Hello, hello, welcome back to Soundbite. This week is all about consolidation in podcasting. As always, if you have something to share, reach me through email, and if you haven’t yet subscribed to this newsletter, please do so here.

Podcasting’s next wave of mergers
The era of consolidation in podcasting seemed like it might have effectively started and ended when Spotify, Amazon, SiriusXM and others gobbled up major names in the space in an effort to diversify their audio lineups. But now, four years after Spotify got into podcasting by buying Anchor and Gimlet Media, we’re witnessing the dawn of a second wave. This time around, the companies up for sale are smaller production studios and networks.

This week brought news of two such deals. Audily, a relatively new production company that specializes in branded shows, bought Rococo Punch, an independent studio best known for its shows Welcome to Provincetown and Finding Raffi .

A second, all-stock deal involved LiveOne, the owner of PodcastOne, acquiring Kast Media, which makes and monetizes programs like The Sarah Silverman Podcast and Whitney Cummings’ Good For You .

The terms for these deals were not disclosed. But the back-to-back announcements arrived in an increasingly challenging environment for podcasters looking to monetize their work, both through ads and selling programs to production partners. The tech companies that have traditionally spent the most money in the space have slowed down their spending just as advertisers, spooked by a possible recession, have pulled back on marketing.

“It’s a rough, rough world out there,” said Jessica Alpert, co-founder at Rococo Punch. “I wish I could say everyone is going to get through it but I don’t know.”

We’ve seen the fallout already. Smaller networks, such as Starburns Audio, have shut down while almost every audio company has laid off employees. Limited series, which are more difficult to monetize even in a good economy, aren’t being made as frequently and have grown less appealing to possible financers. To stay afloat, independents might have to band together, diversify their offerings and ride out whatever comes next.

“I fully expect this isn’t our last opportunity to roll up this space,” said Robert Ellin, CEO and chairman at LiveOne.

“The new podcast ecosystem is really, really good, but it requires a bigger and more robust set of operations as a home for creative,” said Colin Thomson, founder and CEO of Kast.

Alpert and Matt Wells, co-founder and president at Audily, tell me the deal made sense for them because the joint corporation will now have various revenue lines. Rococo makes prestige limited series but also spun up a business focusing on continuing education.

Audily maintains its branded podcasts operations, working with marketers to ensure they can publish a regular show without having to worry about staffing up. It also helps them make the most of their work by providing supplementary marketing assets – like content to fill a TikTok page or a YouTube channel.

While these two companies were snapped up, other buyers are circling and looking for possible investments. Chris Peterson, a former iHeartMedia and LionTree executive, just announced the launch of DWNLOAD Media, which intends to take majority stakes in podcast companies. Meanwhile, PodX Group, a private-equity-backed firm, has made multiple acquisitions around the world since setting out to roll up independent production shops.

This week’s deals are likely only the start.

A chat with Crime Junkie’s Ashley Flowers
Last week, I connected with Ashley Flowers, the host of Crime Junkie and founder and chief creative officer at Audiochuck, to get a better sense of how things are going on the independent network front. She told me the company now employs 40 people full time and has reached 2 billion streams. In recent years, she has built a company that’s not just focused on podcast ad revenue, but also involves a subscription fan club, a live events business, film and TV development and even book publishing. Here’s an edited version of our conversation:

Two billion streams is major. How does it feel?

Great. It feels a little surreal, almost like Monopoly money. I know that it’s real, and I know there are people on the other end, but it just seems like such a big number that it’s hard to believe we did that in five years.

How has the true-crime genre, which your company specializes in, evolved in that time?

I think it’s evolving. I don’t know that it’s fully evolved, or at a new place, or we’re not seeing a lot of the same stuff that we used to see. And really, that was kind of the mission when I got into it. I wanted to help evolve it.

So I think we’ve really been at the forefront of changing how you create true-crime content, how you consume it. One of the things that I was really passionate about when I started was figuring out how to do it responsibly. Because I’ve always been a consumer of this. I didn’t get into true crime just because it was having a moment. This has been my world my whole life. And there was always this feeling I had of, I’m watching these documentaries, or I’m reading these books, and I’m listening to these podcasts and I’m taking, and taking and taking — listening to, watching the worst time in a family’s life. And it can’t be all take and take and take. So even before I had the podcast, I was volunteering with Crime Stoppers. I was trying to figure out a way I could give back to this community I was taking from.

So I think that’s what we’re seeing the most of, and why Crime Junkie took off the way it did. We were one of the first podcasts that gave people a really clear path of how to take action. ‘Okay, this is a tragic case, I cannot believe this is happening. Well, what do I do next?’ It was the question I was always asking.

How do I contribute? And I think we were giving people that, and it’s something that a huge group of people truly wants. The true-crime community is an amazing, engaged, active community if you can tap into it. I think we’re seeing more and more of that, which is so encouraging.

You also run a fan club. Can you tell me about the thinking behind it?

Yeah, so it became a spinoff of Patreon. Many podcasts, when I started, were using Patreon for additional content. What I was seeing is that Patreon was more like a platform for, ‘Hey, I love what you’re doing over here for free. I’m going to donate to support that.’ Really what we were doing was an exchange of content. We were on the nose, every day of a month you knew what content you could expect. We were giving perks and extras and access.

I hired a development team and created our own app that actually plugs into Patreon. So we converted everyone over. But it just gave us more access to be able to talk to our fans, engage with our fans, create this community where they could talk about the episodes, just have a better listening experience. Because everything that I try and do is so much based around the fans.

The first employee I ever hired was for fan engagement because I think that that is so key to the success of podcasting.

In the years since you launched your company, podcasting has gotten a lot more crowded. Is it difficult to launch new shows now? How do you deal with added competition?

It hasn’t actually changed a lot. I think I’ve stuck to the content that I believe in. Again, what we do is mostly true crime because that’s what I’m so passionate about. I know the types of stories that our listeners are wanting. I know how to tell it to them in a way that’s going to be well received, that I can continue to serve these millions of people who are tuning in. Because I’m continuing to give them what it is I know that they’re wanting and asking for, we have such a high conversion rate, and I think we’ve been trendsetting.

We were one of the first, if not the first, network that did a binge. Now I’m seeing that happen more and more. That was something I did because the space was getting more crowded. There were bigger and bigger players, and it all went back to, what’s the fan experience? And what I kept hearing is like, ‘Oh my God, waiting week to week is so painful and there’s so much noise you forget on Thursday that a new episode of CounterClock dropped.’ The space growing is nothing but good. The more attention, the more people we can bring to it, the better. For me, it’s just kept us on our toes. Like how do we stay ahead of that instead of just being reactionary.

So how do you stay on your toes?

I feel like the way that we are staying ahead is by serving the people who are listening and by giving them the highest quality content in a way that they want to get it. And constantly looking for those stories that I think are hard to find. Even when we wanted to keep Crime Junkie fresh, that’s what I did. It’s not just like you’re hearing me and Brit’s voice. There’s so many podcasts now, especially weekly shows, that what I was seeing over and over is we’re all covering the same cases. And so for me, okay, how do you stay ahead in a weekly show? That’s when we hired additional reporters and were like, let’s go find the stories that no one else is talking about. So if you’re listening to Crime Junkie , you’re going to hear a story that you’ve never heard anywhere else. I’m just trying to keep an edge while still giving people what it is they came for.

What’s the bigger part of your business: ads or subscriptions?

So there’s ads, there’s subscription. We have merchandise. We have different partnerships we’re doing. The ad sales will probably always, unless there’s a huge shift in the industry, be the main source of income.

Has the ad slowdown affected your business?

I think it’s impacted everyone. Luckily, we’re still doing really well, but again, I think everyone saw a big boom. And then I think that advertisers are really honing in. Our shows are consistently performing, which the advertisers are seeing. So we haven’t felt the pain in a way that other people have. But we’re seeing it the same across the board like everyone else.

I’m sure you’ve seen the headlines in the podcast industry. Things have been tough out there. What do you make of what’s happening?

We had such a boom to begin with. I think that everyone was just throwing money at podcasting because they were seeing it work, and it was new. If you’re doing podcasting well you make it look easy. If you do anything well, you make it look easy. And I think what these people realize is it’s actually really hard, and it can be, if you don’t know how to do it efficiently, really costly.

Where we could have gotten off on a bad foot — and I’ve seen so many people do — is looking at podcasting as only a test ground for IP. Where we’re going to dump all this money, and we’re just going to bank on this getting made into a TV show and that’s our business model. I think that’s really hard to sustain. It can work for one in a million, and it will. If you’re HBO, and you have the power to make the show, go for it. But for someone like me, our focus has to be in how do we make a great podcast. And if something comes from that, great. But I think we would’ve gotten really turned around if we would’ve flipped that.

Do you have any advice for people in the space who might run networks or studios?

My advice to someone is the same advice for anything: know who you’re getting into bed with. Because if you love what you do and you want people to hear the content, at the end of the day, the biggest dollar is not necessarily going to serve you long term. I’ve seen so many shows get bought up at a high dollar price and then just killed. If you can retire on it, and that’s your dream, man, live your dream. But I’ve also seen so many people just be blindsided. And I think a lot of these wonderful, creative, independent people can get lost in really big companies. This isn’t a cutesy startup industry anymore.

Odds and ends
Spotify works to develop AI-generated podcast ads

Bill Simmons shared on his podcast last week that Spotify is working on technology that’ll allow AI-generated voices of podcast hosts to read ads. He mentioned one possible use case: the ability to localize ad spots using some of the company’s most recognizable personalities.

As with any AI-centric conversation, I’m left wondering what transparency listeners deserve. Over on LinkedIn, Dan Granger, CEO and founder of Oxford Road, an ad agency, made a worthwhile point about the news.

“While I’m a massive proponent of most industries leveraging all things AI, when it comes to talent endorsements, are we sure we want to introduce something ‘artificial,’” he wrote. “Trust between a host, their audience and the brands they recommend is a delicate thing. Personal endorsements should remain decidedly inefficient in this regard.”

UMG will release artist-sanctioned soundscapes through AI company Endel

Universal Music Group announced this week that it plans to work with AI company Endel to release “soundscapes” based on its artists’ music for various activities, like sleeping, focusing and relaxing. If you want to get a sense of how the new work might sound, Republic Records’ artist James Blake released his album Wind Down with Endel last year.

In January, UMG’s CEO Lucian Grainge expressed his disdain for audio that’s built to benefit from recommendation algorithms and take listening time away from major artists. He described these tracks as “lower-quality functional content that in some cases can barely pass for ‘music.’”

Yet, here we are, with UMG-ordained, functional tracks. I need a shrug emoji key.