Making Your Audio Business Acquirable

Spotify’s CEO, Paul Vogel, appeared at the MIT Sloan CFO Summit last week, setting out Spotify’s stall: “We want to be the No. 1 global streaming audio player, and that means having everything as much as you could possibly think in audio”.

He also casually mentioned that it “has $3.5 billion in cash on its balance sheet available for expansion” and that acquisitions “lead to user growth, better engagement, more time span and a higher lifetime value. We can invest a lot in things — we want to take risks.” It’s most recent acquisition was audiobook platform Findaway, which I talked about last week.

He was pretty bullish on podcasting:

“What you’ve seen over time, particularly in the media space, is people try to use old paradigms to understand where the business and markets are going…. the opportunity is limitless, [only] limited by your imagination”.

“Podcasting was this business that for 20 years didn’t change — it was a simple RSS feed — no way to do anything different,” he then went on to talk about the things that the company’s been doing to change that.

Spotify’s been one of the more aggressive acquirers, but there’s been plenty of purchases – small and large – as the big companies look to fill gaps in their strategies.

As we know, audio’s been around a long time – but the combination of smart-phones, ubiquitous connectivity, successful large-scale distribution of music or other audio content, plus established audio ad networks and subscription platforms – has meant the battle is now less about technology and more about attention.

Consumers, at the touch of a button, can join one of many ecosystems that can be (relatively) easily monetised by these large operators. Plus it’s a growing market. As Vogel says:

“In the next five to 10 years there’ll be 3 to 4 billion smartphone enabled devices — why shouldn’t every one of those phones have a streaming audio app on it? And if they’re going to have a streaming audio app, let’s make ours the best.” 

As well as consumers, Spotify’s trying to become the place for creators. Vogel again: “What we want to become is the best platform for creators to create and distribute their art. Whether that’s music, whether that’s podcasting, whether that’s anything else, if you come to Spotify and we make it easier for you, we help you monetise, and we help you get discovered, you’re going to want to work with us more.”

Spotify’s seen much success on the podcast side by locking in exclusive distribution with big name creators, as well as providing an easy on-ramp for new creators on its Anchor platform. If these activities generate holes in other providers’ catalogues, then all the better.

UK Acquisitions

Few UK have companies have been targets in this audio shopping spree. One reason is undoubtedly that it’s more difficult for large US operations to devolve M&A decisions to these fine shores. Things that don’t fit in the prism of US thinking end up being a harder lift. Having to translate what sort of company you are and to explain your relevance to those unfamiliar, is an added tax on any dealmaking.

In fast-growing, cash-rich companies the options are to build or to buy. Building is perfectly achievable, and there’s money to do it, it just takes time. Companies that are growing through acquisitions want short-cuts to achieve their aims.

Often UK firms lack the scale to make much of an impact. Their size means that they don’t instantly solve a problem for a big acquirer.

Where small transactions do happen, it’s usually about acquiring talent. Acqui-hiring. With these purchases, it’s less about scale and more about filling out teams with bright people who can help an internal build go faster. There may be some special tech that can be adapted, but you’re really grabbing the people that can make your thing it happen.

Audio acquisitions can be broadly split into content or technology (particularly ad-tech). The tech’s important as it often acts as the plumbing to deliver greater goals. Being able to deploy something that works, at an acquirers scale, definitely ticks the box of short-cutting internal development.

On the content-side, acquirers have been after scale and impact. Spotify’s grab of Gimlet and Parcast, and later the Ringer and Joe Rogan has given it advertising impact heft. Something it can then better monetise by aligning (the acquired) Megaphone and Spotify’s in-house team. Amazon have run a similar play with Wondery, exclusives like SmartLess and its (acquired) distribution and sales outfit, Art 19.

The UK lacks similar content networks of scale, with many indie-publishers either having a single big show, some scale but it all built around celebrities (where the IP has little value), or having material that does alright in the UK, but doesn’t really travel. These operations don’t really solve a problem for the big streamers, where they can do a single distribution deal with one big show that has an immediate (and global) impact on an ad operation.

Sony Music’s acquisition of audio production company Somethin’ Else did definitely short-cut their desire to be a big podcast player. As well as some solid-sized shows they also inherited 50-odd audio producers. Building out businesses that require lots of production can be hard, so the Somethin’ Else acquisition definitely provided a strategy fix and hopefully a faster route to scale.

In the tech-sphere, there’s few companies that have experimented around audio. Entale, which started off as visual podcasting app, and now leans into AI for discovery has recently been acquired by DMGT. Now predominantly a newspaper company, they’ve had little success in podcasting, so you can see why bringing Entale’s expertise in their business could be good. Outside of them, and perhaps ad personalisation company A Million Ads, the UK seems to have lacked much disruptive podcast tech.

Where the UK has had a big impact, is in the sales and distribution arena, with UK teams helping drive the success of Swedish Acast (market cap c£500m) and now US-based, though significantly UK-owned Audioboom (market cap c£150m).

Both started by developing strong tech to deliver the ability to commercialise podcasts and then built sales operations alongside partner management to grow inventory.

The tech-side has been somewhat commoditised and now the key skill is growing inventory and monetising that to a high level. Audioboom has taken more of an interest in growing a slate of originals, to reduce reliance on third-party monetisation and has outsourced more of its revenue operation, whilst Acast has concentrated on repping and selling – growing is international footprint in-house.

Whilst both are stock-market listed companies and have a route to happily exist out of the hands of big tech, there will always be some interest from shareholders in getting them married off. Their public nature does though make it expensive for them to be grabbed.

Also for both of them, the big question remains what problem does acquiring them solve? Core potential acquirers Amazon, Spotify, iHeart, SiriusXM have ad-tech, repping and sales operations already – do they need the extra scale? More likely they could solve a problem for a newer or a so-far less hungry big company. Both Google and Apple are laggards in this space (and both have had issues with media sales operations in the past) so this could fix a hole in a broader podcast strategy (if they think this is a hole that needs filling).

For other UK companies, finding smaller local partners may perhaps be a more likely option. Solving a smaller company’s problem is easier than a bigger one.

Building out a business to be acquired is different to building out a business for stand-alone success (even if operators pretend there is no difference). For those that will only realise their value through a sale and have jumped onto the hot hot hot world of podcasting, the key is to understanding what problems you fix for what kind of companies. Alongside that, it’s scale, ownership of successful IP and a unique (and potentially dominant) position in the market that’s core.

Plus, fundamentally, is buying you easier and more fruitful than building something from scratch?

How to entice big tech to make a big leap for your company (7min read)

Spotify’s Audiobook Acquisition

News last week that Spotify acquired the Audiobook platform Findaway. This helps the streamer reach its goal of providing “a destination for all things audio both for listeners and creators” – combining music, podcasts, live audio and now audiobooks.

There’s actually already a decent amount of audiobooks on Spotify, particularly in some languages, like German. The acquisition, as Spotify states: “…will accelerate Spotify’s entry into the audiobook space”.

Whether it’s just the catalogue that they’re after, or the broader Findaway business, remains to be seen. Findaway provided a place for authors and publishers to put audiobooks which the company then distributes to apps and services like Scribd, Chirp and Nook. Alongside that, they have a services business that helps create audiobooks and a devices operation that releases product that comes with audiobooks pre-installed.

Indeed, part of the benefit for creators in using Findaway is that it gives publishers broad distribution to a variety of suppliers including the big three of Amazon, Audible and Apple, alongside the smaller players and also the library platforms. The market leader – ACX (owned by Audible) concentrates on Audible, Amazon and Apple (where the bulk of consumption is).

It’ll be interesting to see if Findaway’s distribution partners still want to play ball when it’s owned by a competitor in Spotify, and therefore whether it becomes just a route for publishers to just get on the streamer.

The other thing to see is whether the self-service part of Findaway (authors creating their own audiobooks) is aligned with Anchor, Spotify’s product that does the same for podcasters. Anchor gets a podcast into Spotify very easily, but it also acts as a distributor to other podcast destinations like Apple Podcasts. There’s definitely some similarities there. Spotify did also have a self-service distribution system for music artists, but it mothballed that in 2019 (now you need to use a distributor like TuneCore or CD Baby)

Spotify’s growth into multiple verticals has meant that its partner and content management is a little confused. For musicians you can only have a direct relationship through a larger publisher (or aggregator), not as a creator. For podcasters its optimised for creators through Anchor, but larger publishers have a variable mixed bag of services. For Greenroom (its live product) they’re seemingly looking after creators, but not publishers. And then with audiobooks they, at the moment, have a route for both creators and publishers.

Of course, why Spotify has expanded out of music is for two reasons. Firstly their music deals still seem to lose them more money as they add subscribers. At some point they will likely renegotiate with the record companies and they will be able to point to the fact that music only accounts for x% of their listening, so is it time to do a new deal etc? Even a small reduction will generate millions of profit to the bottom line. The question is whether Sony, Warners and UMG will ever want to play ball.

However, even if that never happens, podcasts and Greenroom allows it to introduce advertising products, even for its paying subscribers (who only don’t get ads with their music). The addition of audiobooks gives them the opportunity to up the subscription price (or develop an ad-funded operation) to try and increase the margin in their business.

Spotify are also betting on getting consumers to abandon their Apple Podcasts or Audible app for just hitting a green Spotify button. This will then give them a lock on the audio consumer, that they can sell to, and more importantly sell up.

AOB

There’s a new edition of the Media Podcast with guests Faraz Osman (MD of TV production company Gold Wala) and Jack Davison (EVP of TV strategy firm 3Vision). We talk Dacre & Ofcom, ITV profits, BBC & Stonewall, the new audio development fund and more. Take a listen!

Over at Fun Kids, I’m pleased we caught up with the Prime Minister to round out our Climate Heroes campaign. He answered kids’ questions and played Dan’s Yes or No game.

It’s the latest notch on their audio bedpost (4min read)

Tackling radio’s youthquake

You join me on my way home from Copenhagen where I’ve had a great day with Peter Niegel from DR and Radiodays Europe, reviewing our Podcast Day 24 conference and planning for the next one.

Peter’s day job is looking after the research for DR – Denmark’s public broadcaster. It’s always fascinating to hear what they’ve been doing. As a developed western audio market I’m always intrigued how what’s happening there is different, or the same, to what’s happening here in the UK.

We had a good discussion about young listeners and what they’re consuming, from whom and on which device. Like many broadcasters they’re grappling with what’s broadcast, what sits on owned and operated platforms and what should be on third party destinations. It’s a conversation that could be replicated in pretty much every large audio operation in the world.

I was also telling Peter about my turn at the Radio Festival last week. I’m always very conscious that I occupy an odd place in the radio industry. I’m fortunate to have been involved with it for over 20 years, but I sit outside of the main operators – commercial and BBC – though the work we do at Folder often crosses over with some of their projects.

The industry has consolidated massively since I went to my first Radio Festival in Cardiff in the 90s and I think how the industry talks to each other has changed significantly too.

At one end it’s pretty collaborative. RAJAR, digital radio and Radioplayer is everyone, commercial and BBC, all collaborating. In the commercial world, there’s also pretty close alignment around regulatory discussions.

At the other end of things, where people speak publicly, there’s perhaps a more guarded discussion about the nature of the business. In the margins, and privately, there’s more openness about challenges that people are facing – but the difference between the two is sometimes quite striking.

There is, of course, a delicate balance between airing one’s dirty laundry in public and trying to have an honest discussion about working on challenges together.

I do think, though, there are some existential threats for the radio industry which can only really be tackled by a concerted cross-industry effort.

In my Radio Festival talk I spoke about the radio sector facing a youthquake.

Youthquake

Historically I’ve been quite bullish about radio’s youth performance. Whilst total hours have been dropping consistently, total reach for 15-24s has only seen a small decline, nothing particularly dramatic. As I mentioned the other week, Facebook had seen a much more worrying drop for young users – a decline of 13% in the last two years. Radio’s only seen around a 10% drop in five years.

However, with new RAJAR data out, I thought it would be worth more of a look. My key insight was splitting 15-24s into 15-19s (teenagers) and 20-24s. For the latter group, radio reach is actually up 7%, which hides the teenage performance – a 30% drop. That equates to around a million teens stopping tuning in.

Take that reach drop and combine it with less listening, and it means that 15-19’s total listening hours is down 40%.

I think that’s a pretty big problem.

At the same time the UK’s youth radio stations – Radio 1, Kiss and Capital – are much broader than just teenage stations. The profile of listening shows huge consumption by older listeners. For the commercial stations, this older audience is actually pretty essential to their business model. Their hours of listening turns directly into revenue.

For many of the stations on that list, 45 to 54s are bigger than 15-19s.

I feel for Radio 1, Kiss and Capital, they are broad younger focused stations. It’s unfair and unrealistic to task them with super-serving teens.

But with all three stations suffering 15-24 drop-offs, they are the first to feel the heat from the change in listening behaviour. I remarked to someone that they’re the equivalent of Barbados in the climate change discussion. The country that’s shouting to the others ‘hey there’s a problem you need to fix, it’s affecting us now’. The big countries (or radio stations) then go ‘yes, yes, we’ll obviously get to dealing with it’, whilst still enjoying their pre-change environments.

The reason why everyone should be concerned is this bingo-like grid below. What it looks at is the average hours a radio listener consumes at different years of their life. Here showing 15 to 34 year olds over a fifteen year period. What it effectively does is track a cohort of listeners as they get older, year to year.

I’ve highlighted in green a sample cohort and you can see that, roughly, the amount of hours they listen to when they’re 15 stays, just about, the same over much of the following years of their life. If you pick any starting year on the chart it more or less follows through the same way.

In other words the amount of radio that you listen to at 15 becomes the regular amount that you consume.

And no, people don’t ‘grow into’ radio as they join the workforce etc.

Therefore if you don’t work to engage with young audiences early on, it will affect how you do later on.

Teen Appeal

Now radio doesn’t have some god-given right to have teenagers tuning in. This is an audience with lots of media at their finger tips and lots of places that can replicate many of the mood states that radio can deliver. But the radio industry has to decide whether it wants to have a go at ensnaring this audience. And if it does want to do that, then I’m afraid that a radio group having a go at it on their own is unlikely to reap much of a dividend.

As has been demonstrated by DAB digital radio or Radioplayer, the radio sector can have a big impact on consumers when it works together to create a solution to a problem and then collectively sells it to consumers.

DAB has worked because the sector worked together on distribution and transmitters, the right regulatory environment and then a broad selection of new radio stations that include 6Music and Absolute 80s, 1Xtra and Kisstory. I think Teens need this same focus.

So to kick things off, two suggestion from me.

We need Radioplayer for Teens

A broad web, mobile and social platform that brings together all the content the sector makes that’s of interest to teenagers – audio, video, text and imagery. From Capital’s Jingle Bell Ball to Radio 1’s Surgery. Inclusion of all the groups’ radio stations and music streams. Radio, playlists and podcasts. All curated with an eye to those teens.

A radio station for teenagers.

Whether it’s the Global Academy, Bauer Academy, Wireless’ apprenticeships or the BBC’s talent outreach. The radio sector is doing a good job at training young people. Why not go a stage further and design an environment where teens can work on, and help to develop, a station for them.

It should live in the new Teen app, but also be available on BBC Sounds, Global Player et al. It should be well-funded, well-distributed and well-marketed and should hook into activities from all the stations. Why shouldn’t it be back stage at BBC’s Teen Awards or a Kiss New Year’s Eve party?

It should live and breathe the teen world – a secondary school world- co-opting the other environments that teens live digitally in.

There’s perhaps some better ideas and ways to engage with teenagers. A decent research project would probably help. But if radio wants to engage with this audience, it needs to do something different. Because the status quo isn’t really working.

You can watch my session from the Radio Festival, and the others, if you get a catch-up ticket from the Radio Academy.

AOB

As well as the Radio `Festival session, I talked a bit more about it on the RadioToday Programme podcast.

I’ve been a bit all over the place chatting to people at the RAJAR figures over the last week or so.

I popped up on Radio 4’s Media Show (with Miranda Sawyer, Dick Stone and Hot Pod editor Ashley Carmen), which you can listen to on BBC Sounds or watch the visualised version that went out on the BBC News Channel.

I also did a RAJAR catch-up with Ford Ennals from Digital Radio UK, that you can watch on their YouTube channel.

What’s happening to young listeners and what can be done about it (7min read)

How do I get more people to listen to my podcast?

With the work I do on the Podcast Awards, here in the UK and Australia, I often get asked lots of questions about podcasting. They include topics like monetisation, hosting, content, what success looks like and then often how to get more people to tune in.

woman in black tank top sitting on chair in front of microphone
Photo by Soundtrap on Unsplash

After someone’s been doing a regular podcast for six months to a year there’s often a point where the team think “jeez, this is hard” and “we don’t seem to be growing very fast”. Whether it’s a big corporate one, or a solo project, everyone tends to hit this wall.

This can either spur them on, or make them quit.

I think there’s a couple of things that podcasts that have been going for a while get wrong, and that’s what inhibits continued growth.

Read more…

Interview Special: Stig Abell of Times Radio

Happy Sunday. A bit of an experiment today as I’ve been thinking about maybe publishing some longer form interviews with audio folk in the newsletter on the weekend. Is that something, dear reader, you would like me to do? Do reply to this and say so, along with any suggestion of who you would like to hear from.

This first one is with Stig Abell, who’s Executive Editor at Wireless, was the launch Director for Times Radio and now also presents its breakfast show. I caught up with him for the Media Podcast to talk about his first RAJAR figures, and Times Radio in general.

The interview’s a transcript of our chat, just tidied up to make it clearer to read. If you want it in audio form, the aforementioned the Media Podcast is where to go.

Read more…

RAJAR’s Return

The latest RAJAR data is out, and there’s a lot in there. An 18 month wait, massive consumer change because of the pandemic alongside gradual consumer changes happening anyway, new stations, network re-brands, new talent. Plus all the normal ups and downs. Phew. I can’t cover it all in here, so you get the best of what I’ve noticed in a few hours.

The other important thing to notice is that RAJAR has changed how it measures audience figures. As I talked about earlier in the week there’s a broader methodology. For this reason, like for like comparisons of data are not really fair. However it’s hard to talk about the data without mentioning changes. It’s therefore up to you, dear reader, to keep that in mind as I talk about old and new data below.

Read more…

Getting to know your listeners and the audio market

For something new to be successful, a number of things have to align. Of course there has to be a great idea, but you need to know where it fits in a market as well as have an understanding of your consumer.

The latter two aren’t as fun as coming up with the product or idea, but the research and knowledge helps you make better decisions.

For the radio sector, and for its audio competitors, there’s two releases of information that will definitely help shape current and future projects.

Read more…

Alternative funding for great audio

The business of audio in the UK has always had public and private elements. Radio of the 90s and 00s combined the licence-fee funded BBC (with guaranteed spend for independent production companies) alongside commercially-funded stations.

The public element existed because governments (and citizens), felt that there was value in creating media that wasn’t just the “commercially viable” stuff. A similar thing happens in other countries, in a variety of different ways. European countries tend to have publicly funded content through taxation or a licence fee. In America, PBS and NPR have some government funding, but much is from pledge drives with listeners and individuals/foundations who write big cheques.

Today, radio’s dominance of ear-time has receded as new audio opportunities, like streaming and podcasts have grown. So it’s interesting to think about whether public funding, providing public value, should still exist, and if so, how it should evolve.

Read more…

Creating Radio With Purpose

Greetings from Lisbon. I’ve had a lovely few days at Radiodays Europe. The pandemic had somewhat got in the way of the event’s usual planning, but they put on a great event with four simultaneous streams of sessions over two days. They also streamed the streams to people who wanted to attend, but not in person.

Unsurprisingly, Coronavirus was mentioned a few times. Yes, there were mentions of how it caused teams to work in different ways, but I think it had a more fundamental effect on how many practitioners thought about their audio medium.

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How Are Apple Podcast Subscriptions Going?

Apple released a new type of chart last week, showing the relative success of its new Apple Podcast Channels product. This is the thing where you can group together shows, or offer a single show, and then make it something that people can pay real money to subscribe to.

Here’s the pay-for list (with some context on each offer courtesy of Podnews)…

Read more…