“The Dumb Money Is Gone”: Is the Podcast Boom Going Bust?

In early 2015, not long after Serial came out of left field and inaugurated a golden age of podcasting, another breakout audio production caught fire. The show, Invisibilia, a science-y narrative series about “the invisible forces that control human behavior,” was incubated inside NPR at a time when the venerated public-radio institution found itself adapting to the rapid rise of on-demand listening. Serial, with its SNL-skit-level cultural penetration, had opened the floodgates on streaming audio just a few months earlier. Now the debut season of Invisibilia was pulling even bigger numbers than Serial had out of the gate: nearly 40 million downloads within three and a half months of its January debut. “A blockbuster,” as The New Yorker’s podcast columnist put it.

Eight years, eight seasons, and God knows how many million more downloads later, Invisibilia was canceled last Friday along with three other NPR podcasts, victims of a 10% staff culling that NPR undertook to stanch the bleeding of a budget gap in excess of $30 million. Reacting to the news, Vulture’s podcast critic Nick Quah observed, “It’s hard to overstate just how big of a deal the show’s success was…symbolizing the possibilities of what NPR could be during the opening innings of what’s now known as the podcast boom.”

As a nonprofit news organization that runs on member-station dues, public funding, and corporate underwriting, NPR has its own complex business model that doesn’t invite an apples-to-apples comparison with other podcasting titans. Nevertheless, last week’s slaughter appeared to be a symptom of the same forces that are bumming out much of the audio world. Or at least, it’s fair to say that when a critically acclaimed, big-numbers show like Invisibilia can’t survive, that doesn’t seem like a very good sign. (If I told you Invisibilia cost NPR well north of $1 million a year to make, according to someone who knows, it’s easy to see why the bean counters might have set their sights on it.)

Indeed, the bad omens continue to accumulate. Look no further than Gimlet’s rise and fall, a stunning reversal of fortunes for a player once heralded as the medium’s best and brightest. Or Spotify’s 180 from its high-dollar podcasting push, which the company’s chief financial officer recently described to the Financial Times as a “big drag on our business.” Or this month’s layoffs at SiriusXM, which, according to “Hot Pod,” now appears to be doubling down on safe-bet celebrity podcasts like the ones it produces from Conan O’Brien and Kevin Hart. Not to mention all those dour headlines of late: “2022: The Year That Podcasting Died”; “This Could Be a Rough Year for the Podcast Industry”; “The Great Podcasting Market Correction.” Oof.

That last piece, from Bloomberg’s Ashley Carman and Lucas Shaw, sums up the state of play: fewer acquisitions, smaller budgets, less favorable terms for creators, and diminished dealmaking. “This past year,” the authors wrote, “podcasting finally achieved one of the ultimate signifiers of middle age—an unsettling realization that the best days of its high-spirited youth may now be behind it.”

Anecdotal evidence seems to bear out that metaphor. Remember all those super-ambitious narrative series that seemed like they were being snapped up left and right at, say, $250,000 to $300,000 a pop? Those types of contracts have become fewer and farther between. On the other hand, I hear about people striking deals with tiny budgets and minimal production support in hopes that their series might catch on, leading to a better next deal or maybe even some royalties. As a podcasting pal put it to me the other day, “It’s an absolutely terrible time to sell a podcast.” One also hears that podcast buyers now want a lot more episodes to make the advertising metrics work. On that note, if your podcast queue is anything like mine, the ads these days tend to sound a bit more, shall we say, mass? (It’s enough to make you miss hearing about KIND Snacks and Mailchimp.)

For a gut check on all of this, I consulted a journalist who’s currently in the trenches of the podcasting space. “Things are bad,” this person said. “There was this ‘Hot Pod’ conference a month ago at the Wythe Hotel” in Brooklyn, “and it was panel after panel of ‘everything’s fine!’ And that is clearly not the case. There used to be all of these vast deals and I feel like everyone felt like that was gonna go on forever, and it hasn’t.”

Or as another veteran of the audio world told me, “It’s sad, but this was a long time coming.”

Here’s where things start to get a little counterintuitive. In contrast to media sectors that are managing inexorable decline—think print, TV news—the podcast market is growing, both in terms of audience and advertising. The latest digital-media-consumption analysis from Edison Research, published earlier this month, concluded that “podcasting is ‘back,’ reaching the highest numbers ever, with 90 million listeners each week,” or 31% of the US population, up from 7% a decade ago. The Interactive Advertising Bureau, meanwhile, projects that US podcast revenue will surge to $4.2 billion in 2024, up from a projected $3 billion this year and $708 million in 2019. The flip side is that, unlike newspapers, magazines, TV news, or even streaming TV, the number of podcasts in the world—3,074,906 with a combined 160,881,736 episodes, by one reliable count at the time of this writing—is practically infinite, resulting in an utterly saturated marketplace for consumers who only have so much time on their hands to read or watch or listen to any one or three things in a given day. 

Still, the trend lines are encouraging. “There’s been no recession among listeners,” said Eric Nuzum, a former NPR and Audible executive (and one of my go-to audio gurus) who cofounded the podcast consultancy and production company Magnificent Noise. “So it’s not really a problem with podcasting as a medium—it’s a problem with the business model we built around it. There’s still more room to grow.”

I asked Nuzum to explain what’s going on with the industry’s course correction. “All the changes happening in podcasting were already rolling before the contraction of the advertising market.” (The ad market as a whole, that is.) “There have been years of people greenlighting and producing six- to 10-part narrative series and realizing that’s an incredibly difficult thing to do if you don’t have a major show to use as a launching pad. Money had been so easy in the podcasting market for years that a lot of these companies have been slow to make changes, because reality hadn’t really forced their hand.” More bluntly: “The dumb money is gone, the easy money has slowed down, and the smart money has seen some pullback.”

In addition to the major players—iHeart, Wondery, Spotify, Sirius, even Vox Media, which one of my sources described as “the sleeping giant in podcasting”—a new crop of smaller, boutique players is emerging. To name a few, there’s Magnificent Noise, Campside Media, Prologue Projects, and Pushkin Industries, cofounded by Malcolm Gladwell and Jacob Weisberg. “All these podcast-company acquisitions over the past few years”—the Gimlets and Wonderys and Stitchers and Ringers of the world—“have cleared out the space for the next generation of companies, which will grow, get bought, merge,” said Nuzum.

The latest entrant is a company called Kaleidoscope, which officially lifted off in November with a party inside the British consul general’s $16 million seven-bedroom penthouse at 50 United Nations Plaza. Kaleidoscope’s cofounders are Oz Woloshyn and Mangesh Hattikudur, whom I’ve known for a long time. (He and my wife worked together years ago.) Despite the industry’s creeping austerity and retreat from a glut of prestige content, Kaleidoscope has all the trappings of a premium enterprise: a six-show deal with iHeart (where Hattikudur was previously an SVP of podcast development and Woloshyn had a production deal); representation from WME; and $3.5 million in seed funding from investors ranging from North Base Media and the Raine Group to Tom Freston and Joanna Coles, both of whom are on Kaleidoscope’s board and have been opening up doors left and right.

Kaleidoscope, with its lean staff of six, has a handful of shows so far. The biggest, hosted by Lance Bass, “tells the story of the last Soviet cosmonaut who is trapped on the world’s only space station, as the country he knows and loves collapses beneath him.” Another, the artificial-intelligence-oriented Sleepwalkers, which Woloshyn and Hattikudur created when they were still at iHeart, led to a commission from a major fashion brand, which hired the duo to conduct an AI seminar for its C-suite. (The fee ended up covering the $150,000 cost of making the show.) Then there’s the Amazonian adventure series Wild Chocolate (recently optioned for a TV documentary), for which Kaleidoscope actually created its own brand of chocolate (made from authentic rainforest beans), which has netted the company $100,000 so far. 

“A lot of places feel compelled to double down on things that are already working, so you see people buying the reliable chat shows or doubling down on true crime,” said Hattikudur. “Our shows are basically international adventure shows. There’s a lot of space and a much bigger audience for stories that haven’t been told in the US.”

I wanted Hattikudur’s thoughts as someone who had just launched a podcast company at the very moment when it’s starting to feel like maybe the party’s over. “I think it’s bleak right now for a lot of people in podcasting,” he said, “and it’s really unfortunate that so many people have lost jobs. But at the same time, there was a lot of commissioning of mediocre content, and places have been really reluctant to cut things.… I do think that, two years from now, the advertising is gonna come in and there are gonna be better ways to target audiences. The companies that can build in these two years will be successful in the end.”