BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

A Stitcher Acquisition Would Give SiriusXM The Tools To Compete With Apple And Spotify In Podcasting

Following
This article is more than 3 years old.

SiriusXM satellite radio is reportedly close to a deal to acquire podcasting company Stitcher from E.W. Scripps for a price reported to be about $300 million, according to the Wall Street Journal. The deal is yet another sign that podcasting is growing in commercial importance and that digital media giants like Apple and Spotify are vying to dominate it.

The history of Stitcher is further evidence that first-mover advantage is overrated, at least in the digital media world. Stitcher was a pioneering entrant into the commercial podcasting market that has tried various different revenue models, only to be overshadowed by bigger players later on.

As a startup in the late 2000s, Stitcher focused on podcast discovery. It had the idea that users would want recommendations for new podcasts to listen to, and it positioned itself as “Pandora for podcasts.” It was one of the first podcast platforms that treated podcasts as streaming media rather than as downloads. But discovery and recommendation for podcasts turned out to be a harder problem than for music, especially since podcasts are typically much longer than songs and users don’t listen to more than one or two of them at a time. Stitcher also tried selling “pre-roll” ads that ran in its app before the podcasts themselves; this was a tough sell when most of those podcasts were available without pre-roll ads on Apple Podcasts and other podcast apps.

The first company to acquire Stitcher was Deezer, the Paris-based music streaming service that has labored in Spotify’s shadow for many years. Deezer bought Stitcher in late 2014 and sold it less than two years later to E.W. Scripps, a diversified media company whose main holdings are dozens of broadcast television stations around the country. By then, Scripps had already acquired the podcasting company Midroll, which itself was a rollup of a comedy-centric podcast publisher (Earwolf, home of Comedy Bang Bang and many others) and a large podcast ad network. Scripps made Stitcher into a subsidiary of Midroll but then gave the name Stitcher to the combined entity. (The sale to SiriusXM would include Midroll.)

Stitcher was also an early entrant into paid podcast subscription services with Stitcher Premium, which it launched soon after the sale to Scripps. For $5/month, Stitcher Premium subscribers get ad-free feeds of some of Stitcher’s own podcasts as well as some exclusive content.

In other words, Stitcher was early in implementing most of the models that are emerging for podcasting as it becomes a more mature business. But as the podcasting audience reached mainstream levels, Stitcher didn’t reach leadership positions in any of these models. Midroll’s ad sales capabilities have gotten competition from technology-based startups such as Acast, but especially from iHeartMedia with its enormous ad sales force from broadcast radio. As a podcast app, Stitcher had been, by some measures, the only one with double-digit market share besides Apple Podcasts, but now Spotify has that distinction. Paid subscriptions to podcasts haven’t taken off yet and may never become more than a niche business, at least in the U.S. And as for discovery and recommendations, the “Pandora for podcasts” is now ... Pandora itself. Two years ago, Pandora launched a classification and recommendation engine for podcasts that’s analogous to its groundbreaking Music Genome Project for music.

Yet SiriusXM could open up a completely different future for Stitcher and its components. SiriusXM already has a significant presence in podcasting through its ownership of Pandora, which has become a popular podcast app in its own right, and its acquisition, just last month, of the podcast publishing tool Simplecast. Some of SiriusXM’s broadcast shows—which have tens of millions of listeners—could be made into podcasts the same way as iHeartMedia and NPR have done with theirs.

In general, Stitcher needs scale to avoid getting lost as the podcast industry grows, a fate that befell various early digital music pioneers such as eMusic (which predated iTunes for paid music downloads by five years) and Rhapsody (which predated Spotify for interactive streaming by six). Meanwhile, SiriusXM has scale; but it needs a coherent podcast strategy to compete with iHeart and Spotify. SiriusXM’s potential acquisition of Stitcher could give it the pieces it needs; it then needs to figure out how to put those pieces together.

Follow me on LinkedInCheck out my website