Part 3b: 5 Interesting Opportunities (and a Few New Ideas) for Audio Media Investors and Entrepreneurs
As stated in Part 1a, massive demand, growing content volume, and low barriers to entry all point towards continued growth in the audio content space. However, audio content still faces significant question marks and obstacles it must overcome if it wants to realize its full potential as a media outlet, including:
- Monetization and Audience Analytics
- Consumer Attention
- Search and Discovery
- Fighting off Spotify
Clearly, there’s a lot of ground to cover here. However, if there weren’t significant market risk, the space would have already been flooded with capital, eliminating most possibilities to generate venture returns. High-return investments imply taking significant risks investing in unproven businesses, models, or industries. A few interesting companies tackling one or several of these challenge are detailed below:
Professional Audio Content Generation and Editing:
While podcasts don’t require the same level of complex editing that videos might demand, there remains a degree of complex editing, mixing, and recording that podcasters need to perform if they want their productions to be more sophisticated/professional. Descript allows a user-friendly platform that allows novice/non-technical podcasters a tool to mix, collaborate, and edit their podcasts for a more polished final product.
Content Discovery and Interaction:
Given the explosion of podcasts and the macro trend towards user-generated content and short-form sharing that social media tools have sparked, finding and sharing the most relevant audio content has become daunting for users and an obstacle to audience growth for creators. A couple of solutions I like in this space are Podz and Shuffle, both of which are building out a content recommendation algorithm to help users find the most relevant audio content for them (think TikTok for audio); Podz focuses specifically on short-form content, a sub-segment of audio I’m bullish on.
Another interesting company is Vurbl, which is looking to create the “Youtube for audio.” The platform offers an attractive UX that allows creators to build their “stations” (much in the way Youtubers have channels) and build audio content playlists that go beyond simply music and podcasts and offers creators to explore any audio as output for their subscribers. Users can then interact with the content, searching, snipping, and sharing in a way that’s designed to enable “viralization”. On the monetization end, Vurbl plans to build programmatic audio inventory, allowing them to tap into the advertising dollars that have been unable to justify significant audio spend due to a lack of attributable ROI.
Spotify looks like it’s moving in this direction, so companies will need to be careful to not directly clash with Spotify in terms of platform strategy, but rather present a differentiated value prop, attack a new type of audio (as opposed to strictly podcasts) and/or solve a complex problem that would be difficult for Spotify to tackle. This would transform a company from a David vs. Goliath scenario to an attractive acquisition target.
The surge in supply-side volume in recent years has been a net-positive for the industry, but matching talent with sponsors is still the wild west. There’s no mature solution out there that facilitates the process in a way that’s scalable or streamlined. Creators are basically on their own when it comes to approaching advertisers, and advertisers have no systematic and cost-effective means of discovering talent. Companies like Podcorn and Megaphone are helping solve this issue by offering a marketplace that connects podcasters to advertisers. The company provides a centralized hub for talent to connect with advertisers, and a streamlined process for advertisers to run a full process from campaign creation through ad delivery.
Personalized short-form content:
Finally, a more tangential (but equally exciting) space is in personalized short-form content. I believe a shift to short-form content will reduce the need for “porous rocks” and make non-music audio content behave like “water” (seriously, go read Sarah’s article so I don’t sound like a crazy person). One drawback from podcasts is the fact that episodes tend to be long-form and require at least a modest time investment. Short-form video platforms such as TikTok have highlighted a trend (particularly in GenZ) towards rapid, high-volume, targeted content consumption. Companies like Human and Bunch.ai capture both this trend and the trend for human interaction highlighted in part 1 of this series. These companies tap into the supply-side by providing a platform where coaches can be creators and plugging them directly into users seeking tailored mentorship and guidance. Further, Human’s 1–5 minute voice notes provide bite-sized empowerment and motivation that fit into the smaller slots of time in our day media companies must compete for.
Interactive voice marketing:
As stated multiple earlier, the structure and approach for voice ads have largely been the same for decades: mass distribution using native ads. Today’s consumers demand interactivity and personalization, but this demands a robust Natural Language Processing algorithm that can understand, process, and respond to various tones, languages, accents, volumes. However, if brands find the right tools that allow them to run targeted, interactive ads with robust analytics demonstrating the efficacy of voice-enabled ads, we will likely see spend take off.
- Companies like Instreamatic are beginning to pop up, offering two-way interactive voice ads driving 5–15x engagement vs traditional display ads. This removes the burden from the platform in offering this technology to the brand, and removes the barrier of a costly ad exchange to bring the interactive voice ads to market.
- Resultkicks offers a platform for managing customer interactions through voice agents, NLP, and automatically-generated voice ads.
In past articles, I’ve limited myself to listing existing companies/models that I like. However, below I’ve taken a swing at naming a few “company-building requests” and “feature-building requests” for any entrepreneurs reading this content considering how to attack the audio space in a differentiated way:
- Brainbase for Audio: Distribution rights are still murky in the audio space and will be even more murky as tools emerge that enable greater interactivity (e.g. mixing, cutting, sharing). Brainbase, if you’re not aware, is a really interesting IP marketplace. I think significant value could be derived from creating a similar marketplace for audio distribution rights that would make it immediately apparent which content infringes on existing copyrights and which content is free and clear for mixing, repurposing, and sharing.
- Paid fan clubs for superfans for audience identification and monetization: This could look like a standalone company (i.e. Patreon for audio) or like a feature within a platform like Vurbl. The reason this would be powerful is two-fold: it would build on a key trend in interactive streaming around prioritizing a smaller “core” audience as opposed to optimizing for volume of users to maximize monetization, and it would allow creators to know exactly who is most engaged with their content, enabling creators to better tailor their content and providing more targeted marketing insights for brands/sponsors. This concept is covered in greater detail in a recent a16z podcast I loved on the present future of audio.
- Watch2gether for audio: again, I’m not sure if this could be a standalone company as opposed to simply a killer feature, but getting a group of friends or colleagues together to listen to a specific piece of media can be a fantastic way to generate greater interactivity, enable “viral” audio content, and provide improved insights into how audio is being consumed and by whom.
The last point I’ll make to drive my point home about the increasingly attractive media space: the number of venture investments into the audio media space have been growing at a 30% CAGR, increasing every year since 2011 and total dollars invested reached $5.4Bn in 2019.
Clearly trending in the right direction, but also clearly with a ton of room to go. Excited to see how this relatively underdeveloped pocket of media and entertainment develops.