of the relationship between a publisher and its audience base.)

    Conversely, an actual “Netflix for podcasts” venture is built on the premise that it’s able to build a product strong enough for listeners to cough up cash before they are delivered value. It’s a more classically transactional relationship, and within the context of the current podcast ecosystem, I’d argue such a venture is basically in the business of extending the promise that it can consistently and perpetually beat the entire universe of free alternatives. This doesn’t necessarily mean that the venture needs to provide better programming than all available alternatives in the open ecosystem — that is, to be entrenched in the highly volatile hits-making business. It can also mean that venture can simply opt for providing a better overall experience when it comes to interacting with on-demand audio in general. Consider one of the fundamental issues for new listeners trying out podcasts: they are made to navigate the full spectrum of options that spans millions and find content that means something to their given tastes.

    CastBox’s paid subscription tool launch comes a few weeks after the public unveiling of a more interesting company: Luminary Media, a venture aiming to build a subscription service that’ll serve a “portfolio of premium podcasts” that has raised $40 million in a funding round led by New Enterprise Associates. In my head, that company is a cleaner test for the promise of a premium podcast subscription platform, and with $40 million in the bank, it’s got a fair bit of ammunition to go out and see where this goes. But its early machinations — back in May that the company has approached Wondery, PRX, HowStuffWorks, and Cadence13 to strike content deals, and one imagines that they’ve initiated talks with many more — doesn’t seem particularly convincing for this reason: It isn’t especially hard for any potential new listeners to discover and access programming from those publishers under the current context of the open podcast ecosystem, and it seems like an unnecessary burden for existing fans if they’re made to cough up additional dollars per month in order to further the relationships they already have with those publishers.

    In theory, I understand the idea behind all of this. A prominent premium podcast platform is a more reliable source of money than advertising dollars to fund projects in the space. A strong subscription player can cultivate a better environment for creatively and structurally riskier projects. Its existence ensures the continuity of the podcast economy regardless of what happens on the advertising side of the ecosystem. And to be clear: I am very, very in favor of a strong subscription-first player in podcast land somewhere down the line.

    I just don’t think a strategy primarily focused on “premium publishers” is a productive place to start, unless you’re able to successfully convince a hefty critical mass of publishers to sign on and effectively shift the status quo of the podcast ecosystem in one fell swoop. Even then, it seems as if you’d be creating value by intentionally increasing friction on the part of the user. That just ain’t good karma.

    The thing that’s always annoyed me about the “Netflix for podcasts” shorthand is that it’s much too focused on what that company looks like right now. It almost always skips the fact that Netflix, in its original iteration, started out by building a business around a more specific problem that’s a little less sexy — to improve upon the video rental market — before moving upmarket. Which is to say, it almost always overlooks the humble beginnings in search of glorious ends.

    Breathe easy. Inspiration should instead be taken from elsewhere. This is going to be something of a crazy leap, but bear with me: I think there’s a lot that subscription on-demand audio gambits can learn from the increasingly formidable world of mindfulness apps.

    Two recent stories of relevance:

    • “Meditation app Calm hits a $250M valuation amid an explosion of interest in mindfulness apps,” .
    • Headspace, probably the most prominent meditation app, recently announced the launch of a new division: Headspace Health, reportedly the first “prescription meditation app.” Here’s on the matter.

    Calm and Headspace are, in purpose and presentation, meditation apps. But strip them down to their technical components and you’ll see that they’re effectively on-demand audio platforms built on strong subscription-first business models. I’d argue they’re the most successful on-demand audio apps in the marketplace right now.

    Consider the product composition of Headspace: For $12.99 a month or $95.88 a year (or, in a fascinating muscle flex, $399.99 for a lifetime), users buy into a substantial content archive — ostensibly rooted in the practical wellness category — that’s chopped up a bunch of different ways for different audience sets: beginners, intermediates, sufferers of specific anxieties (flying, say), and sufferers of more elemental ones (self-esteem, for example). The full spread of the archive functions as the main draw for subscribers, but there’s a layer of regularly updated material that goes a long way in entrenching the habit. It’s a straight-up editorial product, complete with a team that makes discerning content judgments about what to create next in order to keep bringing listeners back.

    The on-demand wellness audio platform just works, and it does so because, at a fundamental level, the product is a specific service that fulfills a specific need for a specific group of people. And it just so happens that its audience set is not only clearly defined but also potentially massive, because the need it fulfills is expansive and deep as life itself. (Wild.)

    Yeah, this argument might be a bit of a stretch, and one could push back with the differences between a wellness activity like meditation and something that feels more frivolous like a piece of entertainment media. But I don’t think that’s the right way to look at it, because it downplays the role of entertainment and media in everyday life. A comedy podcast isn’t just a time-filler; it’s a space of communion. A horror movie isn’t just a shot glass of cheap thrills; it’s a potent space to tackle primal emotions and ideas without physical risk or consequences. (Hell, I’d rather watch Hereditary than base-jump.)

    When it comes to the problem of starting up a paid podcast platform, the key, I think, doesn’t really lie in the nature of the content. Instead, it’s grounded in a focus on a specific engagement of an audience need, and from there, it’s about how to grow and scale in accordance with that engagement of need. I’m curious to see how a venture like Luminary Media plays its initial hand, and I’m excited to interpret it through that idea of specific need.

    Also, I guess what I’m additionally saying is: , Panoply’s on-demand audio platform for kids’ podcasts, should be a bigger deal than it is.

    Public radio watch

    • The BBC doubles its bet on itself. Last week, the U.K. public broadcaster launched a new app to “counter Spotify and Apple Music.” ()
    • Los Angeles public radio station KCRW recently debuted a new podcast hosted by Dear White People director Justin Simien, called Don’t @ Me. ()
    • “KUOW invests in staff compensation study.” Shouts to the P-N-W. ()

    Selected show announcements

    • HowStuffWorks announces two new creepy-themed podcasts, one of which comes from its exclusive overall deal with Lore’s Aaron Mahnke. ()
    • The Vox Media Podcast Network partners with the conservative think tank American Enterprise Institute on an “eight-week seasonal podcast” hosted by AEI president Arthur Brooks. Hmm. ()
    • Some readers rightly complained last week that I did not actually link to Tommy Pico’s new pod, Junk, last week. My apologies. ()

    This week in cash money

    • Midroll ran a splashy outdoor advertising campaign in Times Square last Friday. The company executed this campaign through parent company EW Scripps’ relationship with Nasdaq, the stock exchange on which it has been listed since 2010. ()
    • With three million downloads, Joe Media expands its podcast slate to cover business. ()

    Miscellaneous bites

    • Fewer women, people of color worked at radio stations in 2017 than 2016, a new survey shows.” (AndroidForMobile Lab)
    • “How smart speakers are changing the way we listen to music.” ()
    • Over at Slate, Inkoo Kang reviews Getting Curious With Jonathan Van Ness. The Fab Five’s empire continues to grow. ()
    • This is a surreal one: A prank call by the host of a podcast called The Stuttering John was allegedly patched through to the American president on Air Force One. ()
    • “‘I was devastated’: Tim Berners-Lee, the man who created the World Wide Web, has some regrets.” ()

    Photo by on Unsplash.

    POSTED     July 3, 2018, 10:34 a.m.
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