Podcasting: Can This New Medium Make Money?

Conservative commentator Rush Limbaugh and his nemesis, Al Franken, are podcasting. As are ESPN, former MTV video jockey Adam Curry and thousands of others. Podcasting, a way to broadcast audio over the Internet, has become the latest web movement to get everyone's attention.

Including Apple Computer CEO Steve Jobs, who recently called it "the next generation of radio." On June 28, Apple announced that it had integrated podcasts into the latest version of iTunes software so that users can manage and receive these new kinds of broadcasts. It's a logical move. After all, the podcast moniker stuck partially because of the popularity of the iPod, although most of these broadcasts are produced in a format that can be played on music players using the MPEG-1 Audio Layer-3, or MP3, audio compression format. Podcasting can also apply to video broadcasts, but audio dominates for now.

The actual content on podcasts is a mix of amateur broadcasters -- waxing poetic about everything from global warming to venture capital to ice hockey -- and media giants that are repurposing existing shows like "Nightline." Podcasting is different from traditional media broadcasting because it allows listeners to "time shift," or listen to programs at their leisure, unlike radio, which operates on a schedule. Podcasting is also different from traditional media in that the means of production and distribution are readily available to anyone. The technology required to produce podcast content is relatively simple and, unlike the scarce radio broadcast spectrum, the distribution channel -- the Internet -- is available to all.

The market for podcasts is growing quickly. A survey by the Pew Internet & American Life Project found that more than six million people out of the 22 million who own iPods or MP3 players have listened to a podcast. Such activity begs the question: Is podcasting here to stay? Experts at Wharton and analysts who follow the market answer with a resounding yes. As to whether a business model emerges for these broadcasts, observers suggest that advertising and subscription revenues may eventually come into play. Apple, for example, could begin serving as a guide to podcasts and sell a few more iPods in the process. "A lot of the attention has been overdone, but podcasting is not going away," says Wharton marketing professor Peter Fader. "It will continue to grow and resources will be thrown at it. Some will do podcasting well and be rewarded for it."

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Monty Solomon
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