One of the most fascinating things, at least to me, about the modern Internet sports media business environment is the collapse of the value of the written word online at the same time that the value of podcasts has been soaring. It’s a dichotomy illuminated in a story in today’s Wall Street Journal focusing on Bill Simmons’s “The Ringer” site.
According to The Wall Street Journal article The Ringer made over $15 million in podcast revenue in 2018. The result was The Ringer, which now employs over 100 people, was profitable as an Internet site thanks to its podcast strength. While The Wall Street Journal doesn’t break out the revenue produced by the website itself, I feel pretty confident there’s no way the website itself would have been capable of employing 100 writers, or even close to that many, and been profitable without the podcasts. Why? Because, and this is key, advertisers buy websites based on volume — i.e. pageviews — on an Internet awash in constantly expanding volume. Whereas advertisers buy podcasts based on a limited amount of exposures.
This means, interestingly, podcasts have flipped the web on its head, they’ve become the new print magazines and newspapers.
Let me explain — the reason why Sports Illustrated used to be able to charge several hundred thousand dollars for a full page ad in Sports Illustrated was because each magazine only had a certain number of full page ads. When you purchased an ad in Sports Illustrated you weren’t just buying an ad, you were also excluding your competitor from buying an ad in a product with a limited number of ads to serve.
And you were also, and this is key, buying a scare product. No magazine or newspaper could have an infinite number of pages, after all.
That scarcity led to higher advertising costs. (There are clearly other advertising factors at play here such as the audience size, their demographic make up, the amount of their income, but we’re just focusing on the scarcity here). The result in magazines and print was a competition for quality. That is, everyone wanted to have the “best” writers to draw the biggest audiences for their products.
But guess what happened when the Internet arrived?
Suddenly the advertising metric wasn’t quality based, it was quantity based — how many page views could you create regardless of how good the quality was? Instead of selling something of finite quality — pages in magazines or newspapers — you were selling something infinite — pages on the Internet. The result? Newspapers and magazines competed in quality — eyeballs followed the most unique and best writers — while Internet sites competed for quantity — you don’t need to pay a top writer when you can just aggregate his best or most interesting paragraph and skim the advertising money off his or her work without having to invest the time.
That’s why the past decade has been so destructive for writers — layoffs continue at an insane pace because writing on the Internet hasn’t ever been about monetizing quality, it has been about monetizing quantity. This is also, by the way, why Sports Illustrated is dying as a magazine. Because they’ve had to replace selling scarce quality with selling abundant quantity.
This shift in advertising spending never made sense to me. Indeed, one of the continuing laments you’ve seen on Outkick was the fixation on quantity over quality when it came to writing on the Internet. What’s more, ads on the Internet are notoriously ineffective. That’s because readers hate them and only idiots click on banner ads.
That’s why I’m so encouraged by this story in today’s Wall Street Journal.
Because now popular podcasts have flipped that script — they offer what magazines and newspapers used to — the scarcity of ad placements in a popular product at a premium price. If you want to be on Bill Simmons’s podcast, he can only do so many ad reads. That allows him, I’m assuming, to charge a premium price for those ad reads. As well he should, there aren’t many people with an audience the size of his.
That’s great for content creators and it also hearkens back to live radio, the single most expensive ad you can purchase on live radio is a live read by the host. Why? The same reason. Because the host can only do so many live reads.
Sure, you can argue there will be too many podcasts, but I’m actually bullish on this model. Why? Because it’s more like TV, people choose to spend time consuming the content they want and it makes them feel closer to the creator. Whereas many readers of articles have almost no idea who the writer of that article is on the Internet today almost everyone listening to audio knows who the speaker is.
That’s why I’m so fascinated by the podcast business model. In fact, I’m particularly interested in how the podcast business model impacts and overlaps with live radio. Both are, clearly, auditory businesses primarily, at least in sports, rooted in the host’s opinion.
When I see podcast networks producing revenue like Bill Simmons’s it’s got me wondering if I’m working way too hard in the wrong space. I’ve already done three hours of live radio this morning and I’ll do fifteen hours of live radio this week — and every week all year around.
Anyone who has ever done live radio vs. a podcast would agree that doing 15 hours a week of live radio is way, way harder than doing taped podcasts for a few hours a week.
I mean, honestly, there’s no comparison.
But do advertisers agree? And, more importantly, does the audience agree? To me, live radio should pay a substantial premium. But what if the marketplace disagrees? Should I just be doing three 45 minute podcasts a week instead of 15 hours of live radio and several hours more of live Periscopes and Facebooks and bringing all my audience to bear in one location to sell to advertisers and sleeping much more than I do now?
Maybe the answer is yes.
Maybe I’m working my ass off for no reason while all these podcasting assholes are out here getting filthy rich and working less.
I’ll tell you this much, you know how many podcasters there were on Super Bowl radio row at 5:30 this morning when I dragged my tired ass in that building?
Do you know how many there will be there all week long?
Now it’s not necessarily an either/or business when it comes to live radio and podcasting because we’re doing millions of podcasts downloads a month of our live radio show but the company that distributes Outkick the Coverage has barely made any money at all off our podcast so far.
And I keep asking how that can be possible given the size of our audience and no one seems to know the answer. So if you want to buy ads on Outkick the Coverage’s podcast email me and I’ll sell the damn ads to you myself.
In the meantime I’m fascinated by the structure The Ringer has created — essentially the writing on the website is being subsidized by the advertising value unlocked by the podcast network. That is, the talking pays for the writing.
So you can place a premium value on written content on the Internet, but in order to do so you have to sell audio ads to do so.
What a wild world the Internet is.
And I’d also encourage you to buy ads on my podcast so eventually I can work less.
(By the way, I put Cousin Sal’s picture up on the top of this article because he’s one of the people in The Ringer podcast network. You should go buy ads on his show too because we both lost nearly $30k each on the Saints and otherwise our wives might leave us.)
In the meantime, the market is telling us something interesting here: after well over a decade quality is circling back to matter much more than quantity.
And that’s a damn good thing.