Meta (E)

0:00In college, I briefly served on the Committee on Committees. Years later, I gave a speech at the Association for Associations. And you've probably guessed, but this is a podcast about podcasts. Hey, it's Arav, and this is a special archived episode of Akimbo.

0:28Podcasts. I probably don't have to explain what they are. You're listening to one. There are 700 ,000 podcasts currently available to anyone with an app that lets them listen to podcasts. This is a podcast about why they are so poorly monetized, where they are going, who is listening, and what the future holds for this new, fast-growing form of media. Most of the stats I'll be sharing with you are on the show notes page at akimbo.link from a long, detailed report from Li Qin, Andrew Chen, and Connie Chan. So here we go. We'll begin with this. Podcasts are growing even faster than you expected.

1:1825 % of the population of the United States listens to at least one podcast every week. And if you are one of those weekly listeners, which is 25 % of the population, you are spending on average six and a half hours a week listening to podcasts. There is no medium I am aware of that has grown at that pace with the exception of browsing the internet. I figured that most of the people who were listening to podcasts were listening in their car. Turns out 60 % of the people who listen to podcasts are doing it at home or at work, and only 3 % are doing it at the gym, leaving the car and other activities.

2:06I have regularly seen Uber and Lyft drivers who obviously have a smartphone in their car listening to the radio instead. And I wonder if you were in your car all day and you could listen to streaming music or free podcasts, why on earth would you listen to AM radio? But that's part of what's going on here is that we are seeing a cultural and intellectual schism about how people are consuming this medium. The first thing to understand is that it is much more popular on iPhones than on other phones, partly because the original popular podcast listening app was built right into the iPhone. And partly because since the iPhone is a luxury good, the people who bought it are more likely to be spending their time looking for new forms of media, looking for new ideas, challenging themselves because they're neophiliacs.

3:13They like the idea that they have this expensive device and they're using it to listen to the new stuff. So that skews the demographics of the people who are listening to podcasts. So at one end, you've got people who are listening to sports radio on AM or listening to a top 40 station. And at the other extreme, you've got people who are listening to an 11-hour podcast about Genghis Khan. nonetheless the letter from the pope is one of those communications that if kuyuk was thinking about converting to christianity that letter might have talked him out of it because the letter translated you know four different times that john of plano carpini hands to the new mongol ruler is untranslatable when he reads it and by the way they have found this exact letter and the response in the Vatican's records.

4:12And when you read it, the first thing you think of is that it's the most idiotic letter you've ever seen written to anyone who's totally unfamiliar with the Christian doctrine. Because almost the entire letter is this attempt to explain the divinity of Christ and the Trinity and the virgin birth and all this kind of stuff. But it's not written like you're speaking to someone who doesn't know about it. It's written like you're speaking to someone in your own flock who's heard this story a million times. But at some point in every conversation about media, we end up talking about money. And money has driven the media in our lives, and it's the media in our lives that has driven the culture.

4:59So one reason we are so fraught and filled with fear about public events is cable news. Cable news makes money when people tune in. People tune in when they are afraid, when there is a situation, when there is a crisis, or at the very least, a fight. So what do the cable news people do? They invent the fight. They invent the fear because that gets them more attention, and more attention gets them more money. If cable news were more like NPR, which means that they're not selling ads and they're not dependent on ratings, I think the tone of the culture would be different. That what we're doing is filling our lives with link bait and click bait and arguments and noise because the media landscape makes money by creating those things.

6:02and yet podcasts. Podcasts. Sure, there are a few true crime podcasts. There are podcasts that are cliffhangers. There are podcasts that are designed to get us stressed out. But with the exception of those, podcasts are a lot like the bookstore. They are filled with thoughtful conversations among people who care about specific topics. Is there money in it? So let's break that down a little bit. In 2019, there's going to be$515 million spent sponsoring U.S.-based podcasts, about half a billion dollars. It sounds like a lot of money until you realize it's only a third of how much money is spent running ads at the movie theater.

6:57Ads at the movie theater is a three times bigger business than all of podcasting in the U.S. put together. And the key sentence is this one. When we divide it out, podcasts monetize at one penny per listener hour. So for every hour that someone is listening to a podcast, an advertiser spends a penny. Now, without context, It's hard to know if that's a lot or a little. So here's your context. For radio, it's 11 cents, more than 10 times as much. Television's 13 cents, not much more. The internet, 24 cents. And my theory there is because you're clicking a lot of stuff over the course of the hour.

7:46It would be like changing the channel on your TV every six seconds. magazines get an astonishing 57 cents per hour spent by a reader and newspapers 72 cents. So how do we explain this? Well, I have a couple of theories and these are mine, not from the report. Theory number one, please note that the amount you get goes up the older your medium is, with one exception. So newspapers, the oldest medium, get the most per hour, followed by magazines, and then we flip internet and radio. Then there's TV, and the last is podcasts, the new one. What this tells me is that advertising is largely sold, not bought.

8:39What this tells me is that the arc of how much you pay for advertising is how entrenched is the industry because the people who buy ads, with the exception of the internet, are almost never spending their own money. The people who are buying ads are buying them so that they can tell their boss they bought some ads. That question, what will I tell my boss, fuels so much of what drives our culture. So if you're an advertiser at Kraft or General Foods or Harley Davidson, and you go to your boss and say, I spent all my magic beans on a bunch of podcasts, you might not get promoted. But if you say, I bought a Super Bowl ad, the boss knows exactly what you just did.

9:27And that's because there's a dance between the people who buy ads and sell ads. And a lot of people who are in positions of authority got there because they spent years working their way up on a medium that's been around for a while. Now, the exception I said is the internet. And the reason is the internet, unlike all the other media I've just told you about, is a direct marketing medium. Direct marketing is action marketing. I run an ad at 2 p.m., and at 2.05, someone clicks and sends me money. Google is the giant Godzilla of online direct marketing. When they got started, you could buy a click for a penny or a nickel.

10:14And what would happen is this. An entrepreneur is busy buying clicks for a nickel that she's turning into 100 bucks every time because she's selling something very specific to a very specific group of people. But then her competition sees what's happening because they've been busy Googling themselves. and when they Google themselves, they see the ad for their competitor. And they look at that ad and Google is happy to tell them, their competitor paid a nickel and you can have it if you pay a dime. And so they pay a dime and so the auction is on. And now there are many ads that cost$50 or$100 a click.

10:53In the current election cycle, candidates are paying between$50 and$75 to get one donation of just a dollar. They are willing to engage in that auction because it's worth it to them to win it. This is direct marketing, measured marketing. And the internet has scaled super fast because it has undermined the principle behind most other advertising. And that is the principle of, we don't know which one works because it takes too long because it's too hard to measure. Back in the 90s, when I was one of the first people selling internet advertising, we would go to ad agencies and to clients, and they would say, well, what's your ROI?

11:37And we would say back to them, what's the ROI, the return on investment, of the TV ads you're running? Because you don't know. You don't know what the ROI is because you can't measure what person saw your ad Saturday at 3 p.m. during that golf tournament. And then, six months later, bought a Mercedes. It's unmeasurable. And that's where the ad marketing complex grew. That's why magazines, newspapers, TV, their ad rates are so high. Because all you need to do is pay a penny more than the competition. which leads to the next big idea, which is really important. Except for the direct marketing of the internet, all other forms of media are based on scarcity.

12:27Only three big TV networks, only a few cable TV networks, only 20 giant magazines, only a couple newspapers in a city. What this scarcity means is that your competition can box you out. You can find yourself with no share of voice. And so the psychology was, we better buy this to have a presence. We need to be an Esquire and GQ and the New Yorker, because if we're not, our competition will get more share of voice. And so these media platforms were organized to be perfect to sell ads in. Podcasting? Podcasting, not so much. Because we begin with this. The Internet's the first medium in history that wasn't built to make advertisers happy.

13:19We have television because we needed a place to run TV ads, not the other way around. The reason we have magazines is they were looking for a place to put magazine ads. but that's not what the internet was built for. And then the add-on of podcasts, the idea that we can stuff voice through an RSS feed, that takes it to a whole new level because podcasts, hard to measure, and podcasts, not scarce. Anybody can make a podcast. In fact, anybody should. That's why we run the Podcasting Fellowship at akimbo.com because having a podcast is a great idea. It clarifies your thinking. It lets you share your voice, but it is not a good way to make money.

14:11This podcast is in the top 1 % of all podcasts when it comes down to its audience. The median, The median podcast has 124 listeners. Not 124 million. Not even 124 ,000. 124. 124 listeners per podcast. It's estimated that more than half of all podcasts haven't had a new episode come out in months. and one of the reasons is there are 700 ,000 podcasts with a median listenership of 124. So sure, the podcasts that are among the top 1 % can probably make a living, but most of the other ones won't. But they will be replaced because anyone can make a podcast. And because there's so much scarcity, it is very difficult for even the larger podcasts to ratchet up their pricing.

15:14Because the buyer, who is used to the direct marketing of the internet, because that's where they lumped podcast buying, is busy saying, what's your ROI? What's your click through? How do I measure? What someone needs to say to these buyers is, that's not the way most advertising works, that the advertising that got you here was brand advertising, unmeasurable advertising, influential advertising in a place that wasn't noisy, places like newspapers and magazines, where you can't tell for sure it worked, but if you do it long enough, it will work. And so podcasts have these two problems, no scarcity, and they're being sold to direct marketers.

16:00podcasts don't need advertisers they need sponsors they need patient long-term advertisers who understand that the podcaster is talking directly to curious smart people who have volunteered to spend a half an hour or an hour in an intimate relationship with someone who is talking with them, not at them. And that's going to take a while. And in the meantime, people are trying every trick they can think of. They're trying to become the HBO of podcasting by taking a bunch of podcasts off the market, putting them behind a paywall, and seeing if listeners will pay to hear them. It's harder than it sounds.

16:47Because when HBO came along, your choices were HBO or one of the TV networks. Cable made it harder to be HBO because cable put a whole bunch of other stuff in front of people. But HBO had enough of a head start that they could build The Sopranos, that they could bring TV to people who wanted to see it. But the thing is, it takes millions and millions of dollars to make The Sopranos. It was really hard for TMC or A &E or Bravo to mount a show like The Sopranos. But podcasts? Podcasts, even the most expensive ones, are really inexpensive to make. So it's hard to imagine that people will pay to subscribe to a specific podcast on an issue that hasn't even been brought up yet.

17:40Sure, there are edge cases, the Patreon case of sponsoring directly a specific podcaster. I can totally see that working, but that makes this a long tail cottage industry, one that we cannot compare to radio or to magazines or even to movie theater advertising. Because the culture of the people who buy ads runs really deep. And that culture says, what do people like us buy when we buy media? And so far, they buy one of two things. They buy the brand ads their bosses used to buy, or they buy the direct marketing that they can prove works. And podcasting right now is neither one of them. So where does this all lead us?

18:31Where it leads us is the fact that because it's pretty cheap to make a podcast, because the people in the podcast business are generally talented and open-hearted, wanting to work to make the medium better, it's not going to go away. But what's fascinating to me to watch is how will the people who pay for all this pay for it in a way that changes how the medium works? We've already seen that some advertisers are swayed by the false siren of reach rather than buying four specific podcasts that add up to the group they seek. they would rather buy one giant podcast at a premium that gets them a whole bunch of people they don't want because we're swayed by big numbers.

19:21And the way you get big numbers is by becoming like cable news, becoming like sports radio, yelling a bit, being funny, talking about true crime. So yeah, we're going to have plenty of that. But I think in the long run, we're ending up with a bookstore model. The bookstore model says no one ever got rich owning a bookstore. Every once in a while, an author comes along who does just fine. J.K. Rowling is a billionaire. But in general, you should write a book because you want to write a book, not because you want to get rich. So that's my rant. And thank you for listening to my podcast. We'll see you next time.

20:01Hey, Seth. It's Maria. Hey, Seth. My name's Kyle. Reading, Seth. This is Stephen out in Madison, Wisconsin. Hi, Seth. Alicia from Charleston here. Hi, Seth. This is Anupam. Hi, this is Caitlin. Hi, Seth. Warm greetings from Curacao. Hey, Seth. My name is Nick Ryan from Pittsburgh, Pennsylvania. Hey, Seth. This is Rex. Hey, Seth. Hi, this is Vasilis from Greece. Hi, this is Roberta Perry. My question is... And that completes my question. Thanks, as always, for your questions. I really love to hear from you. All you need to do to ask a question is visit akimbo.link, that's A-K-I-M-B-O dot L-I-N-K, and press the appropriate button.

20:43While you're there, check out the show notes. Hi, I recently heard an interview between Tim Ferriss and Seth Godin, and something that I heard on it is something that I really want more information about, and that is challenging children to solve problems in a way that is both developmentally appropriate and helpful towards their progress, as well as enables the parents to get closer to them. I would love to get some ideas in that regard. I have an almost eight-year-old daughter who I think is very bright, but could definitely use some help in that area of challenging. And I'm just not coming up with ideas.

21:25Is there a podcast that you've already done or one that you can do just focusing on that issue? Thanks. Yes, thank you for this. And your daughter is lucky to have you. I'm doing an upcoming episode about interesting problems, but here's a short preview. Basically, the hard thing, the difficult thing, the important thing about parenting exceptional children in a modern world is teaching them independence, which requires setting them up to be wrong, setting them up to do things that don't work. Back when they had the Maker Faire, they had a very vibrant shop at the back where you could buy stuff, Arduino, cables, wires, little mini monitors, and sometimes even Lego.

22:16But what saved the Lego company were Lego kits that instead of selling kids and their parents blocks, they sold them kits with only one way to be assembled because it fits our mindset. It fits the model that parents and teachers have, people who mean well, which is there is one way to follow the instructions, one way to put it together, one way to be right. and the essence of my argument and the hardest thing you can do is set your kids up to do things where there is more than one way to be right and many ways to be wrong. To challenge kids not to meet spec, but to write the spec. That an eight-year-old probably would benefit from running a business, a simple business, selling iced tea on the corner or something.

23:16but not if you give them the manual. If you give them the manual, then all you've taught them is that they need to follow instructions. Lots of people are teaching them to follow instructions. How can we teach kids to lead, to write the instructions, and most of all, to be generous? Hi, Seth. This is Blake from Barrington, Illinois. I just finished listening to your episode about the fridge and the cultural changes and supply chain changes that are possible with our connected world these days. And I found myself kind of a little bit resistant to some of the ideas you were proposing, namely that because of sort of the industrial surveillance complex that we're sort of living in with our connected internet these days, I found myself increasingly wanting to keep some of the devices that are in my home kind of off limits from other people seeing what's going on with my life, using that to manipulate me in ways that, and my family in ways that I don't really know about or isn't transparent to me.

24:25So I guess the question I have for you is, as we continue down this connected world, Do you see any opportunities or cases where we need to be more transparent about what data we're using on people, what data we're gathering on people, and how we're using that to better serve them? Thanks for all you do, and I appreciate your work. This is a great point, except it's 20 or 30 years too late. If you live in our modern economy, meaning you have a credit card, meaning you have a frequent shopper card, meaning you have used the internet, then the only thing that's going on is you've lost your privacy, but you might not realize it.

25:09Most people don't actually care about privacy. What they care about is being surprised. you don't want your credit card company to call you on the phone and say, hey, we noticed you've been staying at a lot of hourly motels and buying flowers delivered to someone who you are not married to. Would you like a free coupon for venereal disease testing? That would not make you happy, even though it appears generous. The reason it wouldn't make you happy is not because your privacy has been violated, because your credit card company has known this all along. It's because you were surprised. And so when we read the headlines about Alexa or Google Home, they're almost always about how we are upset because the promise wasn't kept.

25:57The promise of this little servant listening to us all the time, but never surprising us. So while it may give you solace to say, I will not let the internet into my refrigerator, it is way too late for that. Years ago, at the dawn of this age, Walmart got caught because their algorithm figured out by surveilling people's shopping habits that a young woman was pregnant and started sending her coupons before she knew she was pregnant. Walmart knew before she did because of her behavior. This horse is way out of the barn, and we don't have to like it, but it's true. And what we really need to do is speak up and get the people who are surveilling us to be transparent about it and keep their promise, not to somehow insulate our avocado habit from the giant system.

26:59Hey, Seth. This is Chris from Utah. I was just listening to your podcast on systems and the refrigeration system. And you got me wondering about the gaps between the time we have a current system and you're trying to push through the new system. And how do we push through that gap? For example, in your system, it really works if everyone's fridge is recording all the details and feeding that information back to the system so that the supermarket has the right stuff in stock. What about the customers who aren't yet exposed to that system and have to go to the store and just buy the stuff that they want?

27:39It kind of throws a wrench in the whole system because their information hasn't propagated back there. The other example that I might apply this idea to is self-driving cars. Self-driving cars could prove a lot of safety. It could improve safety in the system, and it could even make our lives easier. Get in the car. It takes you where you want. We could improve the system, but then you have the things outside the system, like people who don't have a self-driving car. Anyway, thanks, Seth. Appreciate your podcast and everything you do. You've touched on something really important here, which is how systems change.

28:14The answer is they change when the minimum number of people necessary to make the new system viable is a small number. So let's think about email. At the beginning, 1%, 2%, 3 % of the population had an email address. It was hardly universal. People laughed at it. I can use a stamp. I'm modern. I have a fax machine. But 2 % of the population was enough to make the system work. Because you didn't need everyone to have an email address. you only needed the 20 people you worked with the most to have an email address. Slack is the same thing. Slack has a ridiculously small number of paying customers, way fewer than a million, way fewer.

29:08And yet it works great for people who have installed it for a team because the pitch is this system, this inter-office communication system will work great if only 20 people in your team are using it. And then one by one, they can pick off the outliers. So my metaphor last week about the refrigerator, and it was a metaphor, was to help us see what huge systemic change looks like. But you're absolutely correct that the problem with this model is it doesn't work that well until lots and lots and lots of people have embraced it. This is part of the problem of Blue Apron. Blue Apron needed a critical mass of people to make their trucks efficient, to make their systems efficient.

29:57And they misjudged how hard it would be to get that many people to change the way they ate every night. What we've seen in the last 20 years is that systems that could thrive with small audiences that weren't very difficult to build got embraced. and now what's left are the harder systemic changes, things like self-driving cars, things like refrigerators that talk to one another. But what we're going to see in the next decade is organizations taking on these problems, mostly because the small and easy ones are already taken. But if there's a system in your world that you want to change, you can't possibly get it changed with top-down edicts.

30:45it's going to happen because you are able to encircle a few people who care enough that they will adopt a new way to communicate so they can get stuff done. Thanks for listening. We'll see you next time.