As a result, small, indie companies are acquired or have to shut down (because they can't compete).Capital is centralized with mega-corporations who try to grab as much market share as they can.It's when investors realize there's no possibility for a decent return, and they jump ship.Īnd overcapitalization has knock-on effects that won’t be good for podcasting:
Overcapitalization occurs when the real value of an asset (or in this case, an ecosystem) is far less than what's been invested. They're hoping their money will add fuel to the fire, and supercharge podcasting's slow and steady growth.īut what happens if the growth, and the potential financial returns, don't materialize? When investors pour $1 billion+ into a podcast ecosystem that didn’t have $1 billion in total revenue last year, that's a problem. I’m particularly worried about overcapitalization. "To date, we haven't seen a material positive inflection in app downloads or Premium subscriptions."īut, investors keep driving up Spotify's stock price, and venture capitalists keeping investing millions in new audio startups. I'm not the only one scratching their head at Spotify's podcast spending spree. Keep in mind that in 2021, it's anticipated that podcast ad revenue will be $1 billion (it was $782 million in 2020). In the last 2 years, Spotify has spent $1 billion on podcast acquisitions. The amount of money being invested into podcasting is puzzling. As I've shown above, podcasting's adoption curve is different than video, social, or blogging platforms. However, I'm highly skeptical that podcasting is ever going to provide that kind of ROI. (For example, Sequoia earned a 57x return on its $9 million investment in YouTube). Investors are now looking to podcasting to provide them with YouTube-level returns. (As long as Big Money™ doesn't mess it up). You can build a long-lasting, sustainable revenue stream. Plus, I strongly believe that steady ecosystems are better for creators. It's sustainable and shows that podcasting isn't a flash-in-the-pan. Personally, I like this gradual growth curve. These numbers are healthy! But you'll notice, there's no meteoric growth here.
In 2020, an estimated 104 million Americans listen to a podcast monthly.
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