Media War & Peace’s Evan Shapiro on Podcasting in the Media Universe

Jeff Umbro: This is Podcast Perspectives, a show about the latest news in the podcast industry and the people behind it. I'm your host, Jeff Umbro, founder and CEO of The Podglomerate. 

Today on the show we're speaking with Evan Shapiro, a self-dubbed Media Cartographer. I've been reading Evan's newsletter, Media War and Peace, for a long time and it does an amazing job of breaking down the media industry, of which podcasting is obviously a part of. Each issue of Media War and Peace contains amazing demographic information and “maps” explaining where the industry is at. 

He also has a background in podcasting from his time running IFC: the Sundance Channel, NBC's Seeso, their short lived comedy podcast network; and then, briefly working with National Lampoon to revive the National Lampoon Radio Hour as a podcast property.

On this episode we'll do a deep dive into what's happening in the media industry and what that means for podcasting. Let's get to it.

Evan, welcome to the show. Thanks for joining us. 

Evan Shapiro: Thanks. 

Jeff Umbro: We'll start really broad and then I want to really focus in on the podcast industry.

You have written that we are kind of coming out of, or are amidst, a “media apocalypse.” Can you give us like a minute or two on the general media landscape and why we are in an apocalypse?

Evan Shapiro: I think it's like any post-apocalyptic movie that you ever see… Everybody who runs the ecosystem thinks that their innate habits and instincts are leading to a place of prosperity for themselves and their stakeholders. When in reality, the major movers in media over the last decade have basically been ripping out the guts of the fundamentals underneath the industry.

On one hand, that's been positive, because with each move, they're ceding more and more control to the consumer. On the other hand, they've kind of blindly been doing this because they think that each new movement in the ecosystem is in their favor, when in reality, in ceding complete control to the consumer, they've ripped out the engine of their business models.

And so you've found, whether it's Spotify, who's never been profitable on one end of the ecosystem; or any of the gaming companies who are now facing challenges and are ultimately going to be subsumed by larger companies; or most notably that the television film Hollywood industrial complex. [They] found themselves, after Reed Hastings got on an earnings call and said, “oops, my business model doesn't work” in early 2022 – they all went, “wait a second, we were following you.” So it's a self-inflicted apocalypse. 

What I think everybody fails to realize is that we're not headed towards a new era of media. We arrived there back in November, 2019, when Disney+ launched. They went direct-to-consumer for the first time ever with their media and they gained 10 million subscribers in the first month. And everybody thought that was great. And to a certain extent, it was. It gave the consumer even more choice, even more authority. 

But on the other hand, it ruined the basic economics underneath the business that they had been running. And they have no replacement for it. So they basically moved into a new house, but didn't set up the lights, the electricity, the water, the phone, or any of the other elements, and then they poured gasoline to get heat, and now the whole place is on fire. 

All of this is self-inflicted and it could have been avoided. But now we're where we are and now they're all grappling for a new business model. And I don't know that any of them have any idea how to establish a new business model.

Jeff Umbro: So just to break that down a little bit, you're suggesting that when Disney, just as an example, went direct-to-consumer to put all of their products onto Disney+, they’re giving up the business model of licensing their content to their competitors and that kind of thing? Is that, is that the idea or no?

Evan Shapiro: Well, no.

So ESPN, Disney Channel, and ABC, are all wholesale products. They sell it to Comcast. They sell it to Charter. So to a certain extent, it's a licensing model. But they never have to worry about churn, or customer acquisition, or any of these other things that the cable companies were actually really good at, right?

Here you have this pay-TV bundle: a video service bundled in with broadband service and telephone. When you combine those things into a package, it's a very elegant solution to a homeowner's set of, what I call the hierarchy of fees. As people started cutting the cord from pay-TV, and landlines [were] no longer useful, [they] basically ripped out the elegant solution to the homeowner's hierarchy of feeds without a replacement for it.

Actually, we have a replacement for it. It's called Amazon Prime. Everybody has that bundle. No one's de-subscribing from it. 

So by selling their best content – to Netflix and Hulu and Amazon – they created a replacement for themselves without understanding that they had no pivot… that protected them. Now they're all selling their own products individually to consumers, and the consumers are like, “I'll buy it this month, but then when Loki's not in season, or Stranger Things is not in season, or Tom Clancy's Jack Ryan is not in season, I'm going to cancel.” It's so easy. With the swipe of a thumb I can cancel it. 

Amazon Prime [Video] doesn't get de-subscribed [from] because, like the previous era, Amazon has bundled that in with free shipping, and music, and all these other services, all these other hierarchy of fees. Just like the previous era, but different.

Google has built a suite of products, granted some of it is monopolistic and will be disturbed by antitrust regulation. YouTube, YouTube TV, YouTube Kids, YouTube Premium, YouTube Music, YouTube Gaming, Google TV, Search, Chrome, and all these other things. They are surrounding the consumer with everything that they need on an ongoing basis.

That's where we're headed. Big Tech has, for the most part, begun to figure this out. But it's a completely different business than ABC, Disco Brothers, Paramount, and Fox had been operating under in the previous era.

Jeff Umbro: From a bird's eye view, where does the podcast industry fit into this media universe?

Evan Shapiro: To a certain extent it is so small it reaches a level of insignificance that barely deserves attention. I love podcasting, and the listenership is very large, but from an economic standpoint, this year I think podcasting will do… let's call it $3 billion dollars.

Jeff Umbro: Yeah, it depends what the ad market bounces back as.

Evan Shapiro: It sounds like a lot of money, but YouTube alone will do $30-31 billion this year by itself. Just YouTube. 

And by the way, YouTube is probably the most used podcasting platform.

Jeff Umbro: I always laugh when people use that stat, but this particular show [has] been around for two and a half months, it's very new, [and] we already have over a third of our audience on YouTube alone.

Evan Shapiro:  Yeah and for a lot of podcasters, it's half. 

Everybody talks about Spotify – and by the way, Spotify is, I would say, in very large part, responsible for the recent meteoric jump from where podcasting was before Spotify got into it, around a million and a half podcasts in the ecosystem, to where it is now, where there are about four and a half million podcasts. Part of that was the convenience and part of that was introducing what had been traditionally an old, white art form to a younger, far more diverse audience, which is the Spotify audience…

But then think about that for a second. Spotify invested $2 billion into podcasting, an industry that has never done more than $2.5 billion dollars in total revenue. It doesn't make any sense. When you're betting $1 million to win a $500,000 pot, that's not good poker.

Jeff Umbro: Yes and no. I'm going to push back on some of the things that you said. 

Spotify's investment was meant – and whether it worked or not we'll see – but it was meant to look towards the future of podcasting. 10 years from now they might make many multiples of that, annually or in aggregate. 

There's also a lot to be said that Spotify bought anchor, which is an entry-level hosting platform that you can [use to] record a podcast on your phone. Anybody in the world can do it… That is a huge part of the reason why they jumped from 1.5 million podcasts to 4.5 million. I think it's actually over 5 now. 

And then on top of that, we had the pandemic to contend with. So a lot of people were stuck at home, a lot of big companies had event budgets and marketing budgets that they couldn't spend elsewhere, and they pushed that towards podcasting. So realistically, we won't really know where the industry is going to be for another couple of years as it settles, because we're seeing the results of pandemic eagerness now with all the layoffs and everything.

But my real pushback point is: whether this industry is going to be worth $100 billion or not – which maybe it is in 10-20 years, maybe not… – we're seeing a lot of different organizations push into this marketplace. Even TikTok just announced something where they're going to be doing podcast integrations in their platform. We had Meta / Facebook do an integration a little while ago. Pre-Elon, and I think still today, there is Twitter Spaces. 

What about the innovation that we're seeing in the space? And what do you think about the future of the industry? Like presuming that we continue to see growth as we have for the last 15 years. 

Evan Shapiro: When I said [the podcast industry] is insignificant, I meant from a pure economic standpoint. From a cultural standpoint, I think it's hard to argue with how important podcasting is right now. More young people in the United States get their news from podcasting than a number of other sources, other than social media. We did a survey on mobile news recently – Publishers Clearing House, TVREV, and myself – we found that somewhere around 25-30% of young people say they get a consistent diet of news from podcasting. 

But my fear, or my issue with podcasting is [that] a lot of people rushed into [it], like the MCN gold rush of a couple of years ago.

Or the NFTs…

Jeff Umbro: Well, I hope, I hope it was [MCNs] and not the NFTs! 

Evan Shapiro: So many people rushed into podcasting – everybody bought a mic during the pandemic, without understanding the true underlying fundamental economics. 

By the way, I don't think podcasting as an industry has really matured to a level writ large, where anyone understands what the true economic underpinning of this art form is. I think there are very few people who understand that. I include Spotify and I'll include iHeart in this too. 

iHeart is the number one podcasting publisher / platform… I think on the face of the Earth. certainly in America. They do massive audiences on an ongoing basis, but they have like 900 podcasts.

Jeff Umbro: If you break it down by a per-capita podcast listenership they're very small. 

Evan Shapiro: Yeah, their average podcast gets around 40,000 listeners. 

The New York Times, on the other hand, has about 12 [podcasts]. And they get almost a million people per podcast.

That's a way better business model: do 12, get big audiences, sell a lot of ads in it. As opposed to: make a thousand podcasts. Why would anyone make a thousand podcasts? 

Jeff Umbro: Well, we all know the reason: scale helps. 

Evan Shapiro: Scale does help if you're an ad business. 

But I do think where I see it going… I think Apple actually is leading the way as they often do. Podcasting is named for their product, let's remember. I think their subscription product is the future of podcasts. You don't need a million listeners to make a really nice revenue. If you have a subscription podcast [where] you can get 10,000 people to pay you $5 a month, that's $1.2 million a year.

That's hard to do, but you don't have to attract a Joe Rogan-size audience in order to have a real business model. You can super serve a cult, basically. 

Patreon really did preface this, but Patreon is a very friction-filled ecosystem. Whereas with the subscription on Apple podcasts, it's just one touch: subscribe, de-subscribe.

Jeff Umbro: The one downside is that if you're not in the Apple ecosystem, it doesn't work. So what do you think happens with Supporting Cast and Patreon? Do you think Apple buys them one day? 

Evan Shapiro: I don't think they need to. I think Patreon is killing itself, unfortunately, just through terrible management.

It's a good question. I think when Spotify finally figures out how to add a direct subscription per podcast to their platform–

Jeff Umbro: which [is] another Apple tension point.

Evan Shapiro: That’s exactly right. When YouTube figures that out as well, I think that will kind of fill that circle. 

But I do think the idea is you create a subscription product for your cult, where they either get it earlier, they get extra content and it's ad free, etc. And then you do a second window with ads on all the other platforms and that forms your business model. That's a real, sound business model because you get your basic economics from your most ardent fans, and then you get your kind of gravy from a larger, less dedicated audience. 

Jeff Umbro: We're recording this in early October and Pushkin actually just announced that they're laying off a third of their staff. And Pushkin, I actually think, is the company that's doing what you're talking about right now… 

They have their Pushkin+ Apple premium subscription. They also use Supporting Cast for non-Apple users. They're also represented by iHeart who does all of their ad sales at scale. It feels like that's a company that did everything right. And they're clearly experiencing some tension and pressure right now. 

Evan Shapiro:  Well, Sony Music, I would argue, does as good a job of it.  They have a pretty decent podcast business and a good deal of it is subscription-based. I think in both cases, because Sony music podcasting also announced a bit of retrenching… all of them are. Spotify is laying off everybody in podcasting. 

Jeff Umbro: We interviewed Alex Goldman last week and he said that of the 120 people he worked [with at] the Gimlet, there's five left. Spotify did dispute that number, but it was a lot. 

Evan Shapiro: Yeah and if you go back and listen to that first season of StartUp, everything at the heart of what their business model was about kind of got torn apart when it moved over to Spotify. 

There's a moment in there where they talk about the underlying mission of the company: when you look at the most popular podcasts in the world, they're very expensive to make. They take a long time. There's a little high level of artistry to them. 

It's not two dudes talking to a mic. Joe Rogan is actually the exception, not the rule. The highest per show audience out there is still This American Life over a million listeners per episode. 

Jeff Umbro: There was an episode of StartUp towards the end where they basically said, “do we go the Reply All model, or do we go the Bill Simmons model?

And now it doesn't matter because both companies are owned by Spotify.

Evan Shapiro: I think everybody believed that what was happening during the gold rush – which coincided with pre-pandemic and then into pandemic – was going to last forever. And at the end of the day, [the key isn’t] more. It's less, better. 

There's an article in the Wall Street Journal about the end of “Peak TV” that I wrote about on LinkedIn. And I’m going to say the same thing about that as I do about podcasts: yeah, it was a bubble, and every bubble bursts. They never don't burst. They always burst. 

So don't fall in love with a business model, fall in love with a business. The era that we've entered is the user-centric era. This is officially the user-is-is-control era of media. And so instead of building more and more and more and more and trying to reach scale, scale, scale, scale, scale – which ends exactly how… we're seeing right now – find something that you love to do, find an audience for that thing, super-serve that audience, and everything else really does take care of itself.

The second you lose the thread of who you're serving and why, that's when shit falls apart. That's why Spotify had a ton of layoffs this year. Disney just lost the thread. When you have that fervent audience. Never forget, they are in control. It's never you.

Jeff Umbro: So,which podcast companies… do you feel are doing this the right way?

Evan Shapiro: Ira Glass and the New York Times are the only two… who I think are really doing it correctly. Less, better. 

[The] New York Times has 12 podcasts, 1 million people per. This American Life has one and it does 1.5 million people per episode. They invented Serial which [they] then sold to the New York Times for $25 million. No one does it as well. 

And by the way, I don't think anybody is doing publishing as well as the New York Times. I don't think anybody comes remotely close. They don't have 500 million monthly active users. Actually, their website probably does have a massive audience. But their business model is built around 10 million cult members, 10 million subscribers growing to 15 million probably over the next couple of years. 

But they're not trying to be everything for all people. They understand their audience. They super serve that audience. They give that audience a lot of control of how their subscription works. 

Jeff Umbro: I gotta be honest, you're not sounding too optimistic about podcasting!

Evan Shapiro: Let me push back on that. I am… but you have to jump in understanding how deep the waters are. So if you know who your audience is, build a product that makes money off of that size audience. Don't think you're gonna reach My Favorite Murder size audiences, because there are 16 billion true crime podcasts now. They were first. You can't be first, second. 

Understand who your audience is and super serve that audience, then build a business model around that. Ultimately, if you have a hundred rabid listeners and you can get them each to pay you a $1000 a month, do that as opposed to trying to be all things to all people. There is not going to be a next Joe Rogan. That's not gonna happen. 

Jeff Umbro:  Yeah, it's interesting because there will be the next big podcast, but it's gonna be because somebody really was thoughtful and did the hard work to grow the show 

Evan Shapiro: That's exactly right.

Jeff Umbro: So I can't let you go without talking to you about your past life in podcasting. Can you walk us through your experience with Seeso and then also with National Lampoon? 

Evan Shapiro: Sure. So to me, podcasting as step one of an intellectual property's life and as a development tool for other media is fantastic… At IFC I was, I think, one of the first to convert podcasts into television shows. We did it with Comedy Bang Bang very successfully for a number of years – one of the old school podcasts. But then we did it with Maren. We turned WTF into two really good seasons of television with Maren.

Jeff Umbro: I loved that show, by the way. I was really upset when they got rid of it.

Evan Shapiro: Yeah, well, I left and things kind of... Yeah. 

Anyway, then we did a lot of that at Seeso. So we had a really good history of turning podcasts into great TV. We turned Harmontown into HarmonQuest, which I still think is one of the best animated television shows of all time, all due respect to Rick and Morty.

We turned Put Your Hands Together into Take My Wife with Cameron Esposito and River Butcher. So we had a decent history of finding great talent and great pieces of intellectual property on podcasts and turning them into television. 

[National Lampoon was] a short period of my life – a lot of great things came out of that… a lot of not so great things came out of that. But very few people, I think, realize this, but Saturday Night Live was born out of National Lampoon Radio. Pretty much the entire cast and writers of the first five seasons of Saturday Night Live came out of a radio show that National Lampoon did basically in a closet in their offices.

So I set out to recreate that and I think we did a really good job of that. National Lampoon Radio Hour podcast was a scripted half-hour sketch podcast with Cole Scola, Jo Firestone, Brett Davis, Alex English, and all these unbelievable comedy minds. I think it's probably the flat-out funniest thing I've ever worked on.

And I actually now host a podcast with my daughter called Cancel Culture that is basically a reaction to all the comedy bros telling you, “you can't be funny anymore because “Cancel Culture,” which is total fucking bullshit Dave Chappelle. And this was an answer to that. 

Every episode is somewhat built around the idea that young female comedians discuss a topic that is very charged with an old, straight, white dude – myself – and I attempt not to get canceled.

It’s specifically designed to create a conversation around the current state of comedy. Woke culture is not doing anything to comedy that comedy hasn't already – if you listen to George Carlin – done to itself. The best comedy is never punching down, Dave Chappelle. The best comedy is always, always punching up. Always. 

Jeff Umbro: I love it. Well, thank you so much. This was a blast. 

Evan Shapiro: Thank you.

Jeff Umbro: Thank you, Evan, for joining us on the show today. You can find Evan at his newsletter by googling Media War and Peace. He's also on all of the socials and you can search for his podcast, Cancel Culture. 

Have questions, tips, or podcast recommendations? You can follow me on all of the socials @JeffUmbro. Podcast Perspectives is a production of the Podglomerate. If you're looking for help producing, distributing, or monetizing your podcast, you can find us at podglomerate.com, shoot us an email at listen@thepodglomerate.com, or follow us on all social platforms @podglomerate.

Thank you to Chris Boniello, Henry Lavoie and Jordan Aaron for producing this show. Thank you for listening and I will catch you next week.