By Prashanth Rao
In the age of the internet, how do we reach the grassroots? The answer may lie in audio. If we consider the Indian Prime Minister, Narendra Modi’s "Mann Ki Baat" as a podcast, then the listener base stands at 600 million. That being said, it’s still early days for the audiobook and podcast market. The industry is relatively small and is expected to earn less than US$5 billion in revenues globally in 2020, according to Deloitte's TMT predictions 2020.
However, the audiobook and podcast market is expected to grow by 25 to 30 percent compared with the overall media and entertainment industry growth of just 4 percent, globally. So what does the future hold for audiobooks and podcasts, and how will it be realised?
Audiobooks are creating a niche of their own in India with launches by established brands, such as Google, Audible, and Storytel, offering more than 300,000 audiobooks/titles as of January 2020. Contrary to the general perception, audiobooks may not be as much competition with physical pages as they are with other digital modes of reading/listening, e.g., e-books. For instance, in the United States, the global audiobook market leader, revenue from printed book sales and audiobooks grew by 2.5 and 34 percent, respectively in 2019. However, e-books' revenue declined by 4 percent, making the war in the digital arena very evident.
Publishers have identified a new target audience-the non-readers-thanks to audiobooks. Globally, publishers have started setting up in-house recording studios to target non-readers and catch them early. Given the long transit times in India, a key source for audiobook consumption growth globally, the segment has great potential for high revenues and opportunities. In addition, the category of children's audiobooks is also driving up the demand. And, with the advent of smart speakers and streaming-books-on-demand (SBOD), the growth is likely to accelerate in India.
Podcasts could be the growth leader among a clutter of streaming and on-demand audio/music services available today. With over 40 million monthly listeners and 60 percent year-on-year growth in 2018, India is among top three podcast listing markets (below China and US). Curation and customisation are key to consumer preferences and that is why radio is still thriving.
Podcasts, however, are more difficult to monetise compared to audiobooks generating less than a third of the audiobooks' revenue globally. This is despite podcasts having more established avenues of revenue generation, viz. advertisements, sponsorships, merchandise, etc., compared to audiobooks, which rely mostly on direct revenue streams, that is, outright purchases and monthly subscriptions.
Generating no direct revenue, enterprise podcasts are sometimes perceived as mere organisational expense with no real value add. Instead they should be viewed as vehicles for marketing, brand-building, training, and recruiting. Creating value for enterprises of all stripes, as well as for their customers and current and prospective employees.
With 700,000 active podcasts and more than 29 million episodes available for consumption, players are shifting focus from meeting consumer demand to enhancing consumer experience to increase penetration and revenues. A leading player in the market has eliminated the need of an application for android phone users trying to access the content. In addition, they plan to introduce content based search and leverage upon increased interest based selections and not just genre / title / author based search.
Companies are striving to deliver best-in-class service to existing enthusiastic customers rather than blindly following 'the broken window' theory for customer experience. Investments are made towards improved narrations, enhancing app functionalities and advanced analytics enabled demographics-based customisations.
Interestingly, by looking at the recent growth rates and usage patterns, one can infer that podcasts generate demand for audio content and users turn towards audiobooks to fulfil this newfound appetite. Although both podcasts and audiobooks are expected to grow mutually, there appears to be an overlap in the listener base. Studies have shown that listeners preferred podcasts for shorter engagements (less than an hour) and audiobooks for the longer ones (flights, vacation, trips, etc.).
While audiobooks publishers have reasons to cheer, podcasts need technology interventions and a leaf from audiobooks' recording techniques to close the gap. Growing internet and smartphone penetration will act as a catalyst to the overall audio industry and bring about business model innovations even in the traditional mediums such as radio.
The author is partner at Deloitte India