The popularity of podcasts is soaring. From last year the total number of pods has leapt from 550,000 to 700,000—with over 50% more episodes available this year than last. That equates to a market that already generates half a billion dollars, and will top $1bn by 2021.
Those numbers have persuaded giants like Spotify to chase podcasting dollars like never before—the Stockholm startup plans to pile up to $500m into podcast-related acquisitions this year alone. But there’s another Swedish brand that’s built a podcasting brand for almost six years. And it’s latest entry is into a nation whose hunger for the format is in its infancy.
Acast was founded in 2013 by duo Karl Rosander and Mans Ulvestam, to provide a platform to distribute and monetize podcasts. Since then it has raised almost $98m in funding, including a $27.6m “quasi-equity” financing agreement with the Luxembourg-based European Investment Bank, announced late last month.
That will help it expand its tech and team, according to Stefan Zilch, Acast’s regional managing director for Germany, who set up the company’s first German office in Berlin this March. Zilch spearheaded Spotify’s entry into Europe’s largest economy too—and MySpace before it. Few know better how to treat the teutonic tech industry.
“Sometimes you have to exercise some patience, because Germany doesn’t move very fast,” Zilch tells Red Herring, at a Berlin cafe beside its spot at Mindspace, a popular coworking location. “But Germans also trust a really, really great product. And when you have a great product it’s a great market to be in, because you will surely succeed.”
Acast’s product—which tailors advertising to location, time and other factors—has netted it some of the world’s leading podcast titles, from publishers like The Guardian and the Financial Times. Creators can track digital data relating to their shows. Since May, a month after it acquired analytics and hosting firm Pippa, Acast unveiled Acast Access, a model by which publishers can throw content behind an ad-free paywall.
The option gives small and large podcasters the chance to make maximum revenue from their content. It’s similar to the way MySpace, and later Spotify, shook up the traditional label-ownership music model, Zilch says. “Both (models) will live on for a long, long time,” he says. “I don’t think one will kill the other.”
Acast’s holistic approach may be unique. But it is far from the only podcast company in town. Luminary and Himalaya have each won funding upwards of $100m, while creation firm PodFund raised $2.3m this summer.
The lion’s share of these brands operate in the United States, which is undoubtedly king of podcasts, Zilch admits—with its common-tongue cousin Britain the most successful European market. Over half the American population has listened to a podcast. Thirty-two percent of Americans listen regularly. The New York Times’ flagship news podcast, “The Daily”, is the world’s most popular title with an audience of 2m.
Language helps, of course. Around 1.5bn people speak English worldwide. “I could not believe the revenues podcasts are bringing in, in the UK – it’s multiples of what this market is,” he says.
There are just 95m native German speakers on the planet, by comparison. It is also home to the world’s third-oldest population, behind Monaco and Japan. That creates a “chicken-and-egg” scenario for Acast in Germany, Zilch adds, between a lack of content and lack of adverts to monetize it. Berlin is home to many of Germany’s biggest publishers, such as Axel Springer and Bauer. But sales teams are risk-averse, Zilch says: podcasts don’t present easy commission bonuses.
Progress has nonetheless skyrocketed, he adds. When Zilch arrived at Acast there was “zero activity” in the German podcast market. Now its largest broadcasters are toiling to create their own podcast platforms. Shows like “Alle Wege Führen Nach Ruhe” (a play on “All Roads Lead to Rome”) and newspaper Die Zeit’s “Alles Gesagt?” (All Said?) have won considerable fandom. “The market’s so young and dynamic,” he says. “Since I started in March, six months ago, so much has changed.”
Technology, therefore, will drive Acast’s German success, Zilch believes. With unique, established tech underpinning the business, Acast’s business teams have been left free to offer cutting-edge subscription models. That could be seen as “self-cannibalizing,” Zilch says. “But that’s what we are. We’re trying to build an infrastructure for these publishers and help them monetize – whether that’s by an ad, or subscription…we want to have a tool to provide them to execute their strategy.
“I believe people will pay for content that they love – even if it’s just a euro or two.”
With that belief, and Acast’s track record, Zilch is sure he can replicate the success he had with Spotify at his new team—even as Spotify itself makes a charge for podcast riches. Funding will help head office “invest in the product, invest in the people,” he adds. “I love building things, and I love seeing how things develop.” Soon, Zilch hopes, there’ll be more than three Acasters in central Berlin. Then he can replicate the success that has characterized his life in digital media.