May 26, 2020 - Economy & Business

Scoop: Amazon's local podcast play

Illustrated of a pair of headphones in Amazon orange with the Amazon logo on the speaker
Illustration: Sarah Grillo/Axios

Amazon is looking to invest in localized podcast content, like news and sports, sources tell Axios. Sports content is top of mind as the company plans to buy up more TV rights and have adjacent audio content for users.

Why it matters: Amazon sees a strategic advantage in podcasts by leveraging Alexa voice tech to help users discover personalized content.

  • Sources say the company is using its venture arm tied to voice innovation, the Alexa Fund, to invest in local podcast companies.
  • The company has evaluated investing in localized sports podcast companies like Blue Wire, a source familiar with the company's plans tells Axios.
  • It wants to explore short-form audio content that can be surfaced when users ask Alexa for information about topics like news and sports.
  • Amazon declined to comment.

Between the lines: Amazon is looking to possibly tap into a more localized ad market by serving local ads adjacent to that hyper-personalized audio content, according to a person familiar with its plans.

  • Local advertising is a roughly $150 billion market in the U.S.
  • Traditional radio still dominates the local audio ad market, which is about $14.5 billion, per BIA Kelsey.
  • Most of Amazon's ad dollars today come from e-commerce retailers, many of which sell goods on Amazon's platform.

Yes, but: There's been a debate internally over whether the podcast content will live within Amazon's audio book company Audible, Amazon Music, Amazon Alexa or all three, according to a source familiar with the company's plans.

  • Last week, Bloomberg reported that Audible is looking to invest in more original podcast shows with celebrities to help it branch out of books.
  • It also reported that Audible's efforts have confused podcast producers due to the fact that Amazon Music also has plans to distribute podcasts.

Be smart: Amazon's foray in podcasting comes as other big tech giants like Spotify and Apple have increased their investments in the space.

  • Spotify said last week that it signed an exclusive deal worth reportedly over $100 million to distribute one of the most popular podcasts in America, "The Joe Rogan Experience."
  • Apple is looking to double down on its investments in original podcasts, per Bloomberg.

The big picture: More than 1/3 of Americans ages 12+ listen to podcasts monthly, per Edison's latest Infinite Dial survey. But ad revenue for podcasts is still tiny compared to other mediums. That's because podcast monetization is currently too decentralized, as The Stratechery's Ben Thompson notes.

  • Spotify's big-time investments in an array of podcast companies (Anchor, Gimlet, Parcast, The Ringer, Joe Rogan) could help to centralize monetization for the genre, growing podcast revenue as a whole faster.
  • While Apple still has the largest portion of podcast listeners, it hasn't indicated much interest in becoming a centralized player in podcast monetization.
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