How Podcasts’ Gold Rush Crashed and Burned
Media hype, bad market predictions: forces turned a tiny industry into a runaway train wreck and what to learn from it
A couple of weeks back, driving around town, I heard a radio ad — repeat: radio— for a new podcast, an episode-by-episode breakdown of the TV series Hey Dude.
A podcast advertisement. On terrestrial radio. About Hey Dude. A 1989 Nickelodeon sitcom.
Yes, this thing exists. And people are paying real dollars to advertise it in Los Angeles.
Mentioning this to my wife, she asked if everyone on the planet has a podcast, and maybe? It certainly seems like it. I can’t tell you how many people I know in L.A. who already have one. Heck, folks ask me if I’m going to launch a podcast soon and in 2023, I will.1 So yes, podcasting is exploding.
And folks still are hoping to make money on it, too. Back in 2019, Spotify planned to aggressively take over the podcast market, and spent billions (yes with a “b”, as reported by Bloomberg) to get market share. This meant paying at least $230M for Gimlet Media, at least $196M for Bill Simmons’ The Ringer podcast network, more than $100M for Joe Rogan, $50-100M for Parcast, $60M for the Call Her Daddy podcast, big deals with the Obamas and Harry & Meghan, and over $60M for Anchor Media. Meanwhile, subscription podcast company Luminary managed to raise $100M with the pitch “we’re the Netflix of podcasting”.2
But then we got this news from Spotify a few weeks back:
Bloomberg’s entertainment newsletter took it a step further:
Like streaming’s market correction in 2022, podcasts quietly had their own downfall.
This shouldn’t be too surprising in hindsight, of course. A few factors were always working against podcasting. I’m going to cover them today, because they make for a fascinating case study in how business strategy and economics determine what gets overvalued. And how the media often hypes the growth.
In this article you will learn…
The warning signs of “gold rushes” and five other examples of the past decade that went bust (not even including crypto)
How business analysts often wildly overestimate the “TAM” (Total Addressable Market)
Why podcasting might be one of the most competitive landscapes out there without any chance for “winner takes all”
And why, like streaming, this might help the market mature into profitability