Finding Profits In Podcasting

Podcasting's origin is in Web radio and audio blogs. Now companies like IBM, Oracle, and Purina are using podcasting to hawk their wares, and Absolut Spirits is placing ads within podcasts.

Laurie Sullivan, Contributor

August 22, 2005

6 Min Read

It wasn't long ago that podcasting was a fringe medium known only to aficionados of Web radio and audio blogs. But in just a few months, podcasting has jumped onto the leading edge of tech pop culture. Its advancement isn't lost on businesses, which are rapidly morphing podcasting into a vehicle for marketing and communications.

Podcasting can reach very targeted audiences or large masses of people, without costing them a penny to listen. Oracle is among the latest companies to embrace podcasting, which is the act of publishing digital-audio broadcasts to MP3 players such as Apple Computer's iPod and the Dell Jukebox via the Internet. Oracle, which began offering podcasts from its Web site in May, now envisions technologists donning earphones as they traverse its Oracle OpenWorld conference next month. Oracle will publish two 10- to 20-minute podcasts daily during its user conference on subjects such as middleware, applications, databases, and grid technologies, designed for the ears of the software developers and database administrators who buy its products.

The podcasts will be available via Oracle Technology Network TechCasts on the vendor's Web site and through online podcast directories, including iTunes and Podcast Alley. "If you're a developer or database administrator interested in new technologies, then podcasting is an excellent resource," says Justin Kestelyn, editor in chief of Oracle Technology Network. "You're going to hear directly from the people involved in the project what the technology has to offer."

Podcasting's origin is decidedly less business-oriented--those involved in its evolution include former MTV video jockey Adam Curry and Dave Winer, developer of the RSS 2.0 specification. To get podcasts, listeners can go to sites directly publishing them, like Oracle, or to sites that host directories of podcasts. Podcasts are delivered via RSS feeds, and those feeds provide information about the audio files that's read by desktop podcatching software, which downloads the desired content to users' MP3 players. Apple helped propel podcasting into the mainstream two months ago with the release of its free iTunes 4.9 software, which offers podcatching capabilities and also makes it easy for podcasters to publish content at iTunes.

Earlier this month, IBM began offering podcasts from the investor section of its Web site on the use of its technologies in automotive, retail, health care, and other industries. Podcasting isn't limited to tech vendors: Purina, a subsidiary of Nestle S.A., is supplementing its traditional advertising with podcasts published every other week for veterinarians and pet lovers. They include interviews with vets and other experts on animal training, pet surgery, medical insurance, and behavioral issues.

Technology-oriented podcasts are proving to be among the most successful. Los Angeles radio station KFI podcasts Leo Laporte's This Week In Tech, and it now has 41,000 subscribers, up from 360 in May, according to Rick Klau, VP of business development at FeedBurner, which manages RSS feeds for the radio station and thousands of other podcasters. Tech-oriented podcasts consistently rank among FeedBurner's top feeds, Klau says.

Some podcasters are starting to insert paid advertising into content. No standard model has emerged for the practice, but the Yankee Group predicts that podcast ad insertion will be based on a cost-per-impression model, an ad-industry measurement for every 1,000 people who see or hear an ad. It's suggesting podcasters charge advertisers $15 per 1,000 podcast clicks or downloads. PodSafe Music, created by PodShow Inc., sells ad placements in its podcasts to Absolut Spirits Co. "We mention vodka at the start of a podcast," PodSafe site manager C.C. Chapman says. "Absolut lets us do our own thing."

But is anyone listening? That will be a huge measure of success--or failure--by businesses sinking resources and time into podcasts. For one, businesses know their target audience, but it's difficult to figure out if the right people--meaning those most likely to purchase their products--are listening. "Demographics are difficult to determine because trying to track personally identifiable information doesn't work in RSS," Klau says. By comparison, Web sites can collect information from willing visitors through online registration and questionnaires, and use cookies to track user behavior. With podcasts, "there's no reliable way to match downloads to unique visitors," Oracle's Kestelyn says.

And there are drawbacks to the audio-only approach. While Oracle hopes technologists will find its podcasts useful, "there's no visual sample code or screen shots to accompany the MP3 files," Kestelyn says.

One of the best things podcasting has going for it is that it's free--even though some listeners might be willing to pay for the right content. A recent study conducted among young European consumers by Forrester Research found that 46% of 16- and 17-year-olds would consider paying for podcast content. However, only 33% of the teens surveyed said they would accept advertising as a necessary evil to subsidize content.

For all the buzz podcasts have created among the tech savvy, the technology is still relatively unknown. The Yankee Group estimates that by the end of the year, 41.6 million consumers will own a digital audio player, and there will be more than 10,000 businesses and individuals publishing podcasts. Currently, however, less than 1% of digital audio player owners actively download and listen to podcasts, the Yankee Group says.

Momentum is building. About 600 subscribers download Oracle's podcasts every 24 hours, Kestelyn says. FeedBurner offers more than 15,000 podcast RSS feeds, up from less than 1,000 in January. It now has 450,000 podcast RSS feed subscribers, up from 150,000 in June.

Podcasting soon won't be limited to MP3 players. Melodeo Inc., which gives cell-phones users the tools to download music, says it will make it possible to get podcasts from cell phones starting in September. Melodeo will offer software called Mobilcast that signs onto and searches Podcast directories using search criteria set by the user to find new content. Mobilcast will download and store podcasts on phones to be listened to when the user chooses. The software converts the MP3 format, unreadable by the mobile phone, into files created in aacPlus, an audio-compression technology. Mobilcast initially will support the Symbian operating system, followed by a Java operating system version.

Meanwhile, more and more people are learning about podcasting from a variety of sources outside of IT and music. Many major media outlets deliver news podcasts. Purdue University says it began making replays of class lectures available in podcasts last week. Earlier this month an astronaut with NASA sent the first podcast from a test flight on the space shuttle Discovery. And religious groups are using podcasting as a virtual pulpit. One of the more successful examples is Tim Hohm, a senior pastor at Central Assembly in El Sobrante, Calif., who delivers a 15-minute inspirational message twice weekly called RevTim. Subscriptions to RevTim have grown to 6,000 since the podcast was launched in December, ranking it among the top 50 most popular podcasts on Podcast Alley. Forrester Research estimates that by 2010, more than 12.3 million listeners will synchronize podcasts to their MP3 players.

Such huge loads of information, however, can amount to mounds of garbage unless listeners can find things they actually want to hear. For those looking to advertise through podcasting, the Yankee Group advises that podcasts should be built around focused topics that appeal to specific demographic groups. Subscription-based models have been considered by some podcasters, but in the near future, it's likely that advertising will be the principal revenue stream for those looking to profit from podcasting.

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