'Audio Podcasts And The Market For Podcasting' by Grant Goddard

AUDIO PODCASTS AND THE
MARKET FOR PODCASTING

by
GRANT GODDARD

www.grantgoddard.co.uk
April 2006

1.

DEFINITION

“Podcasting” is defined as “the distribution of audio or video files, such as radio
programmes or music videos, over the internet…. for listening on mobile
devices and personal computers”. “Podcast” is a term, like “radio”, that can
refer to both the content and the means of delivery.1
The most notable differences between podcasting and terrestrial broadcasting,
and between podcasting and streamed webcasting, are:2

A podcast is a “programme” of definite duration, produced as a complete
work and encompassing a beginning, a middle and an end, that is
delivered to the user in “archived” form

A podcast can be listened to or viewed by the user at a time of their
convenience

A podcast can be listened to or viewed by the user at a place of their
convenience, either on a mobile device or on a personal computer,
without a simultaneous connection to the internet as a pre-requisite

The user has the ability to stipulate that regularly updated (often daily or
weekly) editions of a podcast be downloaded automatically to a personal
computer or mobile device, as a background activity without further
intervention from the user, for later listening or viewing

Multiple podcasts can be downloaded simultaneously from the internet,
for later listening or viewing, whereas only one streamed webcast or
terrestrial broadcast station can be listened to or viewed at a time
Although the term “podcasting” derives from a combination of the words “iPod”
and “broadcasting”, the listening to or viewing of a podcast does not
necessarily require the user to use a mobile player such as an iPod, since
content can equally be accessed on a personal computer. Podcasting is the
latest development of “push” technology whereby content is pushed through
the worldwide web to the user, according to their stated preferences or
subscriptions, without the user having to actively engage in individual file
downloads. “Push” technology was initially developed in the early 1990s by
nascent internet companies such as PointCast that offered users free
subscriptions to their preferred newspaper stories, and then downloaded files
to their computers automatically overnight. Podcasting has developed the idea
from text files to audio and video content.3

1

Wikipedia, Podcasting, http://en.wikipedia.org/wiki/Podcasting
3
2

Audio Podcasts And The Market For Podcasting
©2006 Grant Goddard

page 2

2.

MARKET DEVELOPMENT

The ability of the podcast to time-shift audio content has been compared to the
improvement in operability that the VCR brought to television in the 1980s,
while the ability to “push” podcast content through the internet to the user’s
computer as a background activity has been compared to the more recent
TiVo TV facility. “As a concept, I see [podcasting] as most closely equivalent to
doing for internet audio content what TiVo does for TV,” said podcast producer
Dave Slusher. Another producer, Carl Franklin, commented: “I think it’s a
natural evolution of content consumption, because people are busy and they
don’t always have time to catch their favourite show. So it’s very convenient to
get notified when new content is available through some sort of aggregator
and automatically download that content and have it put on a portable player
and listened to at your convenience.”4
In October 2004, the user’s ability to locate podcasts of relevant content was
improved by the launch of Podkey, the first phonetic search engine for
podcasting. By November 2004, podcast networks started to emerge, including
the GodCast Network, the Tech Podcasts Network and the Association of
Music Podcasters, created as portals for podcast producers serving specific
genres. In June 2005, the initial inclusion of 3,000 podcasts in Apple’s iTunes
4.9 online music store considerably broadened user access to podcasts
through visibility within a single high-profile aggregator.5 In its first two days of
existence, the iTunes podcast directory attracted one million subscriptions.
“iTunes has done what possibly no one else could have accomplished,
propelled podcasting into the mainstream,” said Will Lewis, management
consultant for US radio station KCRW.6 One US report concluded that “the
inclusion of a podcasting feature by iTunes is the single greatest step in
helping podcasts reach a wider audience.”7
The growth in the number of podcasts available to users has increased
tremendously since then. In November 2004, 212 podcasts were available at
the web site of aggregator feedburner.com but, by January 2005, that number
had increased to 1,090 and then, by August 2005, to 13,782.8 The diverse
subject matter available within podcasts is illustrated by the ten most popular
programme “tags” (descriptors added by the podcast producer) of podcasts
available at another aggregator web site, podcast.net : music (2133 podcasts),
comedy (975), podcast (830), news (810), radio (701), rock (673), technology
(572), politics (531), Christian (444) and indie (436).9
It is this diversity of programme material that, according to one media report,
“allows people to thumb through an exploding treasure trove of shows and find
exactly the right one for them, no matter how off the wall it might be. That
4

Daniel Terdiman, Podcasts: New Twist On Audio, Wired News, 8 August 2004
Steve Friess, iTunes Mints Podcasting Stars, Wired News, 18 July 2005
6
Apple, iTunes Podcast Subscriptions Top One Million, Press Release, 30 June 2005
7
Sheri Crofts, Jon Dilley, Mark Fox, Andrew Retsema & Bob Williams, Podcasting: A New Technology In Search Of
Viable Business Models, [undated] http://firstmonday.org/issues/issue10_9/crofts/
8
9
http://www.podcast.net/browsetags, accessed 18 April 2006
5


page 3

makes podcasting very different from mass radio, which needs to play the
most broadly popular songs to attract the widest audience.”10
An analysis by podcast aggregator digitalpodcast.com of the 2,958 podcasts
indexed on its web site showed “significant imbalances between supply and
demand of different podcast categories.” In the third quarter of 2005, “music”
podcasts comprised 22% of the total podcasts available at digitalpodcast.com,
but accounted for only 6% of downloads. Conversely, “erotica” podcasts
comprised only 1% of available podcasts, but accounted for 11% of
downloads.11
The supply of podcasts is overwhelmingly concentrated on the US at present.
An Australian survey of 366 randomly selected podcast producers found that
65% were based in the US, 88% produced podcasts in the English language,
and most were produced by educated males in their mid-thirties.12
By February 2006, 42 million iPod portable players had been sold in the US,
with 29% of owners having downloaded podcasts.13 Podcasts are now being
extended to additional portable platforms with the launch in March 2006 by
Pod2Mobile of software that allows consumers to download and listen to
podcasts directly on their mobile phones.14
Finding podcasts is being made much easier for the user. In January 2006, a
new podcast search engine named PodZinger was launched by BBN
Technologies, based on speech recognition research to create a text index of
the audio.15 Alongside its competitors such as blinkx and Podscope, these
search engines help users locate their preferred content amongst the
estimated 25,000 to 50,000 podcasts available on the internet in late 2005.16
At the moment, Apple’s iTunes web site remains the most prominent access
point for podcasts. Stan Ng, Apple’s director of iPod marketing worldwide said:
“Podcasting has really taken off now that Apple has brought it to the
mainstream.”17

10

Heather Green, Radio Days For Everyman, Business Week Online, 3 March 2005
Alex Nesbitt, The Podcast Value Chain Report: 3Q 2005 Update: The Podcast Content Bubble, October 2005,
http://www.digitalpodcast.com
12
Peter Chen, Podcasting And Videoblogging: A Production-Side Analysis, Monash University, Australia, November
2005
13
Katy Bachman, Podbridge Starts Podcast Ad Net, 16 February 2006
14
Mike Shields, Pod2Mobile Bows Ad Product, Adweek.com, 27 March 2006
15
BBN Technologies, PodZinger Makes Podcast Searching Fast, Easy And Accurate, Press Release, 11 January
2006
16
Kim Zetter, Podcast Chaos Be Gone, Wired News, 30 November 2005
17
Paul Durman, Will Podcasts Kill The Radio Ads?, The Times, 7 August 2005
11


page 4

3.

THE U.K. MARKET

The BBC first experimented with podcasts in April 2004, when “The Reith
Lectures” were made available on the BBC web site and were downloaded
50,000 times over a ten-week period. In October 2004, the BBC launched a
higher-profile trial podcast of the Radio Four history series “In Our Time”
hosted by Melvyn Bragg, which generated 170,000 downloads in three
months. By January 2005, the trial was extended to include additional shows
from the BBC’s Five Live station. In April 2005, a further twenty shows were
made available as podcasts, including the first daily show – the 0810 interview
on Radio Four’s “Today” programme. During the first four months of the
podcast trial, three programmes generated 270,000 downloads between them.
By February 2006, the BBC had added podcasts of many more programmes,
including an hourly updated news summary from the BBC World Service,
bringing its total portfolio to fifty podcasts.18
In March 2005, Virgin Radio began daily podcasts of its breakfast show that
made it “one of the most popular podcasts in Britain”, registering 85,000
downloads per month on the iTunes web site.19 Its own research found that
41% of its online radio users owned a portable MP3 player (of which 32%
owned iPods).20
In December 2005, London commercial talk radio station LBC claimed it was
the first to offer a premium podcast service.21 For a subscription of £2.50 per
month (discounted to £10 for six months), LBC provides users with a range of
different podcasts, including full-length downloads of the latest editions of most
of its shows, an archive of previous editions, and some non-broadcast shows
specifically recorded for subscribers. Non-subscribers have free access to 15minute “best of” podcasts of ten of the station’s most popular shows.22
Also in December 2005, comedian Ricky Gervais launched a free podcast
entitled “The Ricky Gervais Show”, twelve episodes of which were distributed
by the website Positive Internet and marketed by The Guardian newspaper.
The Guinness Book Of World Records has acclaimed it as the world’s most
successful podcast to date, because each edition was downloaded an average
295,000 times by users. In February 2006, Gervais launched a second series
of his podcast show and charged users £0.95 per download through the
Audible internet site.23
Newspapers started producing podcasts and promoting them in-print and
online. One newspaper commented that “this is an area where web distribution
18

BBC, BBC Radio MP3 Takes Off, Press Release, 17 December 2004
BBC, BBC Podcasting Sparks Fighting Talk, Press Release, 30 January 2005
BBC, BBC To Podcast Up To 20 More Programmes Including Today And Radio 1 Speech Highlights, Press Release,
14 April 2005
BBC, BBC To Podcast Hourly News, Woman’s Hour And Paxman In Trial Extension, Press Release, 14 February
2006
19
20
Jo Twist, Radio Has Its Eye On Podcasters, BBC News, 23 September 2005
21
[uncredited], LBC Claims First For Launch Of Paid-For Podcast Service, Marketing Week, 12 January 2006
22
http://podcast-audio.chrysalis.com/
23
[uncredited], Gervais Charges For Podcast Show, BBC News, 21 February 2006

page 5

has smashed the linear broadcasting model… and it would be completely
wrong for newspapers to ignore it.”24 In November 2005, The Daily Telegraph
launched a daily podcast offering three articles from each day’s print edition;
and New Scientist magazine started a nine-week pilot of podcasts that
included news and interviews.25 In January 2006, The Telegraph newspaper
appointed its own podcast editor, Guy Ruddle, to produce daily podcasts of
content from the newspaper.26 In March 2006, The Guardian newspaper also
started producing a daily news show, a weekly politics show, a media talk
show, a science/technology show, an arts/entertainment show and a music
show.27

24

Emily Bell, Daily Podcasts Will Set New Challenges For Journalists And Readers, The Guardian, 25 March 2006
Ofcom, The Communications Market: Interim Report, February 2006, p.16
26
Torin Douglas, Podcasts Spread Their Wings, BBC News, 23 January 2006
27
Emily Bell, Daily Podcasts Will Set New Challenges For Journalists And Readers, The Guardian, 25 March 2006
25


page 6

4.

REGULATION

Ofcom has no regulatory responsibility for podcasting, which is why this new
medium is, according to one commentator, “circumventing the restrictions
imposed on traditional broadcasting by industry and government.”28 Apple’s
iTunes web site labels its available podcasts “explicit” or “clean”, according to
the content. Violet Blue, erotica author, said that podcasting is the perfect
medium for people like her who want to distribute popular content that would
be illegal to broadcast. “Podcasts are private, anonymous, available and
archive-able,” Blue said. “And people don’t have to sit by the radio to listen.”29
Ofcom’s own market research predicted that “once podcasting, with its
convenience and potential portability, takes off, it seems reasonable to expect
[radio] listening to move away from the home.”30 Ofcom has contrasted the
BBC’s ability to forge ahead and develop podcast opportunities for users with
current hurdles faced by the commercial radio sector in clearing music rights:
“The rate at which broadcasters release content in this [podcast] form may be
determined by how successful they are in negotiating distribution rights for this
medium. While new technologies are providing listeners with more flexibility
and control over their radio listening, the developments could pose potential
concerns for rights owners. As users becoming increasingly able to transfer
radio programming freely between digital devices, rights holders will be keen to
ensure copyright infringement is minimised. For example, commercial radio
stations who are already offering podcasts of live shows have to edit out music
tracks to meet copyright requirements.”31

28

Annalee Newitz, Adam Curry Wants To Make You An iPod Radio Star, Wired Magazine, issue 13.03, March 2005
Annalee Newitz, Adam Curry Wants To Make You An iPod Radio Star, Wired Magazine, issue 13.03, March 2005
30
Ofcom, The Communications Market: Interim Report, February 2006, pp.16 & 27
31
Ofcom, The Communications Market 2005, July 2005, p.88
29


page 7

5

BUSINESS MODELS

In March 2005, almost all podcasts were still being made available on the
internet for free. The evangelisers of the medium, such as former MTV DJ
Adam Curry, were adamant that podcasting would attract considerable
advertising revenue. “It is totally going to kill the business model of radio,”
Curry said. “I just did a tour of Madison Avenue, where all the big brands and
advertising agencies of the world are, and they are scared to death of the next
generation – like my daughter who is fourteen – who doesn’t listen to radio.”
On the other hand, sceptics such as Dave Winer, inventor of the RSS script
[Really Simple Syndication] that podcasting utilises, saw the medium purely as
a supplement to existing delivery systems. “No matter how you look at it,
commercialising this medium isn’t going to make very much money,” Winer
said. “Podcasting is going to be a medium of niches, with audiences in the
single digits, like e-mail or blogs. Maybe in a few years, maybe six or seven
digits, but it will have to sustain interest beyond the hype balloon.”32
Some press reports have been eager to portray podcasting as the new
“goldrush”.33 Business Week magazine noted that “a trend is afoot that could
transform the $21 billion radio industry. Consider the basics: with no licences,
no frequencies and no towers, ordinary people are busy creating audio
programming for thousands of others. They’re bypassing an entire industry.”34
Marc Freedman, analyst with The Diffusion Group, said that “podcasting’s noncommercial status is changing as more businesses begin to find creative ways
to use this new delivery medium to push audio content.”35 Adrian Smith of
venture capital firm Ignition Partners said: “We think there’s a huge market that
will allow podcasting to be extended to the two billion wireless phones across
the world today. In a pretty short number of years, ringtones have become a
huge, multi-billion dollar market, and that suggests podcasting could be a very
large market indeed.”36
Dave Winer believed that traditional radio broadcasting business models do
not apply equally to podcasting. “The assumption is [that podcasting] must be
exactly like every other medium that has come before,” Winer said. “It’s
different. It has different economics. Why invent something new if it has to be
like everything else that came before?”37 On the other hand, Cameron Reilly,
co-founder of the Podcast Network, saw podcasting as a direct descendent of
terrestrial radio. “We don’t see podcasting as ‘revolution’, but simply as an
‘evolution’,” Reilly said. “Podcasting is a viable commercial medium because it
has the same characteristics of more traditional mediums such as radio, but
with the added benefits of time-shifting, portability, user control and global
coverage.”38
A 2005 survey of 366 podcast producers found that 61% had no commercial
motivation for their podcasts. Of the remainder that adopted some kind of
32

Jo Twist, Podcasters Look To Net Money, BBC News, 25 March 2005
Steve Friess, Podcasting Gold Rush Is On, Wired News, 28 September 2005
34
Heather Green, Tom Lowry & Catherine Yang, The New Radio Revolution, Business Week Online, 3 March 2005
35
The Diffusion Group, Podcasting Users To Approach 60 Million US Consumers By 2010, 15 June 2005
36
Chris Vallance, Podcasts Send Mixed Signals To Radio, BBC News, 13 November 2005
37
Scott Kirsner, Podcasting Faces Growing Pains, Boston Globe, 28 February 2005
38
Thomas Claburn, New iPods Debut And A Marketing Medium Too, Information Week, 23 February 2005
33


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commercial motivation, less than 2% used a subscription business model,
while around a third used an advertising model of some type. A substantial
proportion was experimenting with non-specific business models, which the
report concluded was a reflection of the “uncertainty” of commercial viability in
the emerging podcast market.39
5.1

Value Chain

The value chain for the podcast business has been defined as:40
CONTENT: original content of podcast show
▼
ADVERTISING: advertising to be included as part of the show
▼
PRODUCTION: pre-production set-up, recording & post-production editing
▼
PUBLISHING: development show notes and publishing via RSS
▼
HOSTING/BANDWIDTH: website hosting & bandwidth to transmit podcast
▼
PROMOTION: marketing of podcast to listeners
▼
SEARCHING: search tools (directories, user communities) for listener use
▼
CATCHING: client-side software to catch podcasts
▼
LISTENING: end user listening devices such as MP3 players
5.2

Costs

The cost base for podcasting is:41
Production Equipment – fixed cost estimated to range from $225 to $2,500
Marketing – variable cost from $0 to unlimited
Hosting & Bandwidth – variable cost from $0 to $4,000 per month
Grant Mason, producer of the “Three From Leith” podcast, explained his costs:
“I started with my old PC and a fairly dodgy microphone. You can get free
software over the internet that helps you to record and mix the sound, but
aside from a broadband connection, that’s really all you need. Obviously, you
can buy more expensive equipment when you become more proficient…..”42

39

2005
40
Alex Nesbitt, The Podcast Value Chain Report, June 2005, http://www.digitalpodcast.com
41
Alex Nesbitt, The Podcast Value Chain Report, June 2005, http://www.digitalpodcast.com
42
Adrian Mather, In Pod We Trust As New Breed Of DJ Joins Cast List, The Scotsman, 24 January 2006

page 9

5.3

Revenues

Podcasters have adopted a variety of business models:43
5.3.1 Sponsorship
Based on its success in traditional radio, sponsorship is seen as “a throwback
to the Golden Age of radio,” according to Steve Rubel, vice president of New
York public relations firm CooperKatz & Company. “It’s possible a podcast
sponsor might be able to embed a full audio news release right into a
programme, provided it is consistent with a show’s content.”44 For example,
when Durex sponsored the “Dawn & Drew Show” podcast, it was reported that
internet traffic to the sponsor’s web site increased threefold.45 In the US, Virgin
Mobile has sponsored podcasts of New York City radio station Z-100’s
morning show, Verizon Online has sponsored podcasts of ABC News’
Nightline show, and Chrysler has sponsored Slate’s daily podcast.46
5.3.2 Advertising
Opinions vary as to whether advertising is a viable proposition within podcasts.
Former IBM media consultant Griffith Jones said: “For radio, people are used
to advertising but, when it comes to podcasting, and they have to go through
the trouble of downloading it and uploading it into their mobile device, I tend to
think people will be less tolerant.”47 The global nature of podcasts requires that
advertisers be global, as the producers of podcast “Cinecast” found out when
they took sponsorship from local company ChicagoMixer.com. “Twenty per
cent of our listeners are from 59 other countries,” said producer Adam
Kempenaar, “so something specific to one location didn’t turn out to be the
best sponsor for us.”48
The first Portable Media Expo & Podcasting Conference, held in California in
November 2005 (described as “the Woodstock of podcasting”), was a
watershed event for the commercialisation of podcasting.49 While podcast
evangelist Adam Curry was extolling the virtues of advertising in podcasts
(“People enjoy hearing about products that they’re interested in”), some
participants suggested that advertising content was inappropriate for the
medium. “I’m not anti-money or anti-commercials, but people who listen [to]
and do podcasts walked away from commercial radio for a reason,” said Aaron
Bates, producer of The Big Show podcast. So why are people so eager to
return to that failed model?”50
The Conference spawned the first advertising networks in the US specifically
for podcasts. In November 2005, Podtrac launched the first such network and
signed up 1000 podcast producers in its first two months.51 In January 2006,
43

44
Steve Rubel, Pondering Podvertising Possibilities, ImediaConnection, 8 December 2004,
http://www.imediaconnection.com/content/4735.asp
45
Kevin Restivo, Durex Finds New Way To Stretch Advertising Dollars, National Post, 19 May 2005
46
47
Michael Logan, Radio Catches The Next Wave, South China Morning Post, 19 April 2005
48
49
Steve Friess, Curry In Podcast Convention Clash, Wired News, 8 November 2005
50
Steve Friess, Profits May Rock Podcasting World, Wired News, 14 November 2005
51
http://www.podtrac.com

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Kiptronic offered a competing advertising network, having tested its technology
with 200 podcast producers the previous year.52 In March 2006, Podbridge
launched an advertising network that it had been testing with clients such as
the BBC and Clear Channel since October 2005.53 Podbridge believes that a
cost per thousand of between $25 and $40 is justified for advertising in
podcast programmes.54
Andy Lipset, co-founder of Ronning Lipset Radio, a partner of Podbridge in its
podcast network, said: “Advertisers have become increasingly interested in
podcasting but, until now, there hasn’t been a viable solution for them.”
Murgesh Navar, Podbridge founder and CEO, said: “For podcasting to become
a mainstream media, it needs a business model to encourage content
providers.”55
5.3.3 Listener donations
Several podcast producers solicit monetary tips from their users and provide
facilities for them to pay by PayPal to help defray their costs.
5.3.4 Brand extension
Existing broadcasters, such as the BBC in the UK and National Public Radio in
the US, have provided podcasts as a way to exploit content generated for their
existing delivery platforms. The webmaster of Los Angeles station KCRW
explained that the marginal costs of podcasting are minimal: “The money
involved in producing the podcasts is no more than the money we spend on
our existing online budget for bandwidth and staffing.”56 Simon Nelson,
controller of BBC Music Interactive, said: “These technologies can transform
the value we deliver to audiences and make our programmes more accessible
for both new and existing audiences.”57 BBC director general Mark Thompson
explained: “It provides a different way for our licence-payers to access content
which they have already paid for and which they could already watch or listen
to with existing receiving equipment in their homes.”58 The US Bravo TV
channel produces podcasts of its most popular shows because, according to
Frances Berwick, senior VP programming & production, “it’s an informational
tool that extends our brand and our reach.”59
In the UK, Ofcom noted that “commercial radio stations are experimenting with
releasing programming via podcast, thereby extending the reach of their
brands and advertising impacts.”60 Virgin Radio’s head of new media James
Cridland admitted that revenues from its podcasts of the station’s breakfast
show were “still modest”, but that the costs were “almost nil.” Cridland said that
52

Mike Shields, Kiptronic Launches Podcast Ad Network, Adweek.com, 23 January 2006
Katy Bachman, Podbridge Starts Podcast Ad Net, 16 February 2006
Podbridge, Podbridge Launches Podcast Ad Network Utilizing Sophisticated New Audience Measurement And Ad
Placement Techniques, Press Release, 16 February 2006
54
Rachel Rosmarin, Who’s Paying For Podcasts?, Forbes.com, 6 March 2006
55
Podbridge, Podbridge Launches Podcast Ad Network Utilizing Sophisticated New Audience Measurement And Ad
Placement Techniques, Press Release, 16 February 2006
56
Pat Nason, Is Podcasting The New Radio?, Washington Times, 7 April 2005
57
BBC, BBC To Podcast Up To 20 More Programmes Including Today And Radio 1 Speech Highlights, Press
Release, 14 April 2005
58
Mark Thompson, BBC 2.0: Why On Demand Changes Everything, Speech At The Royal Television Society Baird
Lecture, 22 March 2006
59
60
Ofcom, The Communications Market 2005, July 2005, p.88
53


page 11

the podcast “can reach new audiences for our advertisers that we otherwise
couldn’t,” with Mastercard and Orange amongst the first to purchase podcast
airtime.61
5.3.5 Paid subscription
The majority of podcasts (including all those available on the iTunes web site)
are available free, although a few podcast producers have started to
implement a subscription model. Brian Glicklich of Premiere Radio Networks,
which offers podcasts of the popular Rush Limbaugh show for $50 per year in
the US, said: “We chose podcasting as one of our top priorities for 2005, and
we are confident it will successfully drive new subscriptions and revenue,
making us even more competitive with internet and satellite [radio] services.”62
But Forrester Research analyst Ted Schadler has said that “subscriptions are
a non-starter” and predicts that podcasting will eventually diverge into two
types of content: mass-market programming that uses podcasting to attract
listeners and advertisers; and niche programming produced noncommercially.63
5.4

Future implications

The development of podcasting will undoubtedly have an impact on terrestrial
broadcasters, though the extent is as yet unknown. National Public Radio VP
Maria Thomas said that 18 million downloads of NPR programmes have been
made since its podcasting began in August 2005, but admits: “The question
we’re asking ourselves is: is the business model of public radio prepared for a
future where geographic boundaries don’t exist?... I don’t have a silver-bullet
magic answer.”64
An unresolved issue for advertisers is that the user’s complete control over
their listening to a podcast could lead to deliberate avoidance of commercials.
Roger Parry, chairman of Clear Channel International, said: “You have exactly
the same sort of issues that you have with a Sky Plus box. The conventional
thirty-second spot is threatened. The more power you have to listen to
something under your control, the less likely you are to sit through [an
advertisement].”65
Although there is presently no easy way for podcast producers to monetise
their content, it is expected that a supporting value chain will emerge from
primary drivers such as advertising and subscriptions. As with other internet
models, monetisation and a new business model will likely follow increased
uptake of hardware and greater usage of software related to podcasts. The
supporting value chain could become:66

61

Maven Networks, Premiere Radio Network Partners With Maven Networks And Akami Technologies To Deliver
Podcasts Of “The Rush Limbaugh Show”, Press Release, 6 June 2005
Randy Dotinga, Radio Sets Eyes On Podcast Profit, Wired News, 11 June 2005
63
Charlene Li, Getting Real About Podcast Adoption, online blog, 25 August 2005
64
Steve Friess, Podcasting Rolls NPR Fund Raising, Wired News, 5 April 2006
65
66
iPODCASTle, Demystifying Podcasting: A Market Analysis For The Businessperson, July 2005
62


page 12

ADVERTISERS – create advertising content, decide on target strategy
▼
AD BROKERING & ACCOUNTING – connect advertisers with podcast
producers, price advertisements, handle accounting & billing
▼
AD TRACKING + SUBSCRIPTION MANAGEMENT – track impressions in
sponsored podcasts, track subscriptions in paid-for podcasts


page 13

6

AUDIENCE MEASUREMENT

There is great uncertainty as to the size of the audience for podcasts, and
considerable differences of opinion about how quickly the market will develop,
with US estimates varying between 20m and 80m podcast users by 2010.67
Charlene Li of Forrester Research said that “measurement is still really hard to
do” and that “counting podcast downloads is a dubious way to measure usage”
because not all downloads are listened to.68 Sarah Prag, a senior project
manager for the BBC podcast trial, said: “One of the challenges with
podcasting is that there are no audited or reliable reporting mechanisms.”69 A
research report by eMarketer acknowledged that volatile growth in podcasting
had made it difficult to predict where the figures for podcasting will end up.70
The conflicting evidence is itemised below.
6.1

U.S. Research

Research by the Pew Internet & American Life Project in April 2005 found
that:71

In 2005, 29% of owners of MP3 players (6m) had downloaded podcasts
Research by The Diffusion Group in June 2005 found that:72

In 2004, 15% of owners of MP3 player (0.8m) had listened to podcasts

By 2010, 75% of owners of MP3 players (56.8m) are predicted to use
podcasts
Research by Jupiter Research in August 2005 found that:73

In 2005, 7% of internet users had downloaded or listened to a podcast
regularly during the previous year
Research by CLX in August 2005 found that:74

In 2005, 15% of respondents listened to podcasts
Research by Bridge Ratings in November 2005 found that:75

In 2005, 4.8m adults (1.6% of adults) had downloaded a podcast (up from
0.8m in 2004)

Less than 20% of users listened to podcasts on MP3 players

By 2010, 45m users will have downloaded a podcast
Research commissioned by Podtrac in December 2005 found that:76

11% of the population had ever listened to a podcast
67

eMarketer, Podcasting: Who’s Tuning In?, March 2006
Jonathan Fildes, Podcast Numbers Cut Through Hype, BBC News, 10 April 2006
Jonathan Fildes, Podcast Numbers Cut Through Hype, BBC News, 10 April 2006
70
Mike Shields, Study: Podcasting To Grow Ads, Adweek.com, 28 February 2006
71
Pew Internet & American Life Project, Data Memo: Podcasting, April 2005
72
The Diffusion Group, Podcasting Users To Approach 60 Million US Consumers By 2010, Press Release, 15 June
2005
73
Lisa Vaas, What Blogs, Podcasts, Feeds Mean To Bottom Line, eWeek.com, 25 August 2005
74
CLX, Podcasting Popularity More Hype Than Reality, Press Release, 16 August 2005
75
Bridge Ratings, Podcasting To Hit Critical Mass In 2010, Press Release & Presentation, 12 November 2005
76
Podtrac, Men Are Listening To Podcasts But Women Are Getting Hooked Too, Press Release, 27 December 2005
68
69


page 14

Research by eMarketer in March 2006 found that:77

In 2006, 10m US adults had ever downloaded a podcast

By 2010, 50m US adults would have ever downloaded a podcast
Research by Forrester Research in April 2006 found that:78

In 2006, 700,000 households (3%) in the US used podcasts

By 2010, 12.3m households would use podcasts
The Forrester research also found that only 1% of online households in North
America regularly downloaded and listened to podcasts.79 These figures were
considerably lower than other estimates. Analyst Charlene Li explained: “It
doesn’t diminish how powerful or interesting it is, but people need to be
realistic about how many people are listening.” Forrester believed that only
about a third of MP3 Player owners will listen to podcasts on those devices by
2010. Its report cast doubts on whether podcasting creates a level playing field
between corporate media companies on one hand, and amateur content on
the other. The research found that most users were selecting podcasts of
existing content, such as broadcast radio programmes, rather than unfamiliar
content. 80
In the most recently published market research in April 2006, Arbitron found
that:81

27m people aged 12+ (11%) had listened to a podcast

21% of persons aged 12 to 17 years old had listened to a podcast
6.2

European research

In the European market, Forrester Research found that in March 2006:82

2% of online users had listened to podcasts during the past three months
In the UK, market research by BMRB in February 2006 showed that:83

10% of the adult population have downloaded a podcast in the last six
months

17% of adult internet users have downloaded a podcast during the last
six months (28% of owners of MP3 players)

24% of adult internet users intend to download a podcast during the next
six months (38% of owners of MP3 players)

23% of all adults (10.8m) own an MP3 player

9% of all adults (4.2m) own an Apple iPod

a further 4.3m adults are likely to buy an MP3 player in the next six
months
77

eMarketer, Podcasting: Who’s Tuning In?, March 2006
eMarketer, Podcasts: Is Anyone Listening?, 11 April 2006
Charlene Li, Forrester Podcasting Report: Just 1% Use Podcasts, online blog, 5 April 2006,
http://blogs.forrester.com/charleneli/2006/04/forrester_podca_1.html
80
Brian Morrissey, Podcast Listeners Still Few, Adweek.com, 6 April 2006
81
Arbitron, The Infinite Dial: Radio’s Digital Platforms, Report, 2006
82
Forrester Research, The European Podcast Consumer, 2 March 2006
83
BMRB, Podcast Data, press release & accompanying presentation, 15 March 2006
78
79


page 15

BMRB marketing director Steve Cooke said that the findings “suggest that up
to 7.9 million adults could be downloading podcasts in the next six months,
which represents a massive opportunity for advertisers and media owners
alike.”
6.3

Audience issues

Two issues have clouded the measurement of audiences for podcasts:

Downloading does not equal listening. In March 2006, research by Bridge
Ratings showed that 80% of podcast downloads are not transferred to a
portable media player, but are either consumed directly on a personal
computer or simply discarded without listening.84 The tendency of users
not to listen to podcast downloads was confirmed by research by US
public radio station WTMD-FM that found that only 21% of users listened
to every podcast they downloaded, while only 37% listened to most of the
podcasts they downloaded.85

The term “podcast” is not completely understood by the public. Arbitron
found that “the public’s understanding of podcasting is still somewhat
mixed” with considerable confusion existing “about the differences among
podcasting, internet broadcasting and downloadable music” as well as
“streaming, real-time programming or MP3 music”.86
Noting some of the widely disparate estimates of podcast listening, London
communications agency Audacious has argued that podcasting is “all about
the niche, not the numbers” and “provides a fantastic opportunity to provide
niche content to highly focused groups or individuals.”87
One report argues that the assumption that there exists a linear correlation
between the uptake of MP3 player ownership and the growth of podcasting
audiences may be flawed. It expects to see a lag in the growth of audiences
for podcasts, unless there are deliberate efforts to recruit new audiences from
outside the existing user base.88

84

Colin Dixon & Michael Greeson, Recasting The Concept Of Podcasting: Part 1, 23 March 2006,
http://news.designtchnica.com/talkback109.html
85
Stephen Yasko, Stephen Yasko On Podcasting, 16 November 2005,
http://heartsofspace.typepad.com/spatialrelations/2005/11/stephen_yasko_o.html
86
Arbitron, The Infinite Dial: Radio’s Digital Platforms, Report, 2006
87
Audacious Communications, Podcasting: The Niche Not The Numbers, 10 April 2006,
http://www.audaciousonline.com/blog/
88
2005

page 16

7

VALUE OF THE MARKET

One report estimated that, in the US market, podcast producers have spent
between $140m and $7.2bn on software, hardware, hosting fees and
marketing, while podcast users had spent between $224m and $11.2bn on
hardware that enabled them to listen to podcasts ($200m to $10bn) and on
subscriptions to podcasts ($24m to $1.2bn).89
PQ Media found that podcast advertising in the US was valued at $3.1m in
2005 and was projected to grow to $327m by 2010.90
eMarketer predicted that the US podcast advertising market was worth $80m
in 2006, would be worth $150m in 2008, reaching $300m by 2010. The report’s
author said that advertising in podcasts “is in its infancy, to put it mildly” and
that “podcasting is not set to become a new mass-market venue, at least for
the next half-decade”.91

89

iPODCASTle, Demystifying Podcasting: A Market Analysis For The Businessperson, July 2005
PQ Media, New PQ Media Report: Blog, Podcast, RSS Advertising Grow Fastest Among Alternative Media, Surging
198% In 2005 And Forecast To Grow 145% in 2006, Press Release, 11 April 2006
91
Mike Shields, Study: Podcasting To Grow Ads, Adweek.com, 28 February 2006
Rachel Rosmarin, Who’s Paying For Podcasts?, Forbes.com, 6 June 2006
90


page 17

8

BENEFITS
8.1

Consumer Benefits

The user derives the following benefits from a podcast:92

The ability to time-shift an audio or video programme

Space independence in determining where the programme is consumed

An alternative source of programming that does not contain as much
advertising content as commercial terrestrial radio

Relief from perceived frustrations with the homogenous programme
content of terrestrial radio stations

Personalised media content that meets personal needs more directly
than traditional media through substantial fragmentation of available
options
Edison Media Research noted that podcasts can offer “choosier listeners” what
they want, when they want it without, for example, having to wait for the 11pm
Sunday show that is the traditional slot for marginalised minority interests on
terrestrial radio.93
8.2

Industry Benefits

In the public sector, BBC podcasts are rights-protected and time-limited,
allowing users to listen to a podcast an unlimited number of times during the
one-week period following its download. The BBC argues that the ability of
podcasts to provide users with a “catch-up service” for programmes they
missed helps them “to offer even greater public value to licence fee payers”.94
In the commercial sector, existing broadcasters see podcasts as a way to
extend their content to new audiences. “Bumping into us on a non-traditional
platform is very important to us,” said Virgin Radio’s James Cridland. “That
audience is maybe people who don’t [usually] listen to Virgin Radio.”95
Benefits for standalone podcast producers are more difficult to determine
because the business model is, as yet, relatively underdeveloped.

92

93
Marc Fisher, Podcasting: A Made-To-Order Change For Listeners, And Perhaps Stations Too, Washington Post, 10
Apriul 2005
94
BBC, BBC To Podcast Up To 20 More Programmes Including Today And Radio 1 Speech Highlights, Press
Release, 14 April 2005
95
Jo Twist, Radio Has Its Eye On Podcasters, BBC News, 23 September 2005

page 18

9

CONCLUSIONS

In early 2005, even before podcasting achieved improved public visibility
through its inclusion within the iTunes online music store, one commentator
said: “When I look at the radio on my kitchen counter these days, all I can think
about is change – how much radio hasn’t changed, and how much it needs to.”
He noted that young people “are getting conditioned to consuming any media
they want, whenever and however they want it” and suggested that “what
podcasting represents is that consumers want internet-based radio so they can
listen when and how they want.” He predicted that podcasting would: 96

“reach far beyond the boundaries of a single geographic region that will
broaden the appeal to advertisers”

produce “specialised programming that might not work on a traditional
broadcast station”

“cater to narrow interests that would not make commercial sense as
traditional broadcast shows”

“reach wider audiences [globally] and attract the attention of niche
advertisers”
Podcasting can be seen as the starting-point of an enhanced content delivery
system to a wider range of mobile devices. One report said that “it’s possible to
imagine paying monthly fees to hear programming on-demand on the phone,
PC, or in the car. Listeners could buy a song they hear on the radio with the
click of a button. Companies could sell subscriptions and place ads inside
customised traffic information, weather reports, or sports tickers.”97
In the UK market, the BBC has dominated the distribution of podcasts because
it “spends ten of millions making ‘real’ programmes that can have a
considerable shelf-life”, according to media commentator Ray Snoddy. He said
that “commercial radio will have to give far more thought to making sure it
offers more excitement than an iPod selection of the latest tunes” if it wants to
attract interest in its podcasts.98
The trend away from traditional radio and towards internet-delivered content
streams or podcasts is already emerging in the US. Research by Bridge
Ratings found that 54% of 12 to 24 year olds preferred to listen to music
delivered over the internet, compared to 30% who preferred music from
terrestrial radio.99 Podcasting is making an important contribution to these
changing preferences.
Podcast activity on the internet continues to expand at an exponential rate.
Aggregator Feedburner.com announced in April 2006 that subscriptions to
podcasts available from its web site had doubled within the previous six
months to 1.6 million. It estimated that as many as 149,000 podcasts now
existed on the worldwide web.100
96

Arik Hesseldahl, Radio Must Change. Here’s How, Forbes, 27 May 2005
Heather Green, Tom Lowry & Catherine Yang, The New Radio Revolution, Business Week Online, 3 March 2005
98
Raymond Snoddy, Raymond Snoddy On Media: Pod People Will Decide Radio’s Future, Marketing, 17 August 2005
99
Bridge Ratings, How To Make Music Radio More Appealing To The Next Generation, Press Release, 2 December
2005
100
FeedBurner.com, Podcasts Outnumber Radio Stations Worldwide, Press Release, 21 April 2006
97


page 19

The measurement of podcast audiences remains the biggest challenge to the
medium. The Telegraph’s podcast editor Guy Ruddle said: “…..without proper
measurement, how are we ever going to get people to buy into this in a big
way?”101
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk

101

Jemima Kiss, Telegraph’s New Podcast Editor Mulls Over Audio Challenges, 2 February 2006,
http://www.journalism.co.uk

page 20

'Audio Podcasts And The Market For Podcasting' by Grant Goddard

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