The Podcasts That Are Really Screwed Right Now

It was just a few short years ago that Spotify decided to conquer the podcasting world.

Having yanked the mercurial music business from the iTunes era into the epoch of subscription streaming, Spotify recentered its ambitions around audio—meaning, anything you can listen to. It poured $1 billion into this vision. And podcasts were the first stop en route to aural domination.

The Swedish streaming giant bought three media and podcasting companies—Bill Simmons’ podcast-heavy outfit the Ringer, along with the podcast studios Gimlet and Parcast. But it also doled out megacontracts to high-profile podcasters like Joe Rogan ($200 million) and Call Her Daddy’s Alex Cooper ($60 million) as well as with foolishly steep deals to podcast-curious celebrities such as royals Harry and Meghan ($20 million), ex–White House occupants Barack and Michelle Obama ($25 million), and the ubiquitous Kim Kardashian (still-unknown millions).

Despite this maybe-reckless spending, Spotify is doing just fine, thank you very much. The company turned its first-ever profit in this year’s third fiscal quarter, and its stock has risen 137 percent since the start of the year.

But Spotify’s lurch into podcasting left casualties along the way. Spotify laid off 600 people in January, before its “strategic alignment” in June that claimed 200 podcast-specific roles, in the process consolidating its two studios into one. And just this week, the bloodbath continued: Spotify said on Monday it’s slashing another 1,500 jobs across divisions and ending two popular and critically acclaimed podcasts, Heavyweight and Stolen, the latter of which won a Pulitzer Prize in May. Lydia Polgreen, Gimlet’s former managing director, wrote on Threads, “If you can’t make a go of it with these incredible shows you are simply bad at podcasting.” Somewhat cruelly, Spotify stock rose 7 percent on the news.

This constant stream of layoffs and show cancellations—not just at Spotify, but at other prominent shops across the industry—has made the podcasting world a gloomy place. But the narrative around podcasting is complicated: It’s still a growing media sector for listeners and advertisers. It’s just been burned by rampant M&A, unbridled hype, dwindling margins, and the once-eager fingers of the biggest names in tech.

The cost of this reckoning will not be most podcasts. But it might be many of the best ones.

All year, dour headlines have abounded about the poor state of the podcast industry. In January, Vulture predicted that it could be a rough year, pondering whether it’d be a “dramatic bubble-burst” or a “more gradual deflation.” By February, the New York Times reported that podcast companies were feeling the “strain of gravity.” In March, Vanity Fair confessed that the “dumb money is gone” from podcasting. No more big deals on Spotify or Amazon (which bought the studio Wondery for $300 million in 2020) or SiriusXM (which in 2020 paid $325 million for the app Stitcher, which it recently shuttered).

None of these headlines were wrong, but they’re tough to reconcile with the data.

By just about every metric, podcasts are still gaining popularity with listeners. One hundred and thirty million Americans will have listened to a podcast each month of this year, according to Insider Intelligence, which expects that figure to jump to 150 million by 2027. Meanwhile, in the decade since podcasting’s Serial moment, casuals have become die-hards: In 2015, weekly podcast listeners spent about four and a half hours listening to podcasts, according to Edison Research. Now that figure is north of nine hours a week.

Melissa Kiesche, senior vice president of research at Edison, continues to see growth both in the share of Americans listening to podcasts and how much time they’re dedicating to podcasts. “Both monthly and weekly listenership reached their highest levels this year,” she says.

Ad revenue is growing too. In 2022, podcasts generated $1.8 billion in ad revenue in the U.S., up 26 percent from the year prior, says the industry body Interactive Advertising Bureau. That’s drastically outpacing the 11 percent growth for the rest of the online ad sector. Furthermore, the IAB expects that revenue to double to about $4 billion by 2025.

Advertisers have reduced spending this year amid rising prices, rising interest rates, and still-unrealized fears of an economic recession, but it seems to be more of a pullback from runaway COVID-era spending rather than a full stoppage.

Rachael King, the founder and CEO of Pod People, which makes branded podcasts for companies like Netflix and Intuit, says the sales pitch for podcasts is as strong as ever. “It’s the most desirable demographic in the world,” she says. Podcast listeners “are curious, intellectual, and more likely to take action” based on what they hear.

But perhaps there was too much hype, too many unrealistic expectations—and, dare we say, too many podcasts? Or at least too many podcasts that couldn’t turn a profit based on high talent or production costs?

There’s a real human toll to the right-sizing of podcasts that appears to be occurring. Just about everyone in the podcast sector knows someone affected by layoffs—at Spotify, yes, but also at Amazon Music, New York Public Radio, the Athletic, NPR, Sony Music, and Pushkin Industries, the podcast studio co-founded by Malcolm Gladwell and former Slate editor and chairman Jacob Weisberg that laid off one-third of its staff and is now in union negotiations.

In interviews with podcast executives, a number of rationales came up: Undiversified revenue streams, overreliance on prestige shows, a chilled market for podcast-related IP, hesitance from heel-dragging marketers, and of course a big reality check for the biggest tech companies that, while podcasts will continue to grow, nothing could make a $20 million deal with Harry and Meghan profitable.

But look again, and you’ll notice that the middle class of podcasting—between the tech conglomerates and the dudes-in-basements crowd—is doing just fine. Unfortunately, for tech companies and the companies funding serious audio journalism, fine might not be good enough.

What’s clear is that a new normal has taken hold. Jenna Weiss-Berman previously worked at BuzzFeed before co-founding the podcast studio Pineapple Street Media, selling it to Audacy in 2019. (Weiss-Berman is now the executive vice president and head of podcasts at Audacy.) She says what’s happened to podcasts is the story of so many digital media businesses that have been saddled by the unrealistic expectations of investors or owners. “It’s been a year of having to figure out how these things are going to actually make money and be a sustainable business,” she says.

“We’re seeing huge jumps in listenership every year, huge jumps in advertiser interest,” she adds. “All of the signs of a healthy industry are there. I think the only thing that happened to make people think that the whole thing was over was that a tech company or two made some purchases that didn’t really make financial sense.”

Amanda McLoughlin and Eric Silver, who run the podcast company Multitude, told me that in the first few weeks of the pandemic, almost all of their advertisers canceled their commitments, dealing a huge blow to their business. While much of that money has returned, it was an important lesson, teaching them they needed to rely on many different revenue streams. “You’d actually be surprised,” McLoughlin says. “Most of our shows make as much money from advertising as they do membership and direct support from listeners.” For everyone in the podcast space, there’s a new way to think about the biggest tech players too.

“The reality is there was a land grab,” says Chris Peterson, the former executive vice president of podcasts at iHeartMedia who recently co-founded the podcast company DWNLOAD Media. “There necessarily wasn’t a cohesive strategy around it. But now we’re seeing the platforms realizing they are platforms. They don’t need to own the content because they can support the content with an ad marketplace.” As part of Spotify’s “strategic realignment” this summer, it canceled six podcasts under the Gimlet and Parcast labels, less than a year after it slashed 11 others. Not only did the Obamas depart Spotify for Amazon’s Audible, but the Harry and Meghan deal ended in a breakup after one controversy-filled season, following which Bill Simmons (now a Spotify executive) publicly called them “fucking grifters” on his own show.

And celebrity deals are now being structured more carefully: As part of a new deal with the comedian Trevor Noah, for example, Spotify will pay the former Daily Show host $4 million but not share show revenue with him until after its initial investment is paid off.

Alex Goldman saw the chaos at Spotify firsthand. Goldman, who was the co-host of the breakout Gimlet tech podcast Reply All, says Spotify evaluated podcasts solely based on whether they led to new subscription sign-ups for the streaming service.

Goldman says that the biggest problem with Spotify’s takeover of Gimlet was that it fundamentally didn’t understand the business it was getting into. “They bought a bunch of companies that did journalism while having real contempt for what we did,” Goldman says. The industry, it seems, is moving away from expensive, reporting-intensive shows and prioritizing lower-cost weekly interview podcasts or celebrity-driven shows. Perhaps it’s no different from Netflix’s bucking of prestige dramas for comedy specials, reality competitions, and getting David Letterman to interview newsworthy celebs.

Still, Goldman says, the podcast industry’s contraction isn’t just a story about Spotify’s failures. It’s a story about thinning margins across the podcast space—margins that aren’t friendly to ambitious reporting. “The upfront funding to gamble on podcasts is gone,” says Goldman, who has been trying to sell a new podcast for a year without luck. “The only things that are left don’t require a large budget or things that are sure bets,” like podcasts hosted by celebrities.

“I feel self-conscious saying this, but if I hosted this massively successful show and can’t manage to get something funded,” Goldman asks, “what does that say for everybody else?”