Podcasting is the one media trend top VCs keep talking about. 5 investors shared which companies they're betting on and why.
- 2020 is shaping up to be a big year for podcasting after Spotify kicked things off with its acquisition of Gimlet in 2019, and it's the one area of media that VCs are all talking about.
- We talked to five VC firms including Union Square Ventures and Greycroft about why they're big on it and which companies they're high on.
- They point to the market for paid podcasting and its low-cost appeal as a way to test interest in new content areas.
- Click here for more BI Prime stories.
2020 is shaping up to be a big year for podcasting. Spotify set the stage for the boom in 2019, spending $400 million to buy Gimlet, Parcast, and Anchor, and podcasting was one of the big trends at CES.
Talent agencies have gotten more involved, helping podcast stars move to other media, while top podcast platform Apple has reportedly started flexing its muscles, talking up content deals with podcast publishers. Meanwhile, Amazon and Google, with their smart speakers, are driving the audio ecosystem, and while their speakers don't carry traditional advertising, Amazon is cracking open the door more to get marketers promoting its Alexa voice platform.
After being burned on digital media startups, audio is the one media trend VCs keep talking about. We talked to five who are hot on the space about why they're big on it and which companies they're betting on.
There's a market for paid audio
$100 million podcast startup Luminary faced backlash over its plan to become the "Netflix of podcasts," but VCs still see a lot of potential for paid-for podcasts.
Comcast Ventures is an investor in TuneIn, an online radio streaming service that was early in putting audio content behind a paywall.
Amy Banse, managing director and head of funds at Comcast Ventures, said that now that people been trained to pay for video and other online content, the idea of paying for podcasts isn't far behind.
"People have been trained to pay for video, and I think they'll pay for audio content as well," Banse said.
Lightspeed partner Nicole Quinn said this is already happening in China, where a burgeoning paid audio industry is at the core of an estimated $7.3 billion knowledge economy.
"We're always thinking cross-border," she said. "That trend is coming to the US, where there's premium content people will pay for."
It's a way for companies to market to customers
Podcast advertising is projected to more than double to $1 billion advertising by 2021 from 2018, according to eMarketer. Most of that advertising has traditionally been direct-response, but it's becoming more mainstream as more advertisers are drawn to the intimacy of podcasting and its loyal audiences. Marketers aren't lost on the trend.
Dana Settle is a founding partner at Greycroft, whose portfolio includes Wondery, the company behind podcasts "Dirty John," "American History Tellers," and "Business Wars."
"We think as a medium, it's super interesting and a big growth area, in terms of platforms but in the ways our consumer companies are using podcasting to engage their audience in really interesting ways," she said.
It fits with people's behavior
In addition to consumer goods makers, media companies are using audio as a relatively low-cost way to test out the market for people's interest in a subject before investing more heavily in content creation. One of the best examples of this is The New York Times, whose "The Daily" has quickly become a top news podcast.
"Audio is going to become an increasingly big deal," said Fred Wilson, cofounder and partner at Union Square Ventures. "What The New York Times has done with 'The Daily' is really incredible ... A lot of people, that's the only New York Times content they consume."
He noted that the popularity of Apple's Airpods will help propel audio as a medium.
Heather Hartnett, CEO and general partner at Human Ventures, sees audio being a good way for media companies to test content, but also warned that the delivery of audio content is still archaic and hard to measure.
"We are still in the early days of podcasting," she said.
