On Wednesday, The New York Times announced it was acquiring groundbreaking podcast studio Serial Productions for a reported $25M. Launched by Sarah Koenig, Julie Snyder, and Ira Glass after the success of the eponymous podcast series, Serial Productions has a legendary standing in the podcast community. The runaway success of the Serial Podcast’s 2014 season is oft cited as a formative tipping point that led to today’s rapidly growing audio industry and the series would go on to receive every major award for broadcasting (and yes, Adnan Syed is still prison). While Serial Productions was targeting a valuation of $75M when it first entered the market earlier this year, those familiar with the deal intimated that Serial’s team was first and foremost interested in the infrastructural stability that would allow the studio to pursue a broader slate of projects which the Times obviously provides.
In addition to the acquisition, The Times will enter into a “strategic and creative” alliance with This American Life. In effect, this means two things. First, co-development of TAL sourced concepts for stand-alone podcasts that can run under the Serial banner. Second, and more importantly, The Times will now solely represent all ad sales for both Serial AND This American Life. PMM, the longtime ad sales rep for both studios, will continue to represent available inventory until the end of the year.
The consolidation of The Times audio interests (with its top of the charts podcast The Daily), This American Life, and Serial Productions is powerful unto itself. Combine this with the leading digital news provider in the US (at 4.4M+ subs across its portfolio, The Times has more digital subs than The Wall Street Journal, The Washington Post and the 250 local Gannett papers combined) and you have an entity that can easily remain independent as Apple, Spotify, and SiriusXM / Pandora increasingly play the platform exclusivity game.
The Times’ own Ben Smith suggested back in March that the purchase of Serial Productions may provide a path forward for a monetized audio product with a business model similar to the NYT Cooking and Crossword apps. Throw in The Time’s sub $10M acquisition of audio subscription service Audm earlier this year and the pieces appear to be in place for just that.
The quality of production and consumption in the US podcasting market has long been divorced from the medium’s ability to monetize its content. Numerous attempts at creating the “Netflix of podcasting” have been attempted, but almost all have been DOA (ahem….Luminary). There is simply too much good “free content” available - preventing listeners from climbing even a minimal paywall. Nonetheless, some podcast stalwarts are starting to push this model themselves (Wondery recently launched the Wondery+ app and subscription) although this feels like it will have a negligible effect beyond a core set of diehard fans.
We at illum agree with Smith, The Times is going to be the first to do it right. The difference? A New York Times Audio product will likely be bundled with the Crossword App, Cooking App, and Digital News – combining an audio sub with offerings that users are already used to paying for. The effect will be gradual at first but listeners will quickly normalize to paying for high quality podcasts above a certain bar of brand appeal.
This is going to happen sooner than later, transitioning top players from pure ad support to hybrid subscription models and further igniting the audio content arms race that we have already seen accelerate this past year with Gimlet, The Ringer, Joe Rogan, Stitcher, etc. For those in the M&A game, here’s 3 top of mind interesting and premium podcast targets out there, (1) Wondery, (2) QCode, and (3) Chartable (not a content provider but their attribution tech is utilized by numerous major networks.) Tough to imagine these 3 are all independent 9 to 12 months from now, with Wondery likely off the table for a premium before or near years end.