Podcasting could possibly be in for a rocky 2023

This story initially appeared in Hot Pod Insider, The Verge’s e-newsletter concerning the largest occasions in audio. You can sign up here.

It appears like 2022 was the 12 months when podcasting got here again to earth. After years of go-go development, podcast hits going mainstream, main company funding, and hype concerning the market to return ($4 billion by 2024!!), optimism concerning the trade hit the wall of an unsure economic system. M&A took a breather, promoting received tighter, and firms began shedding audio staff after years of frenzied hiring.

What does 2023 have in retailer? If we’ve got realized something in any respect from the last decade to this point, it’s to count on the surprising. But seeing as I’m in as dangerous a place to foretell the long run as anybody, I spoke to some consultants about what they anticipate for the 12 months to return. The high line: if the economic system avoids any massive downturns, we’ll see extra of the identical for podcasting — slowing, however manageable, development. If there’s a recession, then it may set the trade method again.

The promoting market, to make use of trade terminology, is mushy. It shouldn’t be terrible — there are nonetheless loads of advert {dollars} flowing to numerous sorts of media — however it’s not rising as a lot because it had been. And there’s potential for it to get considerably worse in 2023.

This goes to sound actually fundamental, and positively a lot of you studying this already understand how this works, however promoting is extraordinarily prone to financial disruption. And there have been fairly a couple of disruptions in 2022: the struggle in Ukraine pushing up power prices; excessive inflation making everything from vegetables to auto insurance dearer; and rising rates of interest pushing inventory costs down. Altogether, these components make it dearer to run a enterprise. It additionally may power customers to spend much less on items and providers, and though that has not really happened yet, it’s one thing that simply may if these financial situations proceed.

So companies that might in any other case be spending cash on promoting are both feeling the ache or are being conservative within the face of uncertainty. And when these companies have to choose between issues like staffing, operations, shopper expertise, and advertising, advertising is normally the primary to go. That means fewer advert {dollars} flowing to the companies that rely on them: conventional media, digital media, and social media.

Which is to not say that the advert market has collapsed, however it’s wobbly. Max Willens, a senior analyst at eMarketer, says that he seen one thing odd when he spoke with an advert company government. The government famous that solely 5 p.c of its shopper base had submitted their advert budgets for the 12 months. According to Willens, that’s extremely uncommon this near the top of the 12 months. Normally, greater than half of these corporations would have finished so by now. “The uncertainty that people talked about as an abstraction for most of 2022 is really only just getting started,” Willens stated.

So what occurs subsequent within the advert market is actually depending on what occurs in the remainder of the economic system. The job market continues to be tight (even when it doesn’t really feel that method in case you work in media, however extra on that later) and inflation is starting to slow. But a Bloomberg survey of greater than three dozen economists is extra pessimistic. They put the probability of a recession within the subsequent 12 months at 7 in 10. 

Barring all-out financial catastrophe, podcasting must be okay. Not nice, not horrible, however fantastic. The downside is that the trade has been working beneath the belief that podcast development would proceed to be as robust because it has been for the previous a number of years.

For 2023, eMarketer estimates that podcast advert income ought to nonetheless develop by 28.8 p.c — practically the identical development charge as in 2022. But that can also be about half the expansion charge podcasting skilled in 2021. Worse, that charge is anticipated to drop by greater than 10 factors in 2024. “People overestimated and misinterpreted the bounce back in 2021 as a sign that was going to be a springboard into real sustained blockbuster growth,” Willens stated. “And you see across media that has proven to be quite incorrect.” 

During the growth time, corporations like Spotify, Amazon, and SiriusXM invested a whole bunch of thousands and thousands of {dollars} in podcast tech and content material with the expectation that the sector would proceed to develop. Even if buyers should not thrilled with how a lot they spent (and their present podcast revenue margins), they’re in a greater place to seize what advert {dollars} are flowing into the market. With the largest podcasts in the marketplace (Spotify and Joe Rogan, Wondery and SmartLess, SiriusXM and Crime Junkie) and most refined tech stacks, they’re in a greater place to climate a downturn. Independent creators, who’re already having a more durable time breaking out than they did a couple of years in the past, shall be left to select up the scraps.

Probably. Even as layoffs have been averted in lots of sectors of the economic system, that has not been the case in tech and media. Like I discussed up high, companies will minimize advert budgets earlier than reducing employees. But these advert cuts simply find yourself leading to layoffs in ad-based companies. (Lucky us!) 

The again half of 2022 was affected by freaky layoff information, and there’s no cause to assume that would be the final of it. CNN and Spotify minimize podcast producers, Twitter ousted practically all of its Spaces workforce, and Bloomberg reports that SiriusXM layoffs are on the horizon. But the job cuts usually tend to be a correction than an all-out gutting.

Matthew Harrigan, an analyst at The Benchmark Company who covers SiriusXM, stated he wouldn’t be stunned if SiriusXM minimize some jobs. He pointed to CEO Jennifer Witz’s latest remark to analysts about utilizing a “disciplined approach to cost management” as a sign that some roles could possibly be minimize. Even so, he doesn’t count on widespread cuts. “I don’t think there’s any ‘oh, gosh’ moment where they looked at the business model and really wish that they had done all that much differently,” he stated. “It’s just a matter of trimming a little bit.”

But even a handful of layoffs can rattle individuals working within the trade, and never all corporations are in the identical place. NPR, which is a nonprofit, is fairly depending on company sponsorship, one other line merchandise companies minimize when the economic system is messy. With an anticipated $20 million decline in such sponsorships, the community took the drastic transfer of reducing its summer season internship program. Audacy must handle its huge debt and is reportedly contemplating promoting off podcast studio Cadence13, which has in any other case been an enormous success for them. If Cadence13 lands elsewhere, job safety could possibly be tenuous. 

Then there are the information media shops which have invested in podcasting lately. Publications which are depending on digital show promoting and subscriptions are experiencing deep cuts, together with Gannett, Vice, and, quickly, The Washington Post. Many audio employees are embedded at such corporations and could possibly be liable to dropping their jobs, however what number of shall be let go relies on the corporate’s priorities. On one hand, audio promoting is faring higher than digital show promoting, so these jobs could possibly be seen as extra invaluable. On the opposite hand, they aren’t essentially thought-about a part of the core enterprise and could possibly be among the many first to go.

Media trade analyst Craig Huber doesn’t count on that publications are going to drag again from audio altogether. But if the economic system does get considerably worse, any job could possibly be in danger.  “There’s nowhere to hide in a tougher economic environment,” Huber stated. “From an advertising marketing standpoint, everything will get hit.”

On that mild notice, I want you a really comfortable vacation. And don’t despair! Things go in cycles. As my personal lord and savior Bruce Springsteen wrote, “Everything that dies someday comes back.”