Why Is YouTube Paying to Embrace Podcasts? [Next.Jjin]

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] YouTube is providing subsidies of up to $300,000 (approximately 370 million KRW) to popular podcast operators. This is to support the costs involved in turning audio-produced content into video. The funds are intended to be used for studio rentals, hiring editors, and other expenses needed for filming. As the "video powerhouse," YouTube is even investing money to embrace audio-centered podcasts.

According to Bloomberg on the 8th, YouTube offers $50,000 to individuals running podcasts and $200,000 to $300,000 to organizations. Bloomberg explained, "This move can expand the overall podcast lineup and significantly increase programs on Alphabet-owned streaming services," adding, "It allows YouTube to become a powerful podcast platform without spending a lot on the format."

YouTube's interest in podcasts is not new. In 2018, it showed its intention to grow this sector by significantly improving its podcast player. Last October, it appointed a dedicated executive, and earlier this year, YouTube CEO Susan Wojcicki designated podcasts as a key business focus, concentrating on rapidly expanding related operations.

Building Content and Targeting AI Speakers

The reason YouTube is putting so much effort into podcasts seems to be the advantage of attracting already successful audio content onto its own platform. Given the strong fan base typical of podcasts, many listeners tune in regularly, allowing YouTube to bring in subscribers as they are. Especially, despite the growing demand for video, the steady demand in the audio market helps expand the content itself.

The growth of artificial intelligence (AI) speakers is also cited as a reason. The frequency of AI speaker use is increasing in smartphones, various electronic devices, and autonomous vehicles, which is expected to boost audio content consumption. YouTube has already capitalized on the fact that many users consume music on YouTube instead of other music platforms by offering YouTube Music, a free music service for YouTube Premium subscribers, securing 50 million users. Considering the scalability of audio content, it appears to be expanding its business accordingly.

In the mid to long term, there is market anticipation that YouTube could expand its functions on the platform through voice-based search, recording, and translation. With growing interest in voice search and translation via AI due to the spread of the metaverse, audio-centered podcasts are seen as valuable data for technology development.

"Easy Search" Leveraged as the Greatest Advantage to Secure Content

A key factor attracting podcast listeners in this process is YouTube's search capability. Considering that most podcast applications (apps) have inconvenient search functions, YouTube allows users to enter desired keywords using Google's search bar to access various podcasts. Additionally, algorithms display podcasts of interest on the main screen, enabling users to browse and select easily. Ultimately, this is interpreted as strengthening YouTube's position as a search gateway for both video and audio content.

According to the "Digital News Report 2021" by Oxford University's Reuters Institute, among podcast listeners in the United States, the largest share of 26% uses YouTube podcasts, followed by Apple (22%), Spotify (17%), and Google Podcasts (14%). Considering that recommendations from acquaintances have been virtually the only way to promote podcasts, YouTube's search capability is expected to play a crucial role in increasing its market share.

Spotify Feeling the Pressure

The entity feeling threatened by YouTube's aggressive moves is Spotify, a leading podcast platform. As the world's number one music streaming company, Spotify has been growing popular podcasts to become the largest audio platform globally. It signed an exclusive contract with comedian Joe Rogan in 2020, attracting a large audience, and also made podcast production deals with former President Barack Obama and his wife, as well as Prince Harry and Meghan Markle, who stepped back from the British royal family.

As a result, the number of podcasts hosted on Spotify surged from 185,000 in 2018 to 3.6 million last year, and users doubled from 200 million to around 400 million during the same period. Spotify emphasized, "Audio, not just music, will be Spotify's future," and stated, "We will be the next-generation pioneer for streaming audio listeners, creators, and advertisers."

[Image source=Reuters Yonhap News]

Recently, Spotify has also been exploring ways to expand streaming audio advertising revenue. Last month, Spotify acquired podcast technology platform companies Podz and Chartable, explaining the acquisitions as efforts to enhance listener-related data and provide it to advertisers. According to this marketer, the annual digital audio advertising revenue in the U.S. is expected to grow to about $8 billion by 2025, and Spotify has set a strategy to dominate this market first.

Even decades after the widespread adoption of TV worldwide, radio listening demand still remains. Alongside visual content, demand for audio content is expected to continue steadily. Look forward to the changes in the fiercely competitive podcast market.

Editor's Note[Next.Jjin] means 'looking ahead to the real next of business' and is a section delivering overseas news related to future businesses such as metaverse, artificial intelligence (AI), and robotics of major companies and startups. We will uncover and explain both prominent big issues and small but important hidden issues in an easy-to-understand manner.