Introducing the Social Audio Wars

Throughout lockdowns and the last several months, people have been eager to share their stories and voices online in new ways, leading the buzzy social app Clubhouse to skyrocket up app store charts with more than 9.6 million downloads in February 2021. Similarly, podcasts exploded in popularity during the pandemic and, according to The Wall Street Journal, are on track to bring in more than $1 billion in U.S. ad revenue this year. An estimated 116 million people in the U.S. are now monthly podcast listeners, representing 41 percent of the U.S. population over the age of 12. 

Like any new medium, competitors like Twitter and Facebook jumped on the opportunity to build their own drop-in audio capabilities, pushing social audio into the everyday lives of millions of users of dominant social platforms. 

Clubhouse continues to struggle with a lack of organized conversational content and the ability for listeners to catch up on missed content, as nothing is recorded or archived for public consumption. Attempts to monetize the platform are now competing with startups and creators who already have a leg up by tapping into the creator marketplace for ad placements and sponsored content, similar to what is seen on other platforms like Patreon. It’s likely for these reasons — being slow to incorporate new products and offerings into the community — and more that Clubhouse appears to have lost momentum, garnering only 2.7 million downloads in March, a 72 percent drop, according to Sensor Tower data. 

Related: Clubhouse teams up with the NFL for draft programming

Meanwhile, drop-in audio capabilities have since been folded into a larger, seemingly industry-wide effort to support the creator economy with new revenue streams, including the ability for followers or supporters to tip creators directly on some platforms. Building off this trend, the next chapter of social audio now includes podcast subscriptions, a potential revenue stream that has tech competitors in a land grab for advertisers, creators, and listeners alike. 

Official product and partnership announcements last week from Apple, Facebook, and Spotify initiated this arms race after rumors swelled that paid podcast subscriptions would be the next big thing in audio.

Apple’s foray into podcast subscriptions was announced during its ‘Spring Loaded’ event last week, with iOS 14.5 including major updates to Apple Podcasts that improve podcast discovery and listening experiences. Apple also unveiled Apple Podcasts Subscriptions, a global marketplace for listeners to “discover premium subscriptions” offered by creators alongside the millions of free shows available on Apple Podcasts. 

Beginning this May, Apple Podcast listeners in over 170 countries and regions can sign up for premium subscriptions that include ad-free listening, creator curated playlists and access to additional content. Apple will take a 30 percent commission from these podcast subscriptions, similar to transactions made with apps on the Apple App Store. With Apple Podcasts being the biggest podcast listening platform in the world, Apple Podcasts Subscriptions will be monumental for the entire podcasting industry, as listeners won’t have to leave the app to sign up and take advantage of its features.

Related: SiriusXM acquires Roman Mars’ 99% Invisible and a bigger stake in the podcasting industry.

According to Facebook, more than 170 million people are connected to hundreds of thousands of podcast pages on Facebook, and more than 35 million are members of podcast fan groups, but users have to leave the Facebook app to listen to podcast episodes. To solve this challenge, Facebook will soon be launching an integrated version of Spotify’s audio player with a project called “Project Boombox” to provide Facebook users with access to songs and podcasts directly within the Facebook app. 

The new partnership is part of a larger push into social audio by Facebook and an opportunity to strengthen Spotify’s market position globally. 

In the announcement, Facebook outlined its roadmap into social audio with a suite of new features and capabilities that will roll out in the coming months, including: 

Audio creation tools that use AI, voice filters, Facebook’s Sound Collection, and more.

Soundbites, a new social audio format that creates short-form, creative audio clips for more creative and dynamic storytelling.

Live audio rooms on Facebook and Messenger, similar to Instagram Live Rooms and Clubhouse rooms.

Closed captioning capabilities across all Facebook audio features.

Monetization opportunities, including the Audio Creator Fund. 

Separate from the Facebook partnership, Spotify is launching podcast subscription options for partners, initially letting creators keep 100 percent of the subscription fees. Spotify’s decision is in contrast with other creator platforms, including YouTube, Twitch, Apple, Facebook, and Patreon, which all take a cut of subscription fees or fan payments. Spotify kicked off its podcast initiatives in early 2019 with acquisitions of Gimlet Media, Parcast, Anchor, and podcast publishing and ad company Megaphone, along with hefty investments with creators like Bill Simmons’ The Ringer podcast and media startup in a deal worth up to $200 million. 

While some skeptics are unsure if Spotify can sustain this hyperfocus on podcasts without taking at least some revenue from creators, Spotify maintained in its Q4 2020 results last year that 25 percent of its total user base engaged with podcast content that quarter, up from 22 percent in Q3. Podcast consumption hours in Q4 nearly doubled year-over-year according to Spotify’s earnings call, signaling that so far, Spotify’s podcast bet is paying off. 

Separate from big tech, media companies like NPR are trying their hand at paid audio, too. NPR plans to launch a paid radio podcast subscription service that allows listeners to directly support podcasts and “receive sponsorship free versions of individual podcasts for a small fee,” according to Axios. Interestingly, it’s rumored that The New York Times has had internal “conversations” around paywalling podcasts but has no immediate plans to shift access to audio content into a subscription model. 

The financial return on investments into social audio and podcasts has yet to be fully realized, but there’s no doubt that subscription models and new discovery features across platforms will serve as sustainable business strategies for some creators to gain more listeners and rely less on advertising models to achieve revenue growth.