Spotify Breaks Podcast Advertising? | New Media Show Live 4/24/23

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That is true, Don. That is an accurate statement that you have made today.

Indeed. And matter of fact, I said, let's go, and I went over and almost pushed the button and you would have not gotten a stream because I had the the max destination set in, uh, in my Restream dashboard, and it, it would have went, went the wrong way. So I clicked the right, click the right button.

Well, here, let me see if it's there.

It should be there, so you know, you should be good. Yeah, so yeah. Hey everybody, welcome to the show and, uh, happy Wednesday to you.

Hump day, right?

Oh, man. You know, I'm back to the point again. You know, AI took me a year not needing an assistant, but I'm right at the edge again. I'm at the point now where I might actually have to hire somebody. And the thing is, I'm thinking in my head, if I hire someone to be my assistant, it's going to take me 6 months to train them.

And they probably haven't done all the AI research and the other thing.

Well, it's just everything. And I'm thinking, where do I put them? If I do, do I hire someone local or do I, you know, I don't know. We will see, you know. But yeah, my head has been underwater for literally the last week and a half. Yeah, I got home last night about 8:30 and my mom texted me. So did you stop for dinner? I said, no, I didn't leave the office until 8:15 last night. So, yeah, I mean, that's what you do, right? When you When you got too much to do, you just stay and work longer. But, um, no one cares. Everyone's working hard. So yeah, that's right.

Well, especially now, people are really concentrating and working hard now because of just the tight market that we're in right now. But it looks to me like, uh, things aren't so tight over at Spotify right now though.

Well, okay, well, here's the thing. Spotify made some money. Yeah, you know, and we all saw the IB news where they are not going to be certified anymore. And by the word, there is no such word as IB compliant. That's not even supposed to be utilized. And I wish, you know, that's, that's, that's a whole topic in itself. But James claims that I use IB compliant in 2018, and maybe I did, but it was, you know, while we were being certified.

Oh, but isn't that the terminology that the IAB uses though?

No, IAB certified is the—

their artwork though, it says compliance.

Yeah. So whatever the logo says is what we're—

it's always been a very confusing—

the official, the official word. And I guess I should go over and look and actually see it. So whatever we are, IAB certified compliant.

And in some ways, you know, if you look at what Spotify has chosen to do here, and even Podbean has chosen to do this too, it, it kind of plays into that narrative, doesn't it? Well, what— that we're compliant, but what, you know, it's—

there's 2 or 3 things at play here. Number 1, IAB has changed how their membership tiering is priced. It used to be— it used to be on advertising. Okay, so don't quote me. You'll go on revenue, on revenue, advertising revenue. I think it was gross.

And it's not based on that now?

Now it's switched to your revenue, corporate revenue.

Oh, overall revenue.

Yeah, overall revenue. So that takes us all— I think this next year, this year I think we paid the same amount. I think whatever that number— I know what the number is. I'm not going to announce it, but next year, the— depending on your revenue, Mm-hmm. Your, your costs will go up just to maintain membership. And then they brought the cost down on recertification. So again, don't quote me what the recert cost is, and I don't know if they public— I think they've got it publicly published, but it's lower than it's ever been. So in other words, they lowered the recertification cost. Now, we had just— matter of fact, late last week, or even, I don't know, I had sent the tech lab a message, hey, send a paper work over. We want to get started on our research. And then of course this news comes out that Spotify, Chartable, Megaphone, Megaphone, Podbean, and Spotify for Podcasting.

So that, that is quite a group of, of companies, um, inside of Spotify that are no longer going to be considered to be, I guess, certified compliant.

So here's the thing to look at on the Spotify side. Is that you have probably better metrics internally because it's all being done via the app. They can track on the privacy side. They know who you are. They know— they— this is why I've never been a fan of Spotify, is, you know, they, they know everything about you because you've signed into the account. And you're— and so they have, they have, uh, client-side metrics. They have client-side data that they can use that are probably better than any podcast host is going to be able to provide because we don't have no client-side data or apps. You know, basically we have to still use raw download files where anything that's being consumed on Spotify is, is tracked, um, all the way through. So I'm sure then for Megaphone, it probably has, you know, minimal impact. Um, Chartable, well, they lose their ability to say they're certified Um, or whatever the special term we're supposed to use, right? And, um, so in the end, um, what does that mean? Now, you know, if I look at it from Podbean's perspective, if Podbean's not doing a lot of advertising on their own, then they can rely on Podtrack or Blueberry or whoever. Well, actually can't because you can't use third-party stats in Podbean. So the people that get screwed on Podbean are really the ones that are doing their own deals. So those podcasters are doing their own ad deals that Podbean probably will have to look for a new home if they want, if the buyer raises questions about their statistics, which they probably will because, you know, it's a question that's asked all the time.

Yeah, isn't it kind of a thing that will be impactful over a period of time? I would imagine because they're likely to be IAB v2.1 kind of compliant, right?

Well, they sort of— when it was the last time, I don't know what their last level of certification is.

So yeah, I'm not sure either.

So, you know, regardless, it's— yeah, they're being dropped. They're not on the list. They can say what they want, but it's up to the IAB to determine if they want to come over and say you can't say that.

Yeah, but if, if let's say one of these companies exports their, their metrics, right, and they show it to an advertiser currently today, pretty much the advertiser is probably going to trust those numbers because it is— that company was formally certified, right? So, so it's not like their numbers— maybe over time what'll happen is that the numbers will be I guess, um, higher than they should be. That's kind of what happens here, right? Is it— as the standard gets more and more refined, I would think that the numbers may drop, right?

I think if you look at the update, um, there's probably not that many more technical requirements between what was and what is, uh, right? So you know, that is what it is. But it's really truly, you know, but to be honest with you, everyone's touching code all the time.

Yeah.

And if you touch any of your code, you could be out of certification. So, you know, if you say I haven't touched code, um, they might be all right. I think it's a bigger issue long-term. Uh, people making a lot of noise about it right now. Um, you know, oh, looky here. Uh, I don't necessarily know if I'm surprised. I don't ever remember. I legally, I can't say. Yeah, I can't say who was ever in any of the standards meetings. So, um, and usually those are well attended. There's usually 30, 40 people in those standards meetings that are in there. I've missed a couple here recently, so I have no insight to some of the stuff that's been said of recent just because I had schedule conflicts, but the, you know, so we're going to go through the gauntlet and run, run the recertification. I'm going to look at it. I'll keep looking at it from year to year because there is a trade-off. You know, today, matter of fact, it's a press release is going out tomorrow, but we announced in our newsletter today that Blueberry did a partnership with Backbeat Media. And BackBeat Media is going to be our new representative for host-read advertising. Oh, so select Blueberry podcasters is, you know, Dave and his team over there are going to be repping Blueberry inventory. I have another deal in progress as well. We're going to try to get as many of our podcasters have the ability to be involved in host-read ads. It's not something that we specialize in anymore. So from my perspective, and working with Dave and them generating revenue for our podcasters, I have to stay certified because if Dave is going to rep the podcasters that are at blueberry.com, I have to be able to provide him. And actually, it's not me, the podcaster will create an account and let Dave's team come in to look at stats. So we're essentially, you know, we have to keep our platform certified because otherwise then in there we don't need no questions being asked on any data. So, you know, I'm confident where we're at and we'll go through the gauntlet again and get recertified. But I'm just wondering if the Spotify decision had anything to do and it, but they said they may come back next year, which was weird. So I don't know. But it means they dropped their membership this year. They didn't pay their dues.

But they did say in a statement that they would continue to support the IAB and their mission and all this kind of stuff.

Yeah, but they're not writing a check.

But that's easy to say when you're not paying anything.

That's right. Yeah. Again, it's up to IAB to come up with their own statement and defend whatever is the issue here. I think it plays badly for Megaphone, the worst. We move a lot of podcasts. I had two meetings this week, major, major, major big networks, 100+ shows each that are basically going to move to Blueberry. They're moving off Megaphone.

Well, Todd, I would imagine that the that fee that you mentioned about a percentage of gross revenue as the membership fee was probably a big— it was probably okay when they were doing it when it was just advertising revenue.

I bet you their bill was still massive.

Well, yeah, but now that you've thrown into the mix gross revenue of the total company, that probably maybe close to doubled it or more. So that may be a little bit of a reason here. And it looks like, you know, even on the advertising side, Spotify is considered to be the largest global digital audio advertising company. Um, so I can only, I mean, first, uh, and then second is the SiriusXM folks and then iHeart and then Cumulus and then Odyssey and then Acast kind of. Brings to the bottom. And it does look like that Libsyn just recertified under the IAB podcast measurement guidelines to v2.1.

Okay.

Which, which Spotify was already certified at 2.1. So, so that, that may be a little bit of an answer there too.

So maybe, maybe I might be wrong. So the IAB board approved a new rate card for 2025. Information regarding that was sent out in 2023. All members will be required to report the 2023 3. Digital revenue to calculate 2025 dues rate card for non-agency or all the members. So let me see if I can find that, um, if they have this. Okay, IV-2025 all other dues rate card, domestic revenue $0 to $7,012,000. And if you're— if you are $8 to $15 Yeah, if you're a non-member, it's more expensive. Well, this is for renewals, uh, annual domestic digital revenue measurement estimated dues for 2025. So let me show this on the chart.

Well, what's, what's also interesting, Todd, is that it does appear that the IAB has a certification non-member.

Oh, they do. Absolutely. Yeah, they do as well.

So this this pulling back from even being a member of the IAB is, is really more significant than, than the, uh, the certification cost. Yeah, the certification cost is what, for non-members, is about $17,000.

But I— but if you're a member, then the math, all math works out. And is it listed on the site? I don't know if it listed on there. What's that, the membership renewal cost?

Oh no, I don't see that.

Yeah, I don't see—

again, I only see the certification cost.

I have to be careful. Does it say IB member costs for certification or renewal?

Correct. Correct. It's— if you're a member, it's $12,500 for initial, for the first one, and then our renewal is only $6,250.

Yeah. Okay. So if it's, if it's public land, I can say it. I knew what the number was. I just didn't want to say it because I couldn't remember if that number was public. So, so if you think about a $12,000 membership for new, but they're not new. No, no. Let's say you are a new member or your certification lapsed. You have to get another initial. So let's say you're at the base level of $12,000 a year for a membership and the renewal fee is $6,250. So you're in for $18,500 a year. Just to be part of the IB and to participate in the forums and to get certified. This is going forward. It's an $18,500, ding, ding, ding, ding, ding, every year because they have renewals going— a recertification is going to be required every year after this year. $750,000. I don't know what they announced there. I didn't look at their, their earnings