Podcast needs subscription in its future
The Media Leader Interview
Sachin Doshi, chief content officer at Podimo, tells The Media Leader why the podcast market is more similar to news media than music, and what that means for the future of its monetisation.
Podcasting has always been primarily an ad-supported business. But is this sustainable in the future?
Sachin Doshi, chief content officer at premium audio entertainment subscription business Podimo, sees a different way forward for the medium, its creators and listeners.
He says advertising funding for podcasts “was fine when money was pouring into the industry” and effectively subsidising it, but it is a different situation now as the ecosystem is “being forced to sustain itself”.
“Creators with massive audiences are making not enough from advertising,” he explains. “The audio ad business is simply not mature enough to support the value that those creators are providing, which means that advertising alone is not going to be good enough to deliver on the value that the creators in the medium are providing to its listeners and fans.”
Doshi sees this as the case particularly in markets outside the US and, to a lesser extent, in the UK and in Germany. While he concedes advertising “will always be a part” of the podcast business, he emphasises there needs to be “a much stronger role” for listeners’ willingness to pay.
He adds: “Subscription is the natural vehicle for that given that podcasting is not really a transactional business. It is something that you listen to or follow week over week, it’s not something you would buy once. I believe strongly that there needs to be a role for subscription, and there are various ways in which that will play out, but that is going to be a strong part of podcasting’s future.”
Doshi, who has held senior roles at Universal Music Group, Spotify, Scroll, and Twitter, has been working at Podimo since 2022, which offers original and exclusive ad-free podcasts, a collection of audiobooks, and podcasts from around the world via RSS feeds.
It is currently available in Denmark, Germany, Norway, Spain, the Netherlands, Finland, Latin America and has a standard tier and a premium plus tier, the latter with unlimited audiobook hours. Doshi clarifies their “focus” is on establishing the standard tier before introducing any “optimisation”, like Netflix has been doing with its tiers.
He describes Podimo’s “entry point” in terms of strategy as about focussing on local language in each of its markets, and investing in local creators to deliver a better experience than global platforms, which “tend to be more English out”.
“That remains our best entry angle and at the moment we’re focusing on continuing to grow the markets we’re in, but we’ll look at 2024 again and see where it makes sense to expand into,” he remarks.
More options for creators and listeners
Doshi outlines there needs to be three options for the podcast market, both for creators and listeners: an ad-supported model, a hybrid model and a subscription model.
An ad-supported model is “fairly simple” but “limited” in terms of how well creators can monetise their content, and over time he predicts the listener experience will “degrade dramatically” in the same way the reading experience of many news publishing sites has due to an overabundance of ads.
Individual subscriptions is another option that “needs to be in the market”, he maintains. These can include hybrid models with ad-supported options for casual listeners and extra content for “super fans” behind a paywall. This option is “hard work” and only some creators will be successful with it, he believes.
Doshi sees Podimo as “the third solution” in the market, as he explains: “That is a world in which the subscription model is working so we are able to then pay creators significantly more than they were making from advertising, but the creator in exchange does what they do well which is create a great show. They don’t have to worry about optimising their business at all times, because that’s our responsibility effectively.”
He believes that the Podimo subscription model will over time “be preferential” to many creators as they can make a better living and consumers can get a better ad-free experience without having to have multiple paid options.
However, Doshi emphasises, “Advertising is not going away, nor are we asking for it to. This is a [question of]: how do we create complementary business models? And how do we create complementary listening experiences so that people can get what they want and the overall ecosystem can thrive?”
On the subject of potential “subscription fatigue” Doshi does not see a future where, like video currently, consumers subscribe and pay for four or five platforms, as it “starts to get daunting”. He sees Podimo as “well-positioned” to solve that problem from both sides of the marketplace.
He argues that the podcasting experience has not “reached a premium level yet” and that having a paid service or experience within it will help.
In the long-term, Doshi says, “Certainly in our grandest ambitions we would love to take all spoken word audio listening away from Spotify, et cetera, but I think, more realistically, casual podcasters in the ad-supported business can continue to thrive on Spotify and the premium bundled subscription model would be your complementary Podimo subscription and that’s a large opportunity in itself.”
‘Unlocking willingness to pay’
So how do you convince people to pay for something that they have historically got for free? Doshi sees this as “a challenge, always”, but that free has “limitations”, like advertising as a distraction or problems delivering the best possible experience.
For him, music had a “very different set of circumstances” to podcasting, where the problem was piracy over getting people to pay.
Using Spotify as an example, he says that “creating the best listener experience” around legal music was central to what made it successful initially, and then moving people from the free tier to the premium.
“For news media, it has been a little bit more challenging and I think podcasting in my mind has many more similarities, ironically, to the news media space than it does to music, where it really has been a function of the brand and loyalty to the brand, and I do think that is really where podcasting sits,” he says.
Speaking from the perspective of the US market, he adds: “A lot of these companies that were either building out fully ad-supported businesses, or legacy print businesses that had never really invested in digital monetisation beyond advertising, found themselves staring at the abyss where they suddenly needed to get people to pay and nobody knew quite how to do that. Only the ones with strong brand loyalty, whether that’s The New York Times at the biggest level, and a few others at a smaller level, have been able to harvest that audience.”
He highlights certain writers and creators from these publishers have moved over to newsletter subscription platforms like Substack to monetise some of their audience.
“It is really about creator and brand loyalty that gets people to pay, as opposed to experience per se. So to me, those are the two avenues towards unlocking willingness to pay from people,” Doshi concludes.
Another monetisation move some news publishers are exploring includes micropayments, which Doshi says “does not work for a lot of reasons”, both for consumers or publishers. He says there is a psychological barrier to paying for an “ephemeral” one-off consumption experience, and there is the fact it potentially “unbundles” publishers’ subscription models offering casual and avid readers the same price.
Video is not the future of podcasting
Doshi sees “the next great frontier” for audio monetisation as narrative audio, as there is “a blur” between host-driven podcasts and audiobooks. People have been searching for a way to monetise short-form fiction narrative audio for many years and “the big question” is how often people in this space are fully engaged to listening, and to what extent.
For him, the idea that video is the future of podcasting “feels wrong”. This was suggested at the recent IAB Podcast Upfronts, with YouTube being the second or third largest podcast platform, and visualised podcasts and cross-promotion on social media frequently mentioned by presenters.
He sees video as a predominantly “different experience and use case” which is “a complement, not central to the [podcast] experience”.
Doshi says, “the value of listening will always be there”, and sees the power of audio as less about intimacy, which is often referred to by broadcasters and podcast platforms, and more about convenience and utility.
This move into video is “another analogue with publishing,” as he comments: “People want video to be the future of podcasting because it might help an ad-supported monetisation model better, and this happened a lot in publishing. There was a big joke almost five years ago about pivoting to video for a lot of publishers who were struggling with their ad businesses, because if you can get people to watch video, you can demand a much higher CPM than typical display ads.”
He stresses that this is not the experience a consumer came to the platform for. They do not want to wait through a 30-second pre-roll ad to skim an article for 10- 30 seconds, and he worries that a move to visualised podcasts would follow a similar path chasing monetisation rather than consumer value.
“These are things that subscription fundamentally solves,” says Dochi. “You are paying us, so it is our responsibility to give you the best possible experience. If you aren’t paying a subscription, it means I have got to find a way to make money even if that sucks for you the listener.”