Why Podcast Hosting Companies Quit And What You Can Do To Avoid It

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Hey, everyone. Welcome to Feed you'd brand. I'm Tom Hazard along with my co host, Tracy. Today we've got a subject that I have to say, quite honestly, I'm surprised we're going to talk about because it's happening too often these days.

Oh, you're surprised we have to talk about it?

Correct. Yeah, okay.

Not surprised we are talking about it.

That this is happening enough that it's a topic we need to cover. Cover. That's what I'm saying. And that is about podcast hosting companies that are going out of business and why podcast hosting companies quit and what you can do to protect yourself from it or to what you can do to avoid it. I was really surprised this keeps happening, Tracy. That's why. I mean, it happened once in 2022, not too long ago, and I was like, really? Companies going out of business, not doing it anymore. That's weird.

And.

And then it's happened again and again with some of the smaller players, I think.

Well, but I think what we want to do is talk a little bit about the fact that actually this has been happening ongoing over time where companies don't completely shut down. And I think what has happened in the last year is like two companies between now and then. Sounder FM is closing down right now as we record this. And so it's happening actively where the entire company is shutting down. So it's just a little more exacerbated by economic conditions and some other things that it's not just a division of a company. But simplecast actually did this quite a few years ago right before they got bought by Sirius. So simplecast closed down their production side of their business and stopped doing that and had to figure out how to transition clients, a lot of them. And you might see it in some FAQs on some people's websites that I'm mentioning here, they politely call it sunsetting. This is the nice way to say we quit this aspect of our business and we shut this down and all of you are out of it. And now here's how you sunset and this slowly move you out of this and into something else. Right? Moving a hosting company, everyone gets stressed by it, but it's actually not that difficult. But losing a production company or losing any kind of larger businesses like that or advertising revenue you were expecting, that's a big deal. So that's why we are really mentioning this and talking about this. You need to pay attention.

So let's paint this picture for you. As a podcast host, you have a host, everybody has to in order to have their podcast on all the listening apps, and you're publishing episodes and you're into a rhythm and everything's fine. And a lot of times one of the last things you want to do is think about changing one of your processes, system software you use. You get comfortable in what you're doing, and you get an email from your podcast host saying, hey, we're no longer going to be doing this, and you need to move your show off our platform to another one in a month. Otherwise your show will cease to exist at all the listening apps. And you're like, what?

But what really has shocked me, Tom, is that the last two companies that did that didn't offer another resource. Like, they didn't say, we've already made an arrangement with this company to take over your show. I mean, this is what we would do. Like, we would make continuity available to you. Like, I can't even imagine a company not being. Because there's dozens of hosting companies. You could easily make an arrangement. You probably could get somebody to pay you to give you their clients. Right? Like, I mean, why wouldn't you do that?

Well, and I think in some bigger examples where something like this has happened, where a larger company buys a smaller company and gobbles them up, the service is continued. That's a little different situation. This is a company saying, we're out. We're not going to do it anymore. And they let leave you to yourself to figure out what to do. And that. Yeah, I agree, Tracy. That's not really very cooperative, right?

It's not. But part of the problem is, like with Sounder specifically and some of these other companies, is that their podcast hosting was free or so subsidized and inexpensive. It's actually why they're shutting it down. It's what it is. It's because they offered this freemium model where they were going to make up the dollars on the ad side of things. So this happened with Acast actually shut down their listening app because it was free. And so they couldn't continue to support the listening app because they weren't making enough money in the business they thought that it would be leading them to. Right. So the same thing with Sounder in this case, Sounder thought the advertising would subsidize the cost of hosting and it didn't. So shockers though that some ex Google and ex Spotify people couldn't figure out the model of business that could work and thought that this freemium thing would work out. They should know better and they should know it takes enough volume and they didn't get there, but they didn't. So. But that's what happens in this process, is that what they thought would subsidize that. So now they're like, you guys got it for free. Like we don't owe you anything. That's not right. From an ethical perspective, from a business perspective, that's not how I want to show up in the world. Tom, I know you agree with me on this because we talked about this from other companies that this has happened for is that we set out a process that said if we decide to discontinue any single service within our company, we will create continuity for you in some way, shape or form like we will extended transition period and help you through that. Because it's not right to just shut something down that someone was depending on because whether or not they paid you for it, they took a risk with you. They decided to take the leap and come over to you because Sounder didn't exist in the beginning. So somebody decided to leave one of their other hosting companies to move over. And that says that they said, well, I'm going to take a risk on you. I'm trusting in your business model. I think you guys have something and you're going to reward that trust with no help, no transition, no offer. Just here's notice. That's what happens a lot when the company gets bought out. The new company has no loyalty to it. So that does happen a lot there. But in this particular case, there's no buyout happening. So I kind of find it reprehensible. So it's why we haven't been kind of. So we've actually done some messaging and.

We'Ve not been kind in our comments about the platform. That has left people in the lurch, let's put it that way. I mean, I think as people in a company, we certainly try to be very kind.

Yes. But yeah, but we haven't been like masked our language, been polite about it. We've been saying, hey, you guys are out of luck and we're here to help. We're going to pick up these pieces for you. But we aren't sugarcoating that because what they did wasn't right. But I think there are some signals that you need to pay attention to so that you can avoid this. And that is, is when you are looking at a hosting company that is offering you something for free, you ought to make sure that the business that's on the other side of that is sound. And right now it's not. Sounder's business wasn't sound. Pun intended there. Right? It wasn't. And if you're watching what's going on economically, there's a whole bunch of articles going out right now about the state of the podcasting advertising economy. What I want to remind you all is that less than 2% of all podcasts out there ever make enough money in advertising to make it worth doing so. That means that the pool is extremely small. We're talking about less than a hundred thousand podcasts, sixty thousand. Less than a hundred thousand podcast shows that could even possibly make any advertising dollars, period, out of two and a half million shows. So if they've got this freemium plus advertising model, I would worry.

I agree. And really, what we often say is free isn't always really free. Right. You sort of get what you pay for.

Well, and with it comes risk. Yeah, with it comes risk. Right. So this is the thing is so like, they're blaming it on podcast discovery problems because then they can push the blame on Spotify and Apple. They're saying that podcast discovery is so bad, that's why we can't make it work. But the reality is companies like Sounder that were relying on advertising dollars is it's really that this freemium plus advertising is that Spotify and other companies like them are taking over the lion's share of what's left of the ad dollars. The ad dollars are in decline in 2022. And while they're flat, that's not in decline. Like, I really want to clarify that. We did talk about that, I think a week or two ago in our podcast recording here. So if you to another feed your brand episode on what we talked about, advertising and the market that's happening there is, it's flat growth, meaning it grew year over year, 24%, but that's flat growth. And it's not expected to grow more in the next year. It doesn't mean that there's no growth in podcast advertising. So I just want to be clear on that. But there are so few shows that actually qualify for that premium level of advertising. That Spotify has been garnering and building all the brands and that there isn't as much room in the smaller advertising platforms for them to get those ad dollars. So their shares are in decline. And that's where Sounder fell apart and where others have fallen apart. The other part of it is that there's been this tremendous overvaluation spending. Spotify spent way too much money. If you want to know why they're letting people go, it's because they overspent and they shouldn't have spent those crazy 30x plus valuations on buying shows. And we've even seen it happen. I heard of two shows that got bought at the end of last year, and I know that their valuations were 10 times more than they're actually going to be worth in 2023. So someone overspent. Whether they overspent when they bought out a company and the podcast was a part of it, or all of those things. What's the other company that went out of business in the last year?

Tom, I have to tell you, I'm really glad I just found this out because it's one of those things that was bugging me as a podcaster. It was a mental block and I couldn't even really focus on anything else till I figured this out. It was called Tandem.

Is the Tandem. That's it. Yeah. Tandem went out of business mid year.

And there's a podcast with Tandem they went out of business in. I think it was July 1st.

Yeah.

And we got panicked calls from people saying.

Because it happened abruptly.

Right. And it's really a very easy thing to switch your hosting. You have the old RSS feed. If a good podcast host like Potatoes can just import it, duplicate.

And you don't lose your statistics if you go with the right host, there are many companies you lose it with.

Actually, I don't even know of anybody other than Potatoes that will maintain your statistics. I don't know of any. I'm not saying there aren't any. There's so many obscure little companies out there. There may be someone that does.

But you're right, Libsyn definitely doesn't. SoundCloud doesn't. None of those.

All they'll do is import your content. But then your stats start from zero on potatoes. We have to wait till your show's imported, redirect your feed from your old host to Poditize. That's the process. And then once that's done and no more stats are being accrued, that old platform, you export. And actually, I've been Shocked to find there's a couple platforms that don't allow you to export your total episode downloads with the per episode data. We found one recently that only will export the total number of downloads across all episodes. But that's not very helpful to know what you had for each episode. So in our system, you export data from an old platform that's usually a spreadsheet and each episode has a number by it. This episode1237.

And then it totals up to your total downloads.

Totals up to your total. So we actually take that, import that into our system per episode, match up the total downloads you had on the old platform, and then your downloads keep adding to that on potatoes. So the total history of downloads is maintained. That's what a lot of podcasters want. They get pretty attached to their analytics and their numbers because you achieve certain milestones and that has meaning. So to change hosts and start all over, yeah, you can save that number, have it somewhere, and then keep adding to it to know what your total is. But that's sort of.

You shouldn't have to maintain that on a Google sheet. Like, you know, no spreadsheets for you.

Right.

Like we don't want to do that. We want you podcasting and forget all that. But yeah, that happens. And so I think that's why people get panicked and worried about it. But the transition is relatively simple and should be and not difficult. There are companies that don't help you through it and they don't make it easy for you. And that's part of the problem is they make this a difficult process.

So let's recap. So Tandem went out of business. Sounders on its way out of business. As we record this.

Yeah, actually by the time we publish this, it might be done. January 31, 2023 is their last day. And so go on. Yeah.

Acast listening app went out in April of 22. So they are listening app side and they had 2 million users.

So interesting.

That's crazy. And now, I mean I'm sure that they people try it and then don't actually use it. And then all of us register shows on it. So all the podcasters have accounts but never use the app. That's why it didn't work out for them. Right. Facebook closed down their whole podcasting thing that they were working on June of.

2022, a colossal failure. And honestly that one went down because it really wasn't in the podcaster's best interest. And Facebook was trying to use podcasters content for their own benefit. And I Think podcasters saw through it and it just wasn't being adopted. So they killed it.

Yeah, exactly. So that's part of what we're seeing going into Klein Libsyn Studio, which is the creative agency side of it that uses a division they had called Podcast Ad Rep. Both of those stopped in November of 2022. So they stopped both of those divisions because the ad revenue is not there. It's too hit or miss. Like, you start up a podcast with the idea of creating it to make podcast revenue. The ad reps can't sell it because the creative is like one out of every 10 succeed. So it's too low. And the cost of the labor on that creative services is too high. Right. I mean, look, all of us know that starting a podcast isn't hard. You can start a podcast. Starting a successful podcast is really hard. Right? Just starting one. Like, there's nothing to it nowadays, right? This is what Anchor depends on.

So that's what they tell you. And that's why you have so many numbers that are pretty hard to believe of so many users.

So that's an Anchor's number. Can't be bleed.

It's.

So Anchor claims to have 5 million users.

I'll tell you, there are not 5 million podcasters that have ever existed on this earth. I mean, there's only two. Well, I may have to walk that statement back a little bit in terms of people who have ever started a podcast. But I'll tell you, in terms of podcasts that are live in the ecosystem, there's about two and a half million, but there are so many of them that are dormant. They've stopped publishing months or years ago. There's only about 320,000 right now that are actively publishing new episodes. So to say that anchor has 5 million, they maybe.

I mean, that says to me, because, look, people start because Anchor's free, right? Like, it's the freemium model that creates this, and it's a BS model because those aren't real users. They logged in, said, I'm going to start a podcast, and then never even set it up or started it.

Correct. I don't believe it's been syndicated and been able to be played by anybody.

Right? But even still, to say that twice as many, like two times the number of podcasts that have ever existed or that are live today, that are live today, right. That there's also someone who didn't start a podcast, like, that's too high. Like, it should be like 20% more or something like that just doesn't make sense?

Well, the number isn't really meaningful when you know that there's only two and a half million total podcasts in the ecosystem today, and one eighth of them are actually active publishing new episodes. It's just not a meaningful number. I don't think it helps the podcast industry. I think it does a disservice to the podcast industry. So I don't see how that's useful except to help Spotify try to appear like a big player or a banker owned by Spotify. Right.

But I think it makes you look like a bigger failure. And I think this is the number. If a podcast hosting company is out there saying, we have 5 million users, and out of that they have 30,000 active podcasts, that's a bigger failure than saying, out of the two and a half million podcasts, we have this many users, that's realistic to their share of the marketplace, and 30,000 of them are actively posting. Now, that's a more realistic conversion rate. But you look at that 5 million number, and that sets off alarm bells in my head. And this is what I want you to all do. When you're reviewing a hosting company, take a look at those numbers. Do the math a little bit, check it out. Because if their conversion rate is so low, your chance of starting a successful podcast on their platform is slim. And. And if their percentage of premium podcasts or hosting podcasts that are paying for it to freemium is too extreme, there's a good risk they're going to go out of business in this next year. And the last one is if their model is 100% reliant on ads and they're not Spotify, I think you should worry, too. That's where we're going, I think, in this marketplace. So that's kind of my things. So my predictions for is that HubSpot will fail again this year in their podcast. HubSpot, they failed in 2018, and I think they're going to fail again in their podcasting model. So that's my prediction on the next failure we'll hear about is they will discontinue. HubSpot will discontinue the podcasting again at some point in the next six months.

That wouldn't shock me at all.

No, it wouldn't. And then the other thing is that I think that we're going to see a lot more production studios shut down a lot of these, like fly by Night video companies or marketing agencies. I'm hearing a lot of people who are refining their business model realizing what made them Money, what's working for them. So they thought, hey, we're already offering video. We should offer podcasting, too. And I think that they're realizing that they don't know what they're doing. The success rate is really low, the dissatisfaction is high, but they're going to go out of business. So I think we're going to see a lot of those overpriced studios be unable to compete and shut down their production services and support a podcast. So we're going to find that happen. So that's my other prediction on that side of things.

All right, so I have another data point to help you with. So we have a database of every podcast in existence, and we have.

Maybe by the time this airs, Pod Lister will be live and you'll all be able to check it out.

Hopefully. Yes. So we have a database, and not only every show in existence, but we also have metrics by which we evaluate what are the active shows. And I mentioned earlier, there's about 320,000 shows actively publishing episodes on a regular basis. Well, in terms of how many of them are hosted on anchor, 53,000 of those. So if their number, let's just for a moment say, okay, their 5 million number is accurate, I have a lot of doubt and skepticism as to that.

But let's say 99% pod fade.

Yeah. It means 1% of the shows that they claim are hosted on their platform, literally 1.06% are actively publishing episodes. That's not exactly a good batting average in my perspective.

And this is the problem when you think about an organization like that. Right. You're maintaining servers, and those other podcasts aren't taking up hardly any server space. So, like.

And no bandwidth. If they're no bandwidth, no nothing published, nobody's streaming.

Yeah, that's not costly. But what is costly is maintaining that database of users and maintaining the continuity, making sure they can access their accounts even though they're not using it. You still have to make sure that that happens. Customer support.

Customer support. Yeah, yeah.

And billing. Because at some point, you, like, want them to be able to upgrade. Marketing. Are you marketing to them? Like, there's a lot of costs in that, and I can't even imagine the open rate. Like, if you're sending mess portal messages to everybody, your open rate must be in the toilet. So, like, I mean, that can't be good either.

Anyway, look, free isn't really always free, and that's what we're seeing. And that, like you said, Tracy, that's why some of these platforms are going under. And it's very interesting. When it came to Sounder, I mean, we have a list and every podcast has an email that is registered for it. You can't publish podcasts without having an email address that is public. And so we have sent out emails to all the Sounder podcasts that are actively publishing with some fun messages to get their attention about how they're going to be homeless soon and things like that. And then inviting them to come to Poditize and giving them a deal some time free. But what Also highlighting the benefits of hosting with Potitize, one of which, of course, is our service, because our customers get these calls live and have Q and A every week that those of you listening to the podcast weeks later, I mean, obviously haven't been able to participate in that. So there are lots of reasons why paying for a podcast host is probably in your best interest. One of them is continuity. And they're going to be around, right? Especially if.

Because if that's their business model, that works. Right? And so that's where I really want all of you to think about, especially those of you out there, starting a podcast this year. And we have a lot of people because it's the start of the year, like you're thinking about, this is your resolution for the year. It's like, be thinking about, I know you want to be on a budget and I know you want to be cost effective, but also, don't take so much risk with your business. And if you're seeing it working, then move it. Like, make sure you're going with people who can support you. Because at the end of the day, if you don't create a successful podcast, you didn't create a podcast.

Well, then it was more for you than for others. And there has to be a better balance. Well, it has to be a better balance. I mean, certainly you're going to keep doing it if you're getting something out of it as a podcast host. But if you're not serving people, if you're not supporting others, if your message to the world isn't being heard, what's the point? Other than satisfying yourself, I guess, just to. You could be recording and not publishing it at that point, right?

Yeah. Yeah. Don't spend any money.

Record your memoirs. Maybe it'll be a book someday, I don't know.

But who knows what.

Anyway? Well, we are trying to cover more and more of these topics here on feed. You'd brand to give you a more economic view of how podcasting is working in an industry. Wide view and of course the high end tactical. So like thinking about really what does it take to make a really great podcast? That's what we're here on feed your brand about. We're not here about those like me too coaching kind of stuff that you could get anywhere. You can go take our course, you can go join any one of our videos. Like you can join in and learn how to do all that stuff anywhere. But if you want to really know what tactic to try, what we've tried, what's working, what we're seeing working, what pattern is going on in the industry, what patterns going on with the successful podcasters I interview on the binge factor and we have in our company, then you're in the right place. And so we invite you to submit your topics anytime. You can always go to our website and submit through there or if you are one of our clients, you can always go to our help team and submit through them as well. And Tom and I are available everywhere on social media so you can definitely reach out to us and send us a dm, send us a comment. We will get it and we will incorporate that into our content for this year.

All right, so you can find any of the links on things that were mentioned today, companies were mentioned and anything. In case you're listening while you're driving at the blog post for this episode, it's on the feed you'd brand page on potatoes.com thanks so much for listening everybody. This has been Tom and Tracy Hazard on feed you'd brand heard something valuable.

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