Why Podcasts Look Busy but Are Hard to Turn into a Business

Jiang Wu · 2024-02-22

*Originally published in Chinese on February 22, 2024.*

Podcasts attract attention as a medium, yet the business around them has stayed small. These are my observations on why.

The business value of podcasts

The limits of audio and where it can be used

Several points matter when judging what a podcast is worth as a product.

First, the audio medium and the scenes it suits. Audio works when people cannot use their eyes for input. The typical scenes are commuting and driving. A large part of why audio listening time is high abroad is longer commutes and, once cars became common, long stretches on the road. The Chinese equivalent is time on the subway, and that time is split among other products, such as audiobooks, paid knowledge, and music. After the split, the share left for podcasts as a content type is lower. (QQ Music once gave Xiaoyuzhou, a Chinese podcast app, an entry point, but the numbers were probably so poor that it was taken down quickly.)

Converting value is hard

Second, the user base is small to begin with, so converting that into business value is not promising. Most ads in the podcast community are no longer traffic ads but brand or performance ads. The common forms are a brand sponsoring a show, or a coupon for users to redeem. Judged by the business path, podcast advertising is still brand-first today and the overall effect is doubtful. It would not be the first category an advertiser considers.

Paid content and audiobooks

Leave advertising aside and look at paid content. Podcasts' best competitor is a category with more business value, audiobooks. People expect more from audiobooks than from podcasts, and a podcast's cultural value and variety serve as a supplement to the audio category.

The hidden value of podcasts

Beyond these, a podcast's hidden value is emotional companionship, which most people have not noticed. A podcast carries strongly sticky emotional company. Once users lean toward a host's values or form a view of them, the podcast will probably become one channel for that person's IP, or a form their content takes. So the biggest business value of a podcast lies in distributing its leftover value. If I do something else and use this channel to reach this group of users, it works like distributing my content across several platforms. A podcast should not be treated as a place to display pure business value. Its value is thin that way, and the business value that can really be collected is narrow.

How well podcasts spread, and how the market sees them

As a carrier, a podcast is not well suited to dense information. The main reason is that the cost of getting information out of it is high, or that the useful value it can distill is narrow. Audio shows have long existed in China as a track but have stayed lukewarm. Ximalaya, the top player in this field, has failed several times to go public, and its revenue is poor. The capital market's assessment of this field is low.

An open question

Why is this channel not good to work with, and yet looks lively?

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