Silicon Valley VC firm Andreesen Horowitz has produced a long report about podcasting from an investment point of view. Here’s what you need to know.

This week, the firm published a report, Investing in the Podcast Ecosystem in 2019, which looks in-depth at the reasons for the medium’s growth in listenership as well as the opportunities and barriers to making money through them.

Its about audio as much as content

Though podcasts, the downloadable audio content medium first coined in 2004, have stolen much of the limelight, the companies that are succeeding in the space are thinking about how the lines are blurring, in much the same way as the written/visual internet has.

This broader idea of listening echoes the success that Spotify has had since introducing podcasts in 2015. Li Jin, the author of the report and a partner at the firm, observes that downloads data suggests that by using its popularity in music, it has been able to grow the overall podcast category in geographical areas that historically had a smaller podcast listenership.

For Spotify, podcasts have proved to be strategically important, which is an idea they have stated very clearly, in the founder and CEO, Daniel Ek’s letter on the subject. “Our podcast users spend almost twice the time on the platform, and spend even more time listening to music,” Ek wrote.

Lessons from China

Everything is bigger in China, and its podcast ecosystem is large, diversely monetized and fast growing. XimalayaFM, a business valued at $3.6 billion, provides an extremely broad swath of audio content: podcasts, audiobooks, courses, live audio streaming, singing, and film dubbing. “The monetization models are just as diverse,” Jin writes, “there’s advertising, subscriptions, a la carte purchases, and donations / tipping.” In addition, not all paid content is included in the subscription offer, like Amazon Prime Video, though members get a discount.

It also contains opportunities for where the audio world could eventually move. There is a large emphasis on social interaction and community, often based around live-streaming audio channels, where creators can earn virtual gifts from listeners.


Though podcast ads have been shown to be effective in a variety of ways – purchase intent being one – there have been barriers to monetisation, both for platforms and creators.

Apple, the largest platform in terms of market share with 63%, does not allow direct monetization on the platform, meaning that any ads have to be placed directly with hosts. This is both their strength as a medium – the podcasts with the largest listenerships charge high CPMs because it is typically the hosts reading out the ads, which is what makes them effective – and also their weakness.

The long tail of podcasters struggles to make any money because advertisers only want to appear on the largest titles. “Given the lack of advertising inside major listening apps, advertisers need to connect off-platform with podcasters — whether directly or through an ad network. This manual process means that for most advertisers, the long tail of podcasts requires too much time and effort to find and work with.”

But there is an important point for the platforms themselves: there is still a lack of clarity around a listen as opposed to a download, though it doesn’t necessarily translate to a play. They also lag behind the sophistication of Facebook and Google in the written and visual internet. This will be extremely important.

Sourced from Andreesen Horowitz, Spotify