Daniel Ek on podcasting, audiobooks, global ambition, and competitors

As is often the case, much of the interesting content during Spotify’s Q2 earnings call this week transpired during the investor Q&A. There, CEO Daniel Ek and Head of Investor Relations Paul Vogel spoke of the company’s global ambitions, how podcasting is shaking out for Spotify, and a mention of audiobooks. (Take note, Audible.)

“Our ambition is to be in every market in the world.” –Daniel Ek, CEO Spotify

Surveying the globe, Daniel Ek took special note of Africa, Russia, and South Korea. Spotify plays in India, and Ek expressed satisfaction with how that enterprise is developing.

The conversation around podcasting ranged widely. One investor asked about developing a new technology stack for podcasting — modernizing the legacy RSS-based distribution. Ek appeared to agree with the need, comparing RSS to analog radio. : “Well, the tech stack in podcasting today is as embedded in RSS feeds. They don’t know anything about your likes or dislikes. It’s like an FM radio ad. Maybe best you know something about the demo of the audience you’re delivering against.”

Spotify can do considerably better, Ek hypothesized, especially when it comes to smart targeting of ads.

The Spotify exec observed a couple of times that podcasting is still a young category — “an entirely new medium, not unlike maybe radio and just general audio services” (perhaps an exaggeration) and he rolled out the “early innings” standby metaphor.

When it comes  to podcast topicality, Ek seemed to be impressed with a broadening of listening trends: “So the number of verticals, while the general perception today is that it’s typically pretty male-dominated, very techy talk shows, the engagement that we’re seeing in terms of our content is we’re seeing good progress across scripted content, true crime being a massive category for us and growing very, very fast. But we’re also seeing, of course, music podcasts growing very fast, which if you look historically in podcasting, that’s not been a big category, but that’s becoming a much bigger one.”

He said listening should continue to broaden as new creators come into the space.

Wait — did somebody ask about audiobooks? Yes, an investor from Macquarie. Ek’s reply: “Overall, interesting segment. Again, my view is it’s obviously massively growing. I would say though that when you look at the podcast that we have seen, true crime, there really isn’t that much of a difference between those and some of the audiobooks that are available. So I think in the future of audio, we’re going to have an interesting development where we need to think long and hard about what are the optimal formats for consumers. Are we talking about an eight-hour type of programming or two-hour programming? And there’s is going to be a ton more experimentation, I think, across the board.”

What about Apple as a competitor, one investor dared to query. “All of our competitors have their relative strengths,” Daniel Ek yawned.

Spotify’s big bet on podcasts is starting to pay off 21

Its podcast audience has doubled since last year

Spotify’s podcast audience is experiencing huge growth, the company revealed in its earnings report today. The company reports that its podcast audience has grown by over 50 percent since the last quarter, and that it has almost doubled since the start of the year. The company also saw subscriber numbers grow overall, with its total number of premium subscribers growing by 9 percent to 108 million compared to the last quarter, and monthly active users growing to 232 million, an increase of 7 percent that The Wall Street Journalnotes exceeded expectations.

The growth in its podcasting business suggests that Spotify’s investment is starting to pay off. Earlier this year the company acquired the podcasting network Gimlet Media as well as Anchor, which produces tools to let creators build, publish, and monetize podcasts. The following month, it acquired Parcast, another podcast network. At the time of the Gimlet acquisition the company said it expected to invest as much as $500 million in its podcasting business, with the company’s CEO Daniel Ek predicting that 20 percent of all listening on the platform will eventually come from podcasts.

Last month Spotify announced a multiyear podcasting deal with Higher Ground Productions, Barack and Michelle Obama’s media company. It will result in podcasts that are exclusive to the streaming service. The deal is similar to the one Higher Ground made with Netflix, which will see its first release with American Factory later this year. Exclusive podcasts will be an important element in getting people to try Spotify rather than sticking with their existing podcasting apps.

Despite a 31 percent year-over-year rise in subscriber revenue to €1.5 billion (around $1.7 billion) and a 34 percent rise in ad-supported revenue to €165 million (around $184 million), Spotify is continuing to lose money with an operating loss of €3 million (around $3.3 million). Its investment in podcasting may be starting to pay off, but sustained profitability remains elusive.

Digital Audio Ad Serving Template

New Standard for Audio Ads Aims to Strengthen Growth in Sector While Forming Basis for Universal Application

NEW YORK, NY (September 8, 2014) – The Interactive Advertising Bureau (IAB) has released “Digital Audio Ad Serving Template (DAAST) 1.0” for public comment. Created by the IAB Digital Audio Ad Serving Template Working Group and utilizing principles learned from the organization’s highly successful Digital Video Ad Serving Template (VAST), DAAST provides a common set of specifications for audio ad delivery, execution, and reporting across a wide variety of devices and platforms. It is the organization’s first technical solution addressing the fragmented audio advertising market.

DAAST also addresses the concept of “thin client” devices, such as some in-car audio players that have limited functionality for tracking ads or identifying when they play.

“Since IAB introduced VAST, we have seen exponential growth in the digital video advertising market, and we expect to see a similar trend in the audio advertising space with DAAST,” said Scott Cunningham, Vice President, Technology and Ad Operations, IAB. “In addition to bridging the gap between proprietary codes, DAAST goes a long way toward making possible a true omni-channel approach to digital advertising. By refining and extending this solution through iterations in the years ahead, we can create a universal standard that allows any digital ad to be delivered, played, and tracked for any device on a global-scale.”

To increase adoption across the industry by making it easier for ad servers to reach publisher platforms, DAAST requires audio players to support linear ads and one or optionally more of the following ad formats:

  • Companion ads
  • Ad pods
  • Skippable ads

“Bringing consistency to the digital audio advertising space is key to its potential growth, and we aimed to accomplish that with DAAST,” said Benjamin Masse, Senior Vice President and General Manager, Advertising, Triton Digital, and co-Chair of the IAB Digital Audio Ad Serving Template Working Group. “Currently, advertisers must create separate versions of their audio ads, one for each type of player in which they might be shown. By requiring that all audio players support at least one DAAST-compliant format, we are helping advertisers increase demand while maintaining flexibility for player manufacturers.”

“DAAST is a major breakthrough for digital audio advertising that is a crucial first step toward creating a truly universal standard that covers audio, video, and all other digital advertising,” said Chris Doe, Vice President, Emerging Media Products, Vindico, and co-Chair of the IAB Digital Audio Ad Serving Template Working Group. “With music streaming services gaining prominence, we must ensure that audio ads get their chance to flourish in a unified marketplace. Moving forward, we can expand the standards introduced by DAAST and VAST so they apply to all advertising on all devices.”

To review a copy of the public comment version of DAAST 1.0, please visit iab.com/media/file/DAAST_Public_Comment.pdf.

The public comment period will run through (Friday, October 10, 2014), after which the IAB Digital Audio Ad Serving Template Working Group will evaluate the comments received, make any necessary changes, and release a final version. Comments are being accepted by email at (jessica.anderson@iab.com).

In tandem, IAB is also releasing a “Digital Simplified” brief on DAAST to provide the marketplace with an easy-to-understand overview of the template, available at https://www.iab.com/media/file/DAAST_IAB_Digital_Simplified.pdf.

About the IAB
The Interactive Advertising Bureau (IAB) is comprised of more than 600 leading media and technology companies that are responsible for selling 86 percent of online advertising in the United States. The IAB empowers the media and marketing industries to thrive in the digital economy. The organization educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City.

What is HLS Streaming and when should you use it?

Until fairly recently, Adobe’s Flash video technology had been the main method of delivering video via the internet. Today, however, there’s a major shift taking place in the world of online video. Over the past decade, Adobe’s Flash protocol has been replaced increasingly by video delivered using protocols like HLS streaming and played in HTML5 video players.

For broadcasters and viewers alike, this is a largely positive change. HTML5 and HLS are open specifications, which means that users can modify them to their specifications and anyone can access them free of cost. These newer HTML5 and HLS streaming protocols also safer, more reliable, and faster than earlier technologies.

For content producers, there are also some major advantages to using these new live streamingtechnologies. However, there are disadvantages in this realm of content production. In particular, these downsides include the work involved in replacing legacy systems and technologies with new standards that may not work the same across all platforms. As will all technological innovations, growing pains are inevitable.

To get you up to speed on these changes, we’ve geared this article at both longtime broadcasters and newcomers to streaming media, all with a focus on HLS streaming. Our goal here is to make this content relevant for all kinds of streamers. Whether you do live streaming of sports events, or you want to stream live video on your website, we hope you’ll find it useful! We’ll cover basic streaming protocol definitions, discuss other streaming protocols, and, of course answer the question posed in the title of this essay: what is HLS streaming and when should you use it?

What is HLS?

HLS stands for HTTP Live Streaming. Put succinctly, HLS is a media streaming protocol for delivering visual and audio media to viewers over the internet.

The HLS streaming protocol chops up MP4 video content into short, 10 second chunks. HTTP then delivers these short clips to viewers. This technology makes HLS compatible with a wide range of devices and firewalls. Latency (or lag time) for HLS live streams compliant with the specification tends to be in the 15-30 second range. This is certainly an important factor to keep in mind.

When it comes to quality, HLS streaming stands out from the pack. On the server side, content creators often have the option to encode the same live stream at multiple quality settings. In turn, players can dynamically request the best option available, given their specific bandwidth at any given moment. From chunk to chunk, the data quality can differ.

For example, in one moment you might be sending full high-definition video. Moments later, a mobile user may encounter a “dead zone” in which their quality of service declines. The player can detect this decline in bandwidth and begin delivering lower-quality movie chunks at this time. The point of all this? HLS streaming reduces buffering, stuttering, and other problems.

HLS streaming format history

Apple originally launched the HLS streaming protocol in summer 2009. They timed this release to coincide with the debut of the iPhone 3. Previous iPhone models had experienced many problems with streaming media online, partially because these devices often switched between Wi-Fi and mobile networks mid-stream.

Prior to the release of HLS, Apple used the Quicktime Streaming Server as its media streaming standard. Though it was a robust service, Quicktime used non-standard ports for data transfer and so firewalls often blocked its RTSP protocol was often blocked. Combined with slow average internet speeds, these limitations doomed Quicktime Streaming Server. As a result, this early experiment in live streaming technology never reached a wide audience. That said, HTTP Live Streaming ultimately drew from the lessons learned from creating and rolling out the Quicktime service.

Technical overview

HLS streams are generated on the fly, and an HTTP server stores those streams. The protocol splits video files, as we’ve mentioned above, are into short segments with the .ts file extension (standing for MPEG2 Transport Stream).

The HTTP server also creates a .M3U8 playlist file (e.g., manifest file) that serves as an index for the video chunks. The playlist file serves as a bank that points towards additional index files for each of the existing quality options. Even when you choose to only broadcast using a single quality option, this file will still exist.

A given user’s video player software can detect deteriorating or improving network conditions. If either occur, the player software reads the main index playlist, determines which quality video is ideal, and then reads the quality-specific index file to determine which chunk of video corresponds to where the viewer is watching. And best of all–the entire process is seamless for the user.

HLS also supports closed captions embedded in the video stream. To learn more about HLS, we recommend the extensive documentation and best practices provided by Apple.

Review of video streaming protocols

Several companies have developed a variety of streaming solutions through the use of media streaming protocols. Generally, each of these solutions has represented a new innovation in the field of video streaming. Similar to the the HD-DVD vs. Blu-Ray format wars, or the older Betamax vs. VHS showdown, there are nonetheless conflicts that arise. HLS is currently the best option for streaming media protocols, but it wasn’t always that way—nor will it remain so forever. Let’s review several past and current streaming protocols to better understand the innovations that the HLS streaming protocol offers today.

RTMP

Real-Time Messaging Protoco (RTMP) is a standard originally developed by Macromedia in the mid-200s. Designed for streaming audio and video in the mid-2000s, this protocol is frequently referred to simply as Flash. Macromedia later merged with Adobe, which now develops RTMP as a semi-open standard.

For much of the past decade, RTMP was the default video streaming method on the internet. Only with the recent rise of HLS have we seen a decline in the usage of RTMP. Even today, most streaming video hosting services work with RTMP ingestion. In other words, you deliver your stream to your online video platform in RTMP stream format. From there, your OVP usually delivers your stream to your viewers via HLS.

In recent years, however, even this legacy use of RTMP streams is beginning to fade. More and more CDNs (Content Delivery Networks) are beginning to depreciate RTMP support.

HDS

Known as Adobe’s next-gen streaming, HDS actually stands for HTTP Dynamic Streaming. Designed for compatibility with Adobe’s Flash video browser plug-in, the overall adoption of HDS is relatively small compared to HLS.

Here at DaCast, we use HDS to deliver some of our VOD (Video On Demand) content. For devices and browsers that do support Flash video, HDS can be a robust choice with lower latency. Like HLS, the HDS protocol splits media files into small chunks. HDS provides advanced encryption and DRM features. It also uses an advanced key frame method to ensure that chunks align with one another.

Microsoft Smooth Streaming

Microsoft Smooth Streaming (MSS) is Microsoft’s version of a live streaming protocol. Smooth Streaming also uses the adaptive bitrate approach, delivering the best quality available at any given time.

First introduced in 2008, MSS was one of the first adaptive bitrate methods to hit the public realm. MSS protocol helped to broadcast the 2008 Summer Olympics that year. The most widely used MSS platform is actually the XBox One. However, MSS is one of the less popular streaming protocols around today. HLS should be considered the default method over this lesser used approach.

MPEG-DASH

Last up, the newest entry in the streaming protocol format wars is MPEG-DASH. The DASH stands for Dynamic Adaptive Streaming (over HTTP).

MPEG-DASH comes with several advantages. First of all, it is the first international standard streaming protocol based on HTTP. This feature has helped to quicken the process of widespread adoption. For the moment, MPEG-DASH is a new protocol and isn’t widely used across the streaming industry. However, like the rest of the industry, we expect MPEG-DASH to become the de facto standard for streaming within a couple of years.

One major advantage of MPEG-DASH is that this protocol is “codec agnostic.” Simply put, this means that the video or media files sent via MPEG-DASH can utilize a variety of encoding formats. These encoding formats include widely supported standards like H.264, as well as next-gen video formats like HEVC/H.265 and VP10.

HLS streaming advantages

As this article highlights, HLS has a major advantage in terms of streaming video quality. Broadcasters can deliver streams using the adaptive bitrate process supported by HLS. That way, each viewer can receive the best quality stream for their internet connection at any given moment.

The HLS streaming protocol is also widely supported. Originally limited to iOS devices like iPhones, iPads, and the iPod Touch, all Google Chrome browsers, in Safari and Microsoft Edge, and on iOS, Android, Linux, Microsoft, and MacOS platforms now natively support the HLS streaming protocol.

Takeaway: For now and at least the shorter-term future, HLS is the definitive default standard for live streaming content.

When to use HLS streaming?

We recommend adopting the HLS streaming protocol all of the time. It is the most up-to-date and widely used protocol for media streaming. It does have one disadvantage, which we mention above–HLS has a relatively higher latency than some other protocols. This means that HLS streams are not quite as “live.” I nfact, with HLS viewers can experience delays of up to 30 seconds (or more, in some cases). However, for most broadcasters this isn’t a problem. The vast majority of live streams can handle a delay like that without causing any sort of user dissatisfaction.

Streaming to mobile devices

HLS is mandatory for streaming to mobile devices and tablets. Given that mobile devices now make up the majority of internet traffic (around 75% of traffic in 2017), HLS is essential for these users as well.

Streaming with an HTML5 video player

Native HTML5 video doesn’t support RTMP or HDS. Therefore, if you want to use a purely HTML5 video player, HLS is the only choice. Along with reaching mobile devices, these considerations point towards HLS as the default standard. If you’re stuck using Flash technology for the moment, RTMP will be a better delivery method—but only if you have no other option.

Building an RTMP -> HLS workflow

If you’re using a service like DaCast for your online video platform, you’ll need to build a workflow that begins as RTMP. This is much simpler than it sounds. Essentially, you simply need to configure your hardware or software encoder to deliver an RTMP stream to the DaCast servers. Most encoders default to RTMP, and quite a few only support that standard.

Our CDN partner, Akamai, ingests the RTMP stream and automatically rebroadcasts it via both HLS and RTMP. From there, users default to the best supported method on their own devices.

Using HLS is relatively straightforward. On DaCast, all live streams default to HLS delivery. On computers that support Flash, we do fall back on RTMP/Flash in order to reduce latency. However, HLS is supported automatically on every DaCast live stream, and used on almost all devices.

HLS streaming is delivered by means of an M3U8 file. This file is essentially a playlist that contains references to the location of media files. On a local machine, this would be file paths. For live streaming on the internet, an M3U8 file will contain a URL. That’s the URL on which your stream is being delivered.

Using an HTML5 video player

We’ve written extensively about the transition from Flash-based video (usually delivered via RTMP) to HTML5 video (usually delivered using HLS). Check out this blog for more on that subject, including why it’s important to use an HTML5 video player.

If you’re streaming over the DaCast platform, not to worry! You’re already using a fully compatible HTML5 video player. Content delivered via DaCast defaults to HTML5 delivery. However, it will use Flash as a backup method if HTML5 is not supported on a given device or browser. This means that even older devices will have no problem playing your content over your DaCast account.

Of course, some users may wish to use a custom video player. Luckily, it’s quite simple to embed your HLS stream in any video player. For example, if you’re using JW Player, just insert the M38U reference URL into the code for your video player. For example:

var playerInstance = jwplayer("myElement");
playerInstance.setup({
file: "/assets/myVideoStream.m3u8",
image: "/assets/myPoster.jpg"
});

The future of live streaming

While HLS is the current gold standard for live streaming, it won’t stay that way indefinitely. We expect MPEG-DASH to become increasingly popular in the coming years.

As MPEG-DASH becomes more and more commonly used, we’ll see other changes as well, like the transition away from h.264 encoding to h.265/HEVC. This new compression standard provides much smaller file sizes, making 4K live streaming a real possibility.

However, that time hasn’t come yet. For now, it’s more important to stick with the established standards in order to reach as many users as possible.

Conclusion

Our goal in this article has been to introduce you to the HLS protocol for streaming media. We’ve discussed what HLS is, how it works, and when to use it. We’ve also reviewed some alternative options in terms of streaming protocols. After reading, we hope you now have a solid foundation in HLS streaming technology and its future.

To recap, HLS is widely supported, high-quality, and robust. All streamers should be familiar with the protocol, even if they don’t understand all the technical details. This is true for all kinds of streaming, including if you want to stream live video on your website via the DaCast online video platform.

You can do your first HLS live stream today with our video streaming solution. Take advantage of our free 30-day trial (no credit card required).

External Market Data

Reuters Institute Digital News Report 2019

  • This year’s report comes amid a complex set of challenges for the news industry specifically and for our media environment more broadly, including the ongoing disruption of inherited business models for news, constant evolution in how people use digital media (and the ways in which we are constantly reminded of how some of the information they come across is untrustworthy and sometimes spread with malicious intent), and social upheaval associated with the rise of populism and with low trust in many institutions.
  • Against this background we are seeing some real shifts of focus. News organisations are increasingly looking to subscription and membership or other forms of reader contribution to pay the bills in a so-called ‘pivot to paid’. Platforms are rethinking their responsibilities in the face of events (Christchurch attacks, Molly Russell suicide) and regulatory threats, with Facebook rebalancing its business towards messaging apps and groups – the so-called ‘pivot to private’. Meanwhile audiences continue to embrace on-demand formats with new excitement around podcasts (New York Times, Guardian) and voice technologies – the so-called ‘pivot to audio’.
  • Despite the efforts of the news industry, we find only a small increase in the numbers paying for any online news – whether by subscription, membership, or donation. Growth is limited to a handful of countries mainly in the Nordic region (Norway 34%, Sweden 27%) while the number paying in the US (16%) remains stable after a big jump in 2017. 
  • Even in countries with higher levels of payment, the vast majority only have ONE online subscription – suggesting that ‘winner takes all’ dynamics are likely to be important. One encouraging development though is that most payments are now ‘ongoing’, rather than one-offs.
  •  Worries about the quality of information may be good for trusted news brands. Across countries over a quarter (26%) say they have started relying on more ‘reputable’ sources of news – rising to 40% in the US. A further quarter (24%) said they had stopped using sources that had a dubious reputation in the last year. 
  • More people say they actively avoid the news (32%) than when we last asked this question two years ago. Avoidance is up 6 percentage points overall and 11 points in the UK, driven by boredom, anger, or sadness over Brexit. People say they avoid the news because it has a negative effect on their mood (58%) or because they feel powerless to change events.

External Market Data

The Rise of Digital Audio Advertising 2019

  • This year, 86% of advertising agencies and 66% of brand advertisers said that they now see digital audio as a key part of their integrated media strategies. 
  • 75% of advertisers plan to increase spend across podcasts in the next 12 months. 
  • With 85% of advertisers and agencies set to increase their investment in digital audio within the next year alone, it’s undeniable that digital audio has become a major player in a mature advertising market. 
  • Confidence in digital audio advertising has grown in the past year. People in the UK are consuming more digital audio than ever before, whether it is digital radio, podcasts or streamed music. As a result, 86% of agencies and 66% of advertisers surveyed now see digital audio as an important part of most media strategies¹. 
  • Digital audio advertising’s value proposition is becoming clearer. Digital audio is now demonstrating its applications to industry stakeholders more successfully. They believe it is effective in reaching listeners in a variety of contexts, for example reaching consumers on the go (85%)², and while they are doing lots of different activities (79%)³. As a result, 81% of survey respondents said that digital audio means advertisers can be really contextually relevant. 
  • Digital audio is increasingly perceived by agencies and advertisers as a rich creative medium. 78% of survey respondents think that listeners are highly engaged with digital audio because of the great content that’s available5. 
  • Digital audio’s role in a campaign is changing, as agencies increasingly experiment and innovate. Survey respondents see digital audio as the medium developing the most innovative opportunities for advertisers (53% selected the medium)6. 
  • Digital audio still faces a number of challenges. There is still work to do around the effective measurement and attribution of digital audio. 53% of respondents think that streaming audio enables them to target the right people at the right time but some respondents lack awareness about the availability of measurement and attribution tools. 
  • The outlook for digital audio advertising is positive as more advertisers opt to build it into their media strategies. 85% of survey respondents said they will increase their investment in digital audio in the next 12 months8.

Spotify reaches 108 million subscribers, inches closer to profitability with Q2 results

Spotify’s second quarter financial results included notable growth in both its monthly active users and its subscriber base. The company now boasts 232 million monthly active users, up 29% on-year, and 108 million subscribers, a lift of 31% from the year-ago period. Europe was the largest region for the subscription audience, responsible for 40% of that base, followed by North America with 30% and Latin America with 20%.

Quarterly revenue for the company reached nearly €1.67 billion, marking 31% growth from the same period last year. Subscriptions were responsible for €1.5 million of that total, also up 31%. Ad-supported revenue for the platform totaled €165 million, up 34%.

Spotify continues to operate at a loss, but it has been steadily moving toward profitability. The quarterly operating loss for the company was €3 million, compared with €47 million in the first quarter of 2019 and €90 million in the second quarter of 2018.

The company also made a special note of its efforts in podcasting in its shareholder letter. Spotify said that tens of millions of users are now tuning in to its podcasts every month, with its podcast audience nearly doubling since the beginning of the year.

It also stated that it has reached licensing agreements with two of its four major label partners. Spotify did not specify which key players it had landed deals with, but noted that it is “in active discussions” with the other two businesses.

Jeff Vidler: Why Advertisers Are Starting to Open their Wallet for Podcasts

This guest column by Jeff Vidler, President of Audience Insights Inc. in Ontario, was first published in Medium. Jeff Vidler is a regular speaker at RAIN Summit Canada, and is the co-producer of the Canadian Podcast Listener Report.


It’s a heady time to be in podcasting. The latest IAB/PwC Podcast Ad Revenue Studyof the U.S. podcast industry estimates the 2018 ad revenue for podcasts was USD $479 million, a more than 400% increase from USD $107 million in 2015.

That’s pretty spectacular growth for a medium that’s been around for more than 15 years. And there are plenty of good reasons for that. Yes, more people are listening to podcasts. Even more important, advertisers and agencies are waking up to some of the one-of-a-kind benefits offered by podcast ads.

At Audience Insights Inc., we’ve worked on dozens of research studies on podcast listening in both the U.S. and Canada over the past few years, most recently Westwood One and Audience Insights Inc.’s Podcast Download — Spring 2019 Report.

From our research, we see three clear advantages of podcast advertising:

1. Deeply engaged listeners

If you’ve ever gone scuba diving or snorkeling, this may ring a bell for you. I went snorkeling a long time ago. What struck me was the immersive nature of the experience. Surrounded by an undersea world teeming with life, the “above sea” world slipped away. So did time. And I had the sunburn to prove it, because what seemed like 15 minutes was actually an hour and a half. I’d forgotten what snorkeling felt like until I started listening to podcasts. A compelling podcast can be equally engaging, bringing you into another world and making otherwise dead time fly by. Without the sunburn.

We’ve seen this engagement in action in the brand lift studies we have conducted for Pacific Content. Pacific Content takes the idea of a branded podcast and raises the bar by working hand-in-hand with their marketing team on the conception and development of the podcast, then adding in a layer of world-class storytelling. They call them “original podcasts for brands,” and they’ve built them for some of America’s biggest brands — including Facebook, Charles Schwab, Dell Technologies and Prudential Insurance. Remarkably, with no more than a couple of “brought to you by” mentions and absolutely zero product sell per episode, we typically see unaided sponsor recall scores that meet or exceed benchmarks for full length ads embedded in online video content.

2. The personal connection to the program and host

Listeners develop a close relationship with their favorite podcast hosts and shows. It’s a natural extension of that deep engagement.

Popular podcasts often sell out large theatres for their live shows in a way that radio DJs or hosts could only imagine.

We also see this when we ask podcast listeners why they say podcast ads command more of their attention than ads in other media. In our study with Westwood One on U.S. podcast listeners, the top three reasons revolve around the host and their personal connection to the podcast.

The very personal appeal of podcasts — and the ads they typically carry — are also reflected in the ad avoidance results. Fewer U.S. podcast listeners say they skip or otherwise avoid ads in podcasts than ads in any other media, especially ads in other digital media.

3. A unique opportunity for advertisers to reach an on-demand audience

Podcasts occupy the same on-demand media space as Netflix and paid music streaming services like Spotify and Apple Music. This puts them squarely on trend, reaching the same affluent millennial audience that wants their content on their terms and their schedule.

Just one difference. Brands can advertise on podcasts while they can’t advertise on Netflix or paid Spotify or Apple Music subscriptions.

The on-demand pull of podcasts also happens to play into one of podcasting’s strengths as an ad medium. With literally hundreds of thousands of podcasts available, niche interests are a big driver of podcast listening. That in turn provides vertical advertising and marketing opportunities you can’t get through mass media.

What Could Keep Advertisers from Opening their Wallet Wider

PwC projects ad revenue for podcasting to more than double by 2021, breaking through the USD $1 billion milestone. Podcasting is poised to hit that mark or beat it. But future growth will depend on how well the podcast industry meets the following challenges:

While it is getting better, measurement can still be a buying barrier. Downloads do not equal listens. Meanwhile, demographic and attribution data are still lacking. On the bright side, more podcast publishers are now participating in the U.S. IAB guidelines and increasing ad revenues are helping to fuel measurement innovations.

Fragmentation can complicate the buying process. With so many podcasts available, media buys can be challenging. Again, this is improving as sales networks (such as Midroll or Westwood One in the U.S. and TPX in Canada) help brands navigate this by aggregating inventory across multiple podcasts.

Will the need for scalability create a push to programmatic advertising? Podcasters need to fend off the temptation to plug inventory holes with ads that don’t deliver on the one-of-a-kind opportunity to tap into the deeply personal nature of podcasts.

Full results from Westwood One and Audience Insights Inc.’s Podcast Download–Spring 2019 Report of more than 1,400 monthly podcast listeners are available here. The study replicated questions from the survey from The Canadian Podcast Listener 2018 in partnership with North American podcast consulting firm Ulster Media with support from The Podcast Exchange (TPX). New data from The Canadian Podcast Listener 2019 will be available this Fall.

How The Economist builds digital products

The lessons we learned in product development

Over the past year, our digital teams at The Economist have been thinking more deeply about how we can build products and experiences that subscribers love. After a year of experimentation, a little bit of chaos and a whole lot of fun, here are some of the biggest lessons we learned.

Invest in your owned-and-operated products

While it’s important to experiment with new platforms such as social media and other third-party channels, we realised that it’s even more important to invest in the platforms we ultimately control, such as our website and apps. A year ago, The Economist made a big investment to accelerate the development of economist.com and a new app — the products that we believe are best positioned to attract and retain subscribers.

Economist.com is already a big driver of subscriptions. Many people use it to sample our journalism before deciding whether to subscribe. It is crucial that we make a good first impression. That is why we are focusing more resources on optimising our readers’ first visit to the website, in addition to improving basic things like speed, navigation and performance for regular visitors.

The new app, meanwhile, aims to retain subscribers once they have signed up. As my colleague Richard Holden, who led its development, writes: the goal is to help subscribers easily discover and enjoy the best of our journalism in one place.

Ensure that your strategy aligns with your mission

Our product mission is to complement world-class journalism with a world-class digital experience. However, doing more digital stuff is not a strategy. Digital is a means to an end — that end being a better customer experience across all channels. We now try our best to put the customers’ needs (rather than our own!) at the heart of every feature and product we build.

Be humble. Don’t second-guess your subscribers

It’s human nature to want to jump to quick solutions to problems. But in product development, the wrong solutions could turn into a costly waste of time. Especially if you are solving the wrong problems. Before we developed the new app, we started with a simple hypothesis based on customer feedback: readers are cancelling because of the “unread guilt factor”.

Many of our former subscribers found it difficult to stay on top of The Economist edition each week and simply gave up. We spoke to some of them to validate that the problem actually existed. (It helped that The Onion once spoofed us about it.) It did. We also invalidated some of our assumptions: for example, we suspected that readers might want a personalised list of articles, when in reality they saw us as a trusted curator and valued our editorial judgement.

Test ideas with subscribers

Our UX researcher spoke to more than 100 subscribers and prospects before we built the app in actual code. This ensured we weren’t wasting time and resources on features no one wanted. In fact, in some of our user-testing labs, we used post-its as fake menus and prototypes on Marvel, a prototyping app, to figure out whether the app was addressing real pain points, such as information overload and difficulty finding relevant content — the leading indicators for churn. Once we had built the real app, we ran an alpha test with 50 subscribers before releasing it to more than 700 on TestFlight, an Apple service for testing iOS apps.

Featuritis will kill a product

We endeavoured, where possible, to avoid “featuritis” — a terrible affliction that affects many in the world of product management. With the app, we focused on delivering the minimal viable features required at launch (a topical selection called Daily Picks, the Espresso morning briefing, access to the print and audio editions, and bookmarks). Admittedly, it was tempting to cram every shiny new thing into the app before its first release, but we reassured our stakeholders that the launch is only the first step. We plan to continue polishing and improving the app. It is, after all, our job to keep delighting subscribers.

There’s always room for improvement. Tell your customers that

It’s important to take customer feedback seriously, but not too personally (which is easier said than done!). With both the new app and economist.com, we get a flurry of constructive and sometimes painful-to-read comments, daily. While many users raved about the new app experience, for example, some gave us a heart-wrenching 1-star rating (out of five) because we did not include their most beloved feature. So we reassured them that we are working on it and will be adding more features in the coming weeks and months.


As usual, we’d love your feedback. What do you like about our products? What bugs you? What could we do to improve your digital experience of The Economist? Let us know in the comments below.

Computers may take the place of parliament

We’re entering a world where voters’ wishes will be so well understood that arguments for direct democracy will grow.

If this column were a book it might be called: My Dad, the Theory of Measurement and the End of Representative Democracy. When my mum died and we cleared out their house, I took home some of my father’s papers as mementos of his working life. Some stuff about transducers and his book The Mathematical Modelling of Metabolic and Endocrine Systems, which isn’t exactly a page-turner, unless you turn the pages without reading them.

Dad, Professor Ludwik Finkelstein to give him his proper title, was a professor of measurement. And I confess I was never absolutely certain what that meant. A few weeks ago, however, City, University of London, informed me that on the institution’s 125th anniversary it was declaring my father an icon of the university for his scientific contribution, and asked if I would be able to attend the ceremony. Yes, of course. But I thought before I did so it would be a good idea to get a grip on the whole thing.

I learnt quite a bit about scientific instruments that I will save to entertain everyone at the next family party. But here, in a nutshell, is what might matter to you. And what matters to understanding politics and its future.

My father helped develop a consistent understanding of measurement. It is a language, he argued, that you use to describe things. It allows you to appreciate their basic properties, to compare them and to rank them. The purpose of pinning down the meaning of a “proper” measurement was that with this descriptive language you can understand better what look like fuzzy bits of human behaviour. You can see that they are predictable and consistent systems. You can model them and therefore you can computerise them too. Dad’s work was the bedrock of computerisation.

Now I see why, despite being an engineer and devoted to the discipline, Dad was always very encouraging of my interest in politics and economics. He saw they were every bit as much a system as the instruments he installed in coalmines at the start of his career. And as I look both backwards in my political life and forwards to the future of politics, I can see that he was right.

When I first went to work for the Conservative Party in 1995 I realised something quite early on. We were amateurs fighting professionals. Tony Blair’s Labour Party was studying voters systematically, using qualitative and quantitative polling. We were relying on instinct. So when a controversy arose, they knew what voters would think while we were guessing.

Although I say they knew, in fact what they were doing was rudimentary. Some focus group polling, some survey work. Soon the techniques available became much more sophisticated. By the 2015 election, parties were able to target individuals based on demographics, shopping habits and so forth. They were able to describe voters using numbers in exactly the way my father would have recognised, ranking them, ordering them, predicting their behaviour.

Then, of course, there was the controversial work during the Brexit referendum (and in the US, with Trump) to influence opinion based on data mining by companies such as Cambridge Analytica.

Yet this is just the start. This process of ordering and systemising will get deeper as we are able to store more data and process it more quickly. Increasingly we are able not just to ask people what they think but to predict what they will think. As Jamie Susskind noted in his thought-provoking book Future Politics, Facebook’s algorithm needs only ten likes before it can predict your opinions better than your colleagues, 150 to beat family members, 300 to defeat your spouse. Computers will be able to predict what you think better than you can yourself.

Even with this, we will still just be getting going. We will be at the computer-assisted parking stage of development, but we may go all the way to the driverless car stage. Eventually you will be able to produce a speech that is perfectly engineered to achieve a certain reaction. You will be able to take policy positions perfectly designed to produce coalitions of support of a given size. You will be able to select candidates perfectly engineered to win elections. You will know exactly how any argument will play.

Once you know this sort of thing, indeed once you are able to know it, you won’t be able to carry on as before. If you do, you will be beaten by someone who lets the technology assist them.

During the 2011 referendum on the alternative vote, the advocates of AV persisted with an argument — AV would help deal with expenses fraud — that focus groups said wouldn’t work. Presumably they thought it was still compelling, but guess what? Voters didn’t. Which was knowable. To press on with a position when you are certain it’s a loser is unprofessional, and also unyielding.

There is no point objecting that you wouldn’t want all this to happen. That you will want authenticity rather than something so calculated. Because the whole point is that whatever is calculated will, by definition, be what you want. It will always be more appealing to you than the alternative because it will be based on measurements of what you think, what you want and who you are.

And, as with the Cambridge Analytica work, the line between what you really think and what, with computer assistance, you can be persuaded to think will be blurred.

This will be the position every parliamentary representative will find themselves in. It’s one thing to take a stand against public opinion in the hope it will work out. It’s quite another when technology allows you to appreciate that it absolutely won’t work out. Representatives who don’t follow predictable, knowable opinion will be replaced by those who do.

At the same time, the demand for direct democracy may increase. After all, the objection that we can’t deal with complicated questions because we can’t all gather in the same room has already gone. And if technology can measure our opinion and predict our position, it can allow us to make decisions on legislation that reflect our point of view even on issues we don’t properly understand. A computer may know our view on the Domestic Energy Efficiency Plan Bill even when we don’t.

One day, it could even make these decisions without our intervention: driverless cars, voteless democracies.

It seems quite a scary outcome. But I am shored up by what I acknowledge is a statement of faith more than anything else. My Dad always believed that nothing really bad could come from scientific insight and systematic knowledge. That bit of his work I did understand. And I think he was right.