Month: April 2019

Podcasting looks poised for a major infusion of consumer revenue in the next few years. The question is whether audio platforms, rather than individual creators or studios, will reap all the benefits.

Next week, on April 23, a venture-backed podcast app called Luminary will launch to the public, offering more than 1,000 hours’ worth of exclusive, ad-free content to subscribers, who will pay $7.99 per month for access. That content, which includes new shows from podcast networks including Wondery and the Ringer, will mix with ad-supported access to other shows in a standalone app designed to deliver recommendations and solve podcasting’s notoriously troubled discovery issues.

Luminary, which has raised $100 million in venture capital over two rounds since the spring of 2018, will join Stitcher Premium as the only two large subscription services featuring podcasts, and it hopes to be a friend to everybody in the ecosystem. Luminary rep said it developed relationships with 54 of the 160 creators it made offers to, including Guy Raz, Trevor Noah, Adam Davidson and Lena Dunham.

Podcasters have long struggled to add subscription revenue to their businesses, thanks in part to the challenges of delivering exclusive audio content. But a recent run of announcements, including the launch of Supporting Cast, made it seem like 2019 might be the year that could change. In other cases, subscription-focused publishers took matters into their own hands; in March, the Athletic announced it had built out its own podcast network and stashed it inside the Athletic’s own mobile app.

Podcasting currently is a mostly ad-driven medium. Its ad market has been growing healthily, albeit from a small base, for years, projected to reach $659 million in revenue in 2020, according to the IAB. While that total amounts to a rounding error compared to a format like digital video, podcast advertising has been plentiful enough to buoy media companies such as the Ringer, which reportedly earned $15 million in revenue from podcasts in 2018. Even a subs-focused publisher like The New York Times is relying on ads for its podcasts.

But the arrival of more platforms, and their interest in bundles, may wind up limiting creators’ opportunities to scale their own direct relationships to consumers. Though customers are used to the idea of paying creators for audio — podcasters are the second-largest category of creators on Patreon, and their numbers have more than quadrupled over the past three years — the concept of a premium audio bundle appears to have gotten some traction too: Stitcher Premium, about two years since its launch, is closing in on 100,000 subscribers, who pay either $4.99 per month or $34.99 per year, according to a source.

“I believe that it is time for the podcast industry to evolve into a true dual income revenue business,” said Hernan Lopez, CEO of Wondery, which will have two exclusive shows on Luminary. “The more platforms and voices beat the drum that premium content needs to be consumer-supported, the better.”

As that drumbeat grows louder, however, creators and publishers may have to contend with consumers expecting to access a library, rather than one specific show, when they pay for audio. “Both models [both individual subs and bundles] will coexist, but over time you will see a higher incidence of bundles, just because they’re more efficient for the consumer,” Lopez said.

Though podcasting has finally crossed over into the mainstream, with an estimated 70% of Americans aware of the format, less than a quarter of the U.S. population (aged 12 or older) listens to one on a weekly basis, according to Edison Research.

But major platforms are growing interested in them. Earlier this year, Spotify acquired Gimlet Media, the podcast startup responsible for shows including “Homecoming” and “Startup,” and Anchor, a podcast hosting service aimed at amateur creators, for a combined $340 million. Last fall, iHeartMedia acquired Stuff Media, the parent company of top podcast producer HowStuffWorks, for $55 million.

That interest has been good for purveyors of high-quality audio. In its most recent quarterly earnings, Spotify disclosed that it had licensed 14 different shows exclusively for its platform, and intends to invest more heavily in exclusive podcast content in 2019, both in the form of licenses for shows and other forms of acquisition.

Meanwhile, Luminary, flush with VC money and facing skepticism from creators, has been overpaying for shows, according to sources familiar with the platform’s pitch. One source, who asked not to be identified, said Luminary was offering anywhere from $700,000 to $1.5 million per show, provided that show hit subscriber acquisition targets for Luminary.

“The positive is, as someone who can produce podcasts well, there are a lot of people who can pay and pay well,” that source said. “The danger is that this is going to force independent voices out of the space.”

The post Like most media, podcasting is pivoting to paid (with complications) appeared first on Digiday.

TV networks beware: If you’re providing connected TV platforms with your OTT ad inventory for free, cable and satellite providers could use those arrangements to strong-arm you into providing them with a larger share of your linear TV ad inventory.

The key hits:

• Amazon and Roku typically demand that OTT apps on their connected TV platforms provide the companies with 30% of the apps’ ad impressions for Amazon and Roku to sell on their own.
• In their deals with cable and satellite TV providers to carry their channels, TV networks typically agree to provide the pay-TV providers with 12.5% of their ad inventory.
• Pay-TV providers also pay TV networks for carrying their content, whereas Amazon and Roku do not.
• TV networks’ contracts with pay-TV providers include a so-called “most favored nation” clause that restricts networks from providing more favorable terms to certain pay-TV providers without offering those terms to all providers.
• Pay-TV providers could invoke the most favored nation clause to demand a share of TV networks’ linear inventory that would be equal to what they provide to connected TV platforms.
• Some TV networks have addressed the issue by rejecting platforms’ inventory demands and are instead offering to sell them a share of their inventory.

The rise of connected TV is upending the traditional TV business in many ways, from siphoning viewers to threatening to steal advertisers’ dollars. But connected TV may also upset the distribution deals that TV networks strike with traditional pay-TV providers. There is a gray area regarding how networks allocate their OTT ad inventory to connected TV platforms that potentially creates an opening for pay-TV providers to demand a larger share of networks’ ad inventory.

The post Video Briefing: Ad-supported streaming platforms take a bigger cut than pay TV appeared first on Digiday.

Beware, ad agencies.

In a poll of 73 client-side marketers who are responsible for their company’s work and relationship with agencies, 22% said they were planning shifting work from traditional agencies to consulting firms. Overall the majority, 52% of marketers, are still keeping their work with agencies while 26% are unsure of what they will do.

The post Digiday Research: 22% of marketers plan to give agency work to consultancies appeared first on Digiday.

Today’s mass retailers are hoping to drive growth in the children’s clothing category by experimenting with a variety of purchasing models and pushing more premium brands.

Walmart is the latest to rethink its kids’ clothing category. On Tuesday, the company announced that it’s partnering with Kidbox, a children’s clothing subscription founded in 2016. The Kidbox subscription offered through Walmart will allow parents to receive a box of four to five garments for $48. Additionally, Walmart announced that it will be broadening its assortment of premium kids’ brands and will now include offerings from brands like Betsey Johnson and Levi’s.

Kids’ clothes have always presented a problem: Parents have to replenish them regularly, meaning they’re likely not going to invest much when purchasing them. But new models, like subscriptions and rentals, have opened up opportunities for retailers to try to drive more sales. That’s created competition among retailers to figure out how to position their children’s clothing lines as the easiest to shop from, while marketing them as better finds by partnering with name-brand designers.

According to Mintel, sales of children’s clothing are expected to reach $39.8 billion at the end of 2019, at a growth rate of 2% per year. But the bankruptcies of chains like Gymboree and Toys R’ Us have opened up space for more entrants in the market.

“Retailers are looking for modern forms of convenience to match the modern-day shopping experience,” said Diana Smith, a research analyst with Mintel. “Parents want to shop where they can shop for themselves and others.”

Walmart’s biggest competitors, Target and Amazon, have also emphasized style and trendiness in refreshes of their children’s clothing lines this year. Target announced that it would expand its kids’ clothing line, Art Class, to add items for babies and toddlers. Target has positioned that line as more “on trend,” compared to its other children’s clothing line, Cat & Jack, which it markets as more basic and inclusive.

Amazon, meanwhile, launched a line with J.Crew’s kids’ brand, CrewCuts, in January as part of its push into exclusive brands. According to Ayako Homma, fashion and luxury consultant at Euromonitor International, today’s parents place a higher emphasis on having clothes that are “trend-driven.”

“New parents have more disposable income than past generations and increasingly look towards social media and the internet for fashion inspiration for themselves and their children,” Homma said in an email.

Meanwhile, many of the newer retailers that have entered into the children’s clothing market, like Rockets of Awesome and Stitch Fix, have tried to find success through subscription models or recurring services. At face value, it seems like a fit for an item that needs to be replenished quickly. But if parents find it too difficult to cancel an order for that month or return an item, it can lead to member churn. Subscription services also take a lot of logistical coordination to pull off and can quickly cost the retailer a lot of money if subscribers decide to return items at a frequent cadence. Earlier this year, Gap quietly ended a children’s subscription clothing box it had launched in 2017.

Kidbox CEO Miki Berardelli said Kidbox is in the process of addressing flexibility by letting subscribers choose when they want to receive one of their boxes, which arrive up to six times a year, and making it more accessible, by partnering with Walmart.

“What we’ve learned is the timing of our seasonal launch doesn’t line up to the preferred timing of each of our customers,” Berardelli said.

Parents who aren’t interested in subscription boxes may favor clothing rentals instead. Rent the Runway launched kids’ clothing earlier this month and is betting on rentals to help it gain a greater foothold in the children’s market, with a focus on stocking its collection with premium brands like Stella McCartney’s kids’ line that parents will want to get for a special occasion.

Undercutting this push into children’s space is a big gap in the brick-and-mortar space that’s been left by Gymboree and Toys’ R’ Us shuttering. That leaves a chance for retailers to grab a greater share of business in the kids market by pioneering new models of experiential retail that make them the go-to place for when parents need to bring their kids to a physical store, according to Smith.

“Thirty-six percent of parents specifically see that [back-to-school] period as a time to bond for their children,” Smith said. “So there’s opportunities for retailers to think about how to enable or enhance that shopping experience [perhaps by] creating cross promotions.” 

The post How retailers are rethinking children’s apparel appeared first on Digiday.

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