Podcasting got a black eye this week. PodTech, one of the most high-profile podcasting startups in Silicon Valley, sold for a measly $500,000 to a small California company named ViewPartner. That's not chump change, but considering a bunch of Sand Hill Road VCs plowed millions into the company, the price makes it apparent that the company's business model was flawed. But how much of this relates to missteps by the company, as opposed to fundamental problems with podcasting as a business?
You may recall that back in April I was slammed for posting an essay entitled "Why podcasting is failing". The critics brought up a lot of counterarguments, including:
- Podcasting isn't radio
- Commercial success is a matter of perspective
- Podcasting works within niches
- The business model is headed toward profitability
- Podcasting is not a business, it's an artistic endeavor
The comments were interesting, but they didn't make me change my original thesis: Podcasting is failing as a business platform, and has failed to make a mainstream impact.
The news that PodTech only managed to limp into an acquisition therefore came as no surprise. Former PodTech star Robert Scoble admits on Friendfeed that there were plenty of management and board problems and notes "the company burned through $7 million (plus several million in revenues)." PodTech founder John Furrier, commenting on the same Friendfeed thread, asserts "we made some mistakes but [were] directionally correct." Scoble says a big part of the original plan was the social media star power, supplied by the likes of Scoble, Jeremiah Owyang, Irina Slutsky, and Steve Gillmor.
But even if the stars had stuck around to the end, and the management and board problems were addressed earlier, I have to wonder how well this venture would have done. This was a hyped business built on one of the most hyped technologies of 2005. Once the that faded, reality set in. As I pointed out in my original post, there are a lot of factors that are working against podcasting. Making programs is a labor-intensive process requiring special skills. In addition, there is no AdSense or AdWords equivalents for podcasts -- advertising has to be sold, produced, and placed by humans.
There are problems with metrics too. While the industry is working on this, there's still a lot of work to do and it's uncertain how smaller niche podcasters will be able to benefit.
As for audience appeal, boosters have highlighted impressive survey data from an April 2008 Edison Media Research report showing 54 million people have downloaded podcasts. But buried in the full PDF of the report are some less positive data points. The 37% of Americans who had "ever heard of podcasting" at the beginning of this year was exactly the same as the 2007 level, and podcast consumers are far more likely to be "resistant" to unwelcome advertising. The numbers of people who regularly subscribe or listen to podcasts are not even included in the report -- but, if we apply the older 12:1 ratio of "ever listened" to "listen daily" (from a 2006 Pew report) to the Edison numbers, that means just over four million Americans are listening (or watching) podcasts on a given day -- out of a total population of more than 300 million Americans.
What does the future hold for podcasting? The ViewPartner/PodTech press release stresses the new team's broadcast media experience and goal to take podcasting and "any kind of broadcasting on the 'Net" to the next level. As for other podcasting businesses, changes in technology may increase adoption rates and streamline production and advertising processes, but until that happens, podcasting-focused startups will not see the sort of giddy liquidity events that have boosted other sectors of the Internet economy in recent years.
More news, commentary, and predictions from The Industry Standard:
- Analysis: Why podcasting is failing
- Special Feature: 10 'Net services that will succeed (and 10 that will probably fail)
- Special Feature: The iPhone naysayers, one year later
- Special Feature: Where are they now? The Industry Standard tracks down 10 dot-coms from the Web bubble of the late 1990s
Comments
hey lets do a podcast on this.. point made
Thank you for the great article.
Thanks for the comments. There's more reaction over at Podcasting News, where James Lewin brings up some counterarguments to what I've said about podcasting.
Podcasting is a distribution technology, not a genre.
i think one of the mail problems is that 93% of all advertising dollars are still NOT on the internet, so no matter what a company does (and as you can imagine i did not agree with what this particular company, podtech, did) it will be difficult to MAKE money out of the measly leftovers. its as if we who work strictly online are waiting for the decision makers to retire so we can take their place and start putting the money where the media is. every day i wake up to a useless SF Examiner sitting at my door. i promptly throw it into the recycling bin. every day i FFW through hundreds of commercials on my dvr. AND, every day the internet measures every time i watch a 5-second ad before i watch Dateline on the show's site. THAT ad is watched, counted and effective. and yet cost hundreds of thousands of dollars less than all those ads i didnt see in my Vogue and on any of my DVR'd shows.
I thinks it comes down to geting the technology closer to the customer. I don't mean the "geek" customers compelled to buy-in to whatever the latest and greatest social network or gadget is. I mean everyone else.
People want to view their media on big screens in HD, with incredible ease. They don't want to think about it, fight with software and wires, or anything else. They want to come home, pick up the remote, and turn on the big flat screen TV that the world has been telling them to buy. They also want high production quality, not some dude with a crappy handicam.
Until this new media gets all the way to that TV - effectively, efficiently, and with reasonable cost - podcasting as a medium will continue to struggle. This is what the Apple TV, XBOX, Roku and everything else are aiming at . They see the gap, and are running at it.
I think groups like Revision 3 have the best potential to survive as a business while the deliver mechanisms get improved.
http://www.mcmahonweb.com/?p=40
thanks ... take it further
what other "industries" in the "social media" sphere have no future
if your write that, should see some really interesting conversations
thanks, gregory
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