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December 10, 2018
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Pandora’s Podcast Genome Project goes live for all

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Last month, Pandora announced it would soon be bringing its “Genome” technology to a new space outside of music: it would leverage a similar classification system to make podcast recommendations, too. Initially, the feature was only available to select users on mobile devices, ahead of a broader public launch. Today, Pandora says its Podcast Genome Project has gone live for all users.

Like Pandora’s Music Genome – its music information database capable of classifying songs across 450 different attributes — Pandora’s Podcast Genome Project is a cataloging system designed to evaluate content. But its focus is on audio programs instead of music.

The Podcast Genome Project can currently evaluate content across over 1,500 attributes, including MPAA ratings, production style, content type, host profile, and more, alongside other listener signals, like thumbs, skips, replays and others. It uses a combination of machine learning algorithms, natural language processing and collaborative filtering methods to help determine listener preferences, the company says.

Pandora then combines this data with human curation to make its podcast recommendations.

These recommendations are live now in the Pandora app’s “Browse” section, under the banner “Recommended Podcasts For You.” Podcasts will also be discoverable throughout the app in the Now Playing screen, search bar, in the podcast backstage passes, and in the episode backstage passes.

At launch, the app is aggregating over 100,000 podcast episodes in genres like News, True Crime, Sports, Comedy, Music, Business, Technology, Entertainment, Kids, Health and Science, the company adds.

Podcasters can also now ask to be included in Pandora’s app by filling out a form here.

Longer-term, a better recommendation system for podcasts could help Pandora as it becomes more integrated with its acquirer SiriusXM. The deal will likely bring SiriusXM’s exclusive programming to Pandora’s subscribers, which would greatly increase the number of audio programs available on its service. Putting the right programs in front of the most interested customers could then drive more people to upgrade to a paid subscription, impacting Pandora’s bottom line.

 

News Source = techcrunch.com

JioSaavn becomes India’s answer to Spotify and Apple Music

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India finally has its answer to Spotify after Reliance Jio merged its music service with Saavn, the startup it acquired earlier this year.

The deal itself isn’t new — it was announced back in March — but it has reached its logical conclusion after two apps were merged to create a single entity, JioSaavn, which is valued at $1 billion. For the first time, India has a credible rival to global names like Spotify and Apple Music through the combination of a venture capital-funded business — Saavn — and good old-fashioned telecom, JioMusic from Reliance’s disruptive Jio operator brand.

This merger deal comes days after reports suggested that Spotify is preparing to (finally) enter the Indian market, a move that has been in the planning for over a year as we have reported.

That would set up an interesting battle between global names Spotify and Apple and local players JioSaavn and Gaana, a project from media firm Times Internet which is also backed by China’s Tencent.

It isn’t uncommon to see international firms compete in Asia — Walmart and Amazon are the two major e-commerce players while Chinese firms Alibaba and Tencent have busily snapped up stakes in promising internet companies for the past couple of years — but that competition has finally come to the streaming space.

There have certainly been misses over the years.

Early India-based pioneer Dhingana was scooped by Rdio back in 2014 having initial shut down its service due to financial issues. Ultimately, though, Rdio itself went bankrupt and was sold to Pandora, leaving both Rdio and Dhingana in the startup graveyard.

Saavn, the early competitor too Dhingana, seemed destined to a similar fate, at least from the outside. But it hit the big time in 2015 when it raised $100 million from Tiger Global, the New York hedge fund that made ambitious bets on a number of India’s most promising internet firms. That gave it the fuel to reach this merger deal with JioMusic.

Unlike Dhingana’s fire sale, Saavn’s executive team continues on under the JioSaavn banner.

The coming-together is certainly a far more solid outcome than the Rdio deal. JioSaavn has some 45 million songs — including a slate of originals started by Saav — and access to the Jio network, which claims over 250 million subscribers.

JioSaavn is available across iOS, Android, web and Reliance Jio’s own app store

The JioMusic service will be freemium but Jio subscribers will get a 90-day trial of the ad-free ‘Pro’ service. The company maintains five offices — including outposts in Mountain View and New York — with over 200 employees while Reliance has committed to pumping $100 million into the business for “growth and expansion of the platform.”

While it is linked to Reliance and Jio, JioMusic is a private business that counts Reliance as a stakeholder. You’d imagine that remaining private is a major carrot that has kept Saavn founders — Rishi Malhotra, Paramdeep Singh and Vinodh Bhat — part of the business post-merger.

The window certainly seems open for streaming IPOs — Spotify went public this past April through an unconventional listing that valued its business around $30 billion while China’s Tencent Music is in the process of a listing that could raise $1.2 billion and value it around that $30 billion mark, too. JioSaavn might be the next streamer to test the public markets.

News Source = techcrunch.com

The battle over the driving experience is heating up and will be won in software  

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Sirius XM’s recent all-stock $3.5-billion purchase of the music-streaming service Pandora raised a lot of eyebrows. A big question was why Sirius paid so much. Is Pandora’s music library and customer base really worth that amount? The answer is that this was a strategic move by Sirius in a battle that is far bigger than radio. The real battle, which will become much more visible in the coming years, is over the driving experience.

People spend a lot of time commuting in their cars. That time is fixed and won’t likely change. However, what is changing is the way we drive. We’re already seeing many new cars with driver assist features, and automakers (and tech companies) are working hard to bring fully autonomous cars to the market as quickly as possible. New cars today already contain an average of 100 million lines of code that can be updated to increase driver assist options, and some automakers like Tessla already offer an “autonomous” mode on highways.

According to the Brookings Institute, one-quarter of all cars will be autonomous by 2040 and IHS predicts all cars will be autonomous after 2050. Those are conservative estimates, as we are likely to see major changes in the next 10 years.

These changes will impact the driving experience. As cars become more autonomous, we can do more than simply listen to music or podcasts. We may be able to watch videos, surf the web, and more. The value of car real estate is already valuable, but it’s going to skyrocket as we change the way people consume media while driving.

The Pandora acquisition was a strategic move by Sirius to gain the necessary assets so that it won’t fall behind in this space — and to get into the fast-growing music streaming business, where users consume music at home, work and at play.  While Pandora’s music library is arguably second tier, it’s also good enough that it can provide pretty much every artist most people want. This is often how high-priced mergers happen – one party is concerned about falling behind and pays a premium to purchase the other company’s assets. It’s also a bet by Sirius about the driving experience of the future.

As the battle over the driving experience heats up, we will initially see companies like Google, Amazon and Apple start dipping their toes in the market. They might do that through investments in startups, rolling out their own services, or purchasing competitors. Some of those large tech companies already have projects around autonomous cars. Uber may even be interested in this market.

For now, Sirius probably doesn’t need to worry about competition from startups. They won’t be able to grow big enough fast enough to get a sizable share of the market. A more likely scenario is that startups will work on software that offers a unique functionality, making it an attractive acquisition target by a larger company.

This is going to be an interesting battle to watch in the coming years, as cars essentially become software with four wheels attached. Companies like Sirius know this is an important space and that the battle over the driving experience will be won in software. The acquisition of Pandora is only the beginning.

News Source = techcrunch.com

Pandora brings its Genome technology to podcast recommendations

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Earlier this year, Pandora challenged Spotify’s personalization capabilities by using its Music Genome technology to create dozens of customized playlists for its users. Today, it will begin leveraging similar technology to do the same for podcasts. The Podcast Genome Project, as it’s called, is now powering a new recommendation system that will be combined with human editorial oversight to offer content suggestions for Pandora users.

Like the Music Genome – the music information database capable of classifying songs across 450 different attributes – the Podcast Genome Project is also a cataloging system designed to evaluate content. But in this case, its focus is on audio programs.

Says Pandora, the Podcast Genome Project can currently evaluate content across over 1,500 attributes like MPAA ratings, production style, content type, host profile and more, as well as listener signals, like thumbs, skips, replays, and more. It uses machine learning algorithms, natural language processing and collaborative filtering methods to help determine listener preferences.

Also similar to the Music Genome, the Podcast Genome technology is combined with human curation to make its recommendations.

The system will do more than suggest shows to try out, Pandora notes. In addition to finding new podcasts, it can also suggest which episodes to listen to at the right time.

The Pandora app will direct users to its recommendations in the app.

The goal with the new project is to help solve the issues around podcast discovery, which is an increasingly difficult challenge as the genre’s popularity explodes with more podcasters creating shows. However, Pandora points out that the majority of U.S. users aren’t regular podcast listeners.

“It might feel like podcasts are ubiquitous, but, eighty-three percent of Americans aren’t yet listening to podcasts on a weekly basis, and a majority of them report that’s because they simply don’t know where to start,” said Roger Lynch, Pandora CEO. “Making podcasts – both individual episodes and series – easy to discover and simple to experience is how we plan to greatly grow podcast listening while simultaneously creating new and more sustainable ways to monetize them,” he said.

Pandora was recently acquired by SiriusXM for $3.5 billion – a deal that will likely bring some of SiriusXM’s exclusive audio programming over to Pandora, increasing its lineup of available audio shows. Technology that’s capable of analyzing these sorts of programs for the purpose of recommendations could be useful there, too, in the future.

The personalized podcast destination is launching into beta today to select Pandora users on mobile devices. It will expand to the wider public in the weeks ahead.

News Source = techcrunch.com

What’s next for podcasting?

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The podcast market will discover the answer to a foundational question about its future in the next few years. Will it continue along the path of music streaming, where all podcasts are available everywhere on free, ad-supported tiers? Or, will it follow the path of streaming TV into paid subscription services with exclusive content?

Today, effectively all of the industry’s revenue is from advertising — at least in the United States. However, we’re seeing the first steps being taken toward paid subscriptions and exclusive content. Based on numerous discussions I’ve had with top figures in podcasting over the last month, it’s clear that popular shows are getting large offers for exclusivity on podcasting platforms, major Hollywood players are entering the market, and some top VCs are willing to back new streaming platforms taking a Netflix approach to podcasts (like Luminary Media which raised a $40 million seed round).

Many in the industry are deeply skeptical of that business model and for good reason: we don’t have concrete evidence that consumers in the US will pay for podcasts and ad revenue is becoming quite lucrative for the top shows as the format gains popularity. But that precedent has hardly been entrenched, as the sector is only just now gaining mainstream consumer interest and getting attention from Hollywood.

And, there’s a macro problem with betting on ads. The dominance of Facebook and Google over all digital ad spending has already driven a shift to subscriptions across music, video, and publishing. Even with dramatic market growth, podcasting doesn’t have a comparative advantage in competing against the scale and ad-targeting of the duopoly.

Subscription tiers and exclusive shows (akin to Netflix Originals) can, on the other hand, provide a virtuous cycle of quality content and stable revenue, generating recurring revenue directly from consumers who might ultimately pay for multiple streaming subscriptions to access different shows.

Could podcasting go the direction of streaming TV, with subscription tiers and original series? The breakout success of House of Cardsthe first Netflix Original—set the stage for Netflix’s dominance in streaming TV.

Podcasting’s future looks more like Hollywood than like NPR radio

The annual Infinite Dial survey by Edison Research tracked that the percent of Americans over age 12 who listen to a podcast in a given month grew steadily from 9% in 2008 to 26% (or 72 million people) in 2018. Fifty-four million Americans, or 17% of those over 12, are weekly podcast listeners with a mean weekly listening time over 6.5 hours.

The popularity of podcasts still exists primarily within a demographic niche, however. Roughly half of podcast listeners make $75,000 or more in annual income and a clear majority have a college degree (in fact, one-third have a master’s degree). This highlights how much potential for audience growth there still is. Podcasts are still mainly formatted like NPR radio shows, with hosts discussing politics, business, or society and a particular audience demographic tuning in as a result.

But podcasting is just a content medium and should be filled with shows that appeal to all different types of people, just like music, TV, film, publishing sites, and YouTube each have a vast range of content for everyone. Tom Webster, the SVP of Edison Research who co-authors that big annual survey on podcasting, highlighted in a recent blog post the discrepancy between the format and topics of the most popular podcasts and those of the most popular TV shows.

Addressing this gap in diverse show types is the thesis behind large new podcast production companies like Gimlet Media, Wondery, and Endeavor Audio. Endeavor Audio launched on September 13 as the podcast division of entertainment conglomerate Endeavor, dedicated to financing, developing, and marketing podcasts made for as diverse a set of topics and styles as there are in TV: scripted dramas, competition shows, documentaries, etc. that appeal to different audiences. Endeavor also owns WME, the world’s largest talent agency, giving it distinct advantage in creating new shows that draw on the skills of top creative talent in Hollywood. The upcoming wave of podcasts crafted to be more like TV shows than radio shows is what could bring tens of millions new listeners into the podcast market.

That will only be accelerated through music streaming services’ entry into the market and the rapid consumer adoption of smart speakers. Spotify, Pandora, iHeartRadio, and others have made podcasts a priority over the last year, promoting shows to millions of users who aren’t already into podcasting. Smart speakers like the Amazon Echo and Google Home make it easier for people who hear about a podcast to try it (just ask Alexa to play it) and will likely increase podcast listening among those in age groups that have lower smartphone penetration (children and people over 55).

Advertising isn’t the best path forward

Last year the US market size for podcast ad revenue was only $314M and this year it will still be around $400M (according to the IAB). That’s extraordinary annual growth for an industry but it’s still tiny in absolute value. Justine and Olivia Moore at VC firm CRV crunched the numbers to show that podcasting makes 10x less money per hours consumed than any other major content medium. There’s a lack of monetization on the vast majority of podcasts: the minimum number of downloads per podcast needed to enroll in the industry’s ad marketplaces or start discussions with most advertisers is 50,000. As they noted, this is attributable to a range of issues like lack of programmatic advertising, lack of analytics, and lack of consistent measurement standards.

Life is admittedly getting good for the most downloaded shows now that the podcasting market is getting serious attention. One executive I discussed this with (who represents several top podcast creators) says there are a handful of podcasts generating eight-figures in ad revenue per year, a rapidly growing tier making seven-figures, and a large “middle-class” making six-figures. That’s before income from touring, merchandise, and book/film/TV deals. The going rate for ad spots is anywhere from $20-50+ CPMs and podcast ads tend to have a higher conversion rate than video ads.

As General Manager of Endeavor Audio – the new podcasting division of entertainment conglomerate Endeavor – Moses Soyoola is overseeing a group that’s bringing top Hollywood talent into the podcast space and financing new types of shows.

But near-term financial gains are not the primary reason that big names in Hollywood are getting interested in producing podcasts, according to Endeavor Audio general manager Moses Soyoola. When we spoke recently, he explained that while the income can reach into the seven figures on successful shows, that’s still less than what they can make in other creative projects. They see podcasting as a brand-building mechanism, however, and as an opportunity to understand a new storytelling format that could become even more lucrative in the future.

As with all ad-dependent content, the losers right now are those with passionate niche audiences and those producing big-budget shows that advertisers treat the same even if audiences find much deeper value in. A creator with a devoted fan base of 30,000 listeners cannot currently tap into advertising nor easily turn to subscriptions as an alternative. Listening to an hour’s worth of news discussion that the hosts record over a couple hours day-of generates roughly the same ad revenue as listening to an hour installment of a show that takes months to produce.

With the growing number of narrative podcasts being created by Endeavor Audio and others, the need to include numerous ad spots throughout them is disruptive, pulling audiences out of the story. It constrains the format and limits content within the boundaries of family friendliness that major advertisers are comfortable with. This is like the historic difference between network TV shows and HBO shows, which — freed from ad breaks and advertiser concerns — became the crown jewel of TV dramas and went on to consistently top the Emmy Awards winner list.

Would people pay for podcasts?

China is the inverse of the Western podcast market. The Chinese “podcast” market dwarfs that of the US because it is the norm to have paid subscriptions for shows rather than rely on advertising. To my understanding, the definition of podcast here may be broader than the scope in the US — by including audio courses — but the Chinese government estimated the market for paid podcasts alone as $7.3 billion in 2017.

We know consumers in the West are willing to pay subscriptions for film/TV and for ad-free streaming music, so why not for podcast streaming? New content formats often start free, have lagging monetization, then as the audience grows enough and creators experiment enough, premium content rises up that people are willing to pay for. Podcasts have been around for two decades but are just now going mainstream and seeing serious investment from Hollywood.

We saw with music streaming and satellite radio that many consumers are willing to pay in order to eliminate audio ads from music that’s otherwise free to listen to. Spotify has made a big push into podcasts over the last few months; it creates branded podcasts in collaboration with advertisers but can’t remove ads that are within podcasts it distributes. As podcasts turn to programmatic advertising — and large streaming services like Spotify push them there in order to serve up the ads — it would be surprising if Spotify didn’t make podcasts ad-free for its Premium tier subscribers and encourage podcast listeners to go Premium.

Most podcasts aren’t worth paying for, just like most articles on the internet aren’t worth paying for. Paywalled content has to be exceptional to stand out from the noise and get consumers to open their wallets. The freemium model is most likely to become the norm in podcasting, with most podcasts available free and ad-supported but some particularly high-quality shows restricted to a paid subscription tier that’s ad-free.

Streaming competition will drive exclusivity

If we’re being honest, the existing podcast streaming services — and there are many — are all the same. They are simple utilities for searching for and playing a show. No one has cracked the nut of discoverability in a differentiated way: making podcasts easy to discover based on topic and style and having a personalized recommendation tool that works as well as Pandora and Spotify music recommendations do.

Streaming services of any content format struggle to differentiate on user interface alone. Users are there for the content — that’s the product they’re after. So ultimately, the way to differentiate is via exclusive content that audiences eagerly want. That’s true whether the service has a paid subscription or not, but maintaining a profitable subscription tier is nearly impossible if one’s competitors are able to offer all the same content for cheaper. Differentiation requires differentiated content available in the subscription that can’t be gained elsewhere: high-quality original shows.

This past summer, Spotify launched its first Spotify Original Podcasts, including a $1 million deal with comedian Amy Schumer to develop “3 Girls, 1 Keith” (which it just renewed for a second season). Schumer’s podcast isn’t exclusive to Spotify but it’s easy to envision the streaming service signing future podcast deals as exclusives as its base of podcast listeners grows (it has rapidly become the second most popular podcast platform after Apple’s Podcasts app).

Each individual I’ve spoken to over the last few weeks who runs a leading podcast production company said they are getting approached by numerous streaming platforms about exclusive shows. Most aren’t taking the deals, at least not yet, but it’s clear the industry is about to run this experiment over the next couple years and see if consumers buy in.

A couple of the executives I met noted that the deals top podcast services are offering for exclusivity are quite lucrative, but when you factor in how much the reduced audience size that comes with being exclusive limits touring, merchandise sales, and potential for a book/film/TV deal, it’s a tougher sell.

That has been true, but I think it’s quickly changing. Given how much consumer adoption of podcasts is poised to grow, the top few podcast streaming services (by monthly active users) could each enable an exclusive podcast to still reach an audience in the millions of listeners. In particular, I’m talking about Apple Podcast, Google Podcasts, Spotify, Pandora, and iHeartRadio given their pre-existing install bases. It’s also a rational decision for each of them to overpay for exclusivity of hit shows in these early days of the market — the short-term loss on a given show is an investment in becoming the preferred streaming service for millions of new podcast listeners.

The streaming platforms don’t have the leverage to negotiate ownership over exclusive podcasts—there’s too much competition between them and optionality for podcast creators—so creators will retain rights to develop touring, merchandise, book/film/tv deals, and other revenue streams. As a successful TV producer explained to me, the consideration of turning a podcast into a TV show is the same as turning a book into a TV show: it’s about whether it’s a captivating story that engages the audience; the existing audience size will affect deal terms but a hit podcast only being on iHeart or Spotify wouldn’t inhibit it from getting a deal.

iHeartMedia

If one company is uniquely positioned to offer exclusive shows without a paid subscription tier, it’s iHeartMedia (which acquired the Stuff Media podcast network in September). In addition to its iHeartRadio streaming service, it can syndicate shows across its radio stations which reach 250 million Americans per month. That could generate more ad revenue than from a show existing solely across podcast apps and give it a bigger fan base to benefit touring and other revenue streams.

Looking at how exclusivity could impact consumers’ experience, it’s notable that people are typically on the hunt for just one podcast to listen to in a given session. With lengths typically 25-60 minutes, this is most similar to picking out a TV episode. Music services need full libraries of the world’s songs because people listen to a wide range of 3-4 minute songs in the same sitting and organize them into custom playlists of every imaginable combination. Having music divided between separate streaming platforms would be disruptive to the core experience of a music listening session. Switching apps to listen to a different podcast might not be any more inconvenient than doing so for TV shows on different streaming services.

Podcasting should embrace “listener revenue”

Direct “listener revenue” from paid subscription tiers enable a whole swath of niche content creators to make a living creating high-quality podcasts for a small, passionate audience and they enable worthwhile return-on-investment for big budget productions that audiences find deep value in. Importantly, subscription tiers across the major podcast streaming platforms would drive an industry-wide focus on shows that gain popular acclaim rather than shows that maximize initial downloads or streams (just like subscription publishing incentivizes quality over clickbait).

Breakout shows that receive pop culture buzz will be critical to any paid subscription tier in podcasting gaining traction, like the success of House of Cards and Orange is the New Black were critical to Netflix gaining respect for its Netflix Originals and differentiating from competitors. Such breakouts will likely involve a big name from Hollywood whose existing fan base drives a critical mass of initial listeners, and whose name recognition lends credibility to a potential paid tier subscriber. And it will almost certainly be a narrative format rather than another talk show.

Incumbents moving into podcasting from music streaming (or that are operating systems able to pre-install their app) have a distinct advantage here over startups dedicated to podcast streaming. Established players can expose millions of existing users to their own shows and bundle premium podcasts into existing subscription plans. Podcast streaming startups hoping to break through will need a lot of initial capital to develop their own shows and will need to seek bundling partnerships with companies that already have distribution — like mobile carriers and subscription video platforms. Luminary Media in NYC, founded by Matt Sacks of NEA, might be the first to launch with this approach: with a $40 million seed round, it’s aiming for a majority of content on its upcoming subscription streaming service to be its own originals within 3 years. Don’t be surprised if a couple other VC-backed podcast apps take this route in the year ahead as well.

It is likely we will see a combination of exclusive shows and paid subscription tiers develop on several platforms over a period of the next 18-36 months. It won’t happen overnight, but looking at the precedent set in other content formats and having spoken to two dozen senior figures in the industry during the past month, we seem to be in the early days of this shift, driven by the growth of podcasting from talk shows into a broader entertainment medium.

News Source = techcrunch.com

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