The quiet 600 pound gorilla

AudioBlogger, BlogSparx! and Odeo have been getting a lot of press lately for their efforts to popularize podcasting. But there is another company that does something that looks a lot like podcasting: audible.com.

Audible was founded in 1995, did an ipo in 1999 and recently announced 2004 revenue of US $34.4 million. The company is expecting approximately $60 million in revenue in 2005. They are extremely bullish on the increasing demand for spoken audio. They have initiatives to expand their presence in overseas markets, to expand their wireless offerings, and to dive into educational products. They have also noticed podcasting.

In a February 2005 analysts' call, audible's CEO said a few words about podcasting:

Also on the technology front we will shortly publish powerful tools and support services to aid the growing community of talented self-publishers, bloggers and podcasters. We will move to combine some of the singular advantages of the audible listening experience, our broadly adopted platform for internet audio distribution, and powerful new rss enclosure-based distribution technologies both as additive services for our current content partners and as new tools for the growing self-publishing community.

The technology of podcasting (that is, time-shifted playback) is a natural fit for audible -- especially for their daily audio editions of the New York Times and Wall Street Journal. And I certainly applaud any efforts that encourage more mainstream use of podcasting. But audible's current stable of content is edited content -- in fact, it represents the most successful of edited works. The WSJ recently noted that audio books are only made if the publisher expects the hard-cover edition of a book to sell at least 50,000 copies. Blogs represent a shift to much less formal (and less formulaic) content.

What can we make of this shift to include the substantially less formal blogosphere? First, audible undoubtably sees the power of the long tail in their own business. (How could they not? In many ways, Audible is in the same business as Amazon -- and Amazon is the canonical example of the long tail.) Second, while several entrepreneurs made it out of the starting gate first, large businesses have noticed podcasting and are reacting quickly. First-mover advantage is often an ephemeral advantage at best, and in this market it may go to the larger players!

Odeo begins its beta

Judging from the login text boxes on Odeo's homepage, they have begun their beta. Seems like a reasonable occasion to announce that my new company, talkr.com will begin its beta on Monday, April 18th.

Pheedo scores early advertising wins for podcasters

Pheedo, a company known for its AdWords-like advertising on blogs and rss feeds, has brokered advertising agreements for two podcasters: Eric Rice and the Chris Pirillo Show. Pheedo's blog entry is here. Other coverage is here and here.

I think the deal with Chris Pirillo is interesting, in that Citrix (the company sponsoring the advertisment) is experimenting with pay-for-performance (PPP) metrics on the podcast. Pirillo will be using a Citrix product in his podcasts, and listeners can use a promotional code to register for a free trial of the product. PPP advertising is a natural fit for podcasters given that standard web advertising metrics will be hard to come by.

Hats off to Pheedo!

Update on Odeo's business plan

Evan Williams gave a presentation yesterday on Odeo at O'Reilly's Emerging Technologies conference, and the blogosphere is buzzing. Tom Foremski has a nice writeup, that includes a summary of Odeo's business plan:

• Offer free basic hosting and charge for premium hosting, based on bandwidth usage....
• Sell advertising into popular content (a la radio) with some sort of revenue-sharing arrangement....
• Sell premium content. "Audible has shown that a significant audience is willing to pay for non-music digital audio," said Ev, who counts himself a loyal Audible customer. "I think there's a lot of potential in non-book forms as well. There are a lot of things I would be willing to pay to get in audio form even if they're available for free on text form....

Another Company in the PodCasting Space

Just noticed a company called MessageCast which is adding a new advertising wrinkle. According to IntenetNews.com, MessageCast monitors a podcast feed and notifies its subscribers (via email, rss or "desktop alert") that that a new podcast is available. It plans to add advertisements to those notifications.

MessageCast's LiveMessage alerting service lets users know when a new podcast is available and alerts them via any number of different mechanisms, including e-mail, IM and RSS. The plan is to allow advertisers to place contextual ads in those alerts.

Surveying a rush of Podcasting businesses

A number of new businesses have sprouted in the past month to capitalize on podcasting. (Not sure what podcasting is? Wikipedia is your friend.) The PodCast Network, Odeo, TechPodCasts.com, and Adam Curry's Boku Communications to name a few. And, of course, we can't forget the veritable granddaddy of them all, itconversations. Does the podcasting trend have strong enough legs to support these businesses? Before I answer that question, I should disclose that I am tossing my hat into this ring as well -- so you may want to keep your salt handy if you choose to drink the cool-aid that follows.

How will these businesses make money? A number of individual podcasters already make money from sponsorships and micropayments. Doc Searls' thread on making money with podcasting drew a number of examples from people that make (what I assume to be) beer money (or perhaps car payment money?) from podcasting.

Yet the new crop of podcasting businesses are seeking more substantial revenue. They are focused primarily on advertising. That is, they intend to develop a network of high-quality podcasts that will attract a core of committed listeners, and in turn, a group of avid advertisers.

The problem with advertising strategies today is that there are relatively few listeners. Few podcasts have aggregated more than 10,000 listeners. (In February of this year, ClickZ reported that The PodCast Network's most popular podcast had about 6,000 listeners.) In BlogAd's second annual survey of blog readers about 5% of respondents acknowledged listening to one or two blogs on a weekly basis. It takes no great analytical skill to conclude that if only a few blog readers are listening to podcasts, substantially fewer non-blog readers are listening. Therefore, pursuing an advertising-based strategy today depends on (1) a faith that listenership will expand quickly and (2) either deep pockets or keeping your day job.

Is the audience for podcasts likely to grow dramatically in the next year or two? My guess is that it will. Three trends point in that direction:

1. Better technology for creating, finding and distributing podcasts: Many of the companies mentioned above are trying to make it easier for listeners to find high-quality podcasts. Adam Curry's company is taking that one step farther and offering to pay up-and-coming podcasters directly. Many other companies are developing tools that dramatically reduce the cost of creating and producing high quality audio. And finally, there are a multitude of podcasting clients (podcatchers) under development.

2. MP3 player / cell-phone ownership: MP3 players reached a tipping point in 2004. According to a Pew Internet & American Life survey released on Feb. 14, 2005, 11% of adults now own MP3 players -- and if the teenagers I know are representative, the adoption rate among teens quite likely exceeds the rate among adults. Cell phones with adequate memory can already be used as MP3 players, and that trend will only accelerate. In fact, a recent study found that of the 44% of US teens (ages 10 - 18) that have a cell phone, 71% want to use their phone as an MP3 player.

3. Continuing penetration of broadband: Downloading audio files is impractical on dialup lines -- time shifted or no. As of February 2005, slightly more than 56% of US internet users have broadband access from home. This percentage has increased at approximately 1% a month over the past 12 months. This upward trend is expected to continue, although likely at a decreasing rate as we approach 60 - 65% penetration.

These three trends suggest a trifecta for audio content: it will be easier to develop, easier to find and easier to access in the coming year. That spells more listeners and the advertisers that follow them. Will advertising revenue offset revenue burn quickly enough for these companies (and my own) to succeed? It's too early to say -- I suspect what will matter most is good-old-fashioned entrepreneurship: keep an eye on the money and innovate, innovate, innovate.

First post on new blog

So, here's the obligatory first post / introduction to me:

Name: Chris Brooks

Job Title: Entrepreneur

Current Business: Can't tell you -- Still in stealth mode.

Previous Business: The ever-popular FurnaceCompare.com

Previous Jobs:
VP, Technology at CareScout.com (2000 - 2005)
Software Engineer / Developer at Fidelity Investments (1998 - 2000)
Application Programmer at UNC-Chapel Hill (1997 - 1998)

Education: Yep.

What this blog is about: My thoughts on creating, growing, screwing up and learning from online businesses.