The Vergecast - Can Anchor be the Youtube for podcasts? And should they?

Episode Date: March 5, 2019

Anchor CEO Michael Mignano discusses the company's recent acquisition by Spotify, the future of podcasting, and whether Anchor could become the "YouTube for podcasts." The Verge's Nilay Patel and Ashley Carman talk to Mignano about the current difficulties the podcast industry faces along with possible solutions for discovery and questioning what to do with the RSS feed. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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and one of our tech reporters focused on podcasts. We talked to Michael McNano, who's the CEO and co-founder of Anchor. That's a very popular podcast creation app who was just acquired by Spotify, along with Gimlet Media, which makes reply all. We talked to Michael about what Spotify's plans are. Why are they buying all these podcast companies?

And a lot about what Anchor is for, where it came from, where it's going, what his thoughts about the future of the podcast business are. One really big criticism of Anchor and also a compliment of Anchor that it kind of feels like the YouTube of audio. We really unpack that with Michael, really dug into what it means to centralize the podcast economy, whether that's a good or bad thing. Anyways, a super interesting episode. We also asked Michael about 500 times how much Spotify paid for Anchor, and he deflected it every time. So if you're a young tech executive on the make, you're looking for some guidance on how to deflect hard questions this interview might be for you anyway super interesting interview michael is very passionate

about podcast anchor he's very excited about spotify i love this conversation check it up we're here with mike mcnano the CEO of anchor now part of spotify welcome thank you excited to be here and ash Carmen, who is an accomplished podcaster of her own, also a person reports on podcasts, The Verge. Just join me. Hey, Ash, how you doing? Good. Mike, congratulations.

Thank you. Sold Anchor to Spotify. We did. A big, big deal. A lot of the focus was on the Gimlet folks who also in the same day was announced who were selling Gimlet media to Spotify. I'm sure Vurch has listeners know. Gimlet makes reply all, make a bunch of other fancy podcasts.

I made homecoming. But you guys, in that same press release, Anchor sold to Spotify, real quick for everybody, giving the anchor pitch. What is it that you make? What is it that you do? What is it that you're trying to do? I like to say that anchor is the easiest way to make a podcast. That's it. We built anchor basically because my co-founder, Nier and I, we tried to start a podcast of our own a few years ago. Honestly, probably would have been a similar podcast to like the Vergecast, similar topics. And then I looked into figuring out how we actually go about doing this. And I saw a bunch of pictures online that looked kind of like the studio. And we were both like, that sounds really, really hard. Let's not do this. But it actually, it inspired us to ask the question, well, what if there's an easier way to do this? So it sort of became our mission to simplify this whole process. And the end result of that, the first version was an app.

Correct. That's what it is. Yep. It's not like a hardware ecosystem. Full platform. Yeah. So you have to go back a little bit to 2014. And of course, you know, our sort of first stab at how do you simplify podcasting and make it easier and democratize it and make it a lot more fun?

Of course, the first guess goes to, well, it should be a social network. And so there were sort of- 2014 was a very innocent time. Of course, of course. There were sort of two main components to that. There was simplifying creation and just making creation as simple as talking into your phone. There was that. And then on the consumption side, it was like, okay, how do we make this more fun?

How do we make it engaging? How do we make it short form? How do we make it shareable? Right. like podcasts are these big, chunky monolithic files. Is there a way to sort of usher the format into the next whatever generation? So, of course, again, social network. Feed of two-minute short-form audio clips.

And they were ephemeral, right? They went away after 24 hours? That was the second version of anchor. The first version of Anchor was very much just like a straight-up feed. You followed people. There were these two-minute clips. We saw very quickly that people were really into making this content. It was clear that we had struck a nerve in making recording audio easy, again, because it's complicated, right?

Big chunky microphones, expensive software. But I think we hadn't really figured out the way to do consumption yet. We thought we could do something different than podcasting. But what ended up happening in the couple of years since, you know, not to anyone's surprise is podcast became massive. Everyone loves listening to podcasts now. The big, chunky monolithic format I mentioned is the desired format. It is the preferred format. So somewhere along the way, through a couple different product iterations, we realized, hey, we've built all of this creation tech, we've built this distribution platform, we've built audio file hosting, we've got ideas about how to do monetization.

We should really just be focused on making it easy for anyone to make a podcast as we all know them today. And so we really shifted to that mindset about 18 months ago. And since then, its anchor has just been, like I said, the easiest way to make a podcast. So we've got tools for recording, tools for editing, hosting, distribution to every major platform. And most recently, we've been really focusing on monetization. I just want to unpack the make a podcast because you've described the problems that all media types have to solve, right? Like you've got to create some stuff. We live in a world where technology just makes it easier to create every day.

That's like what the verge covers. Then you have to distribute some stuff, which is usually very difficult. And then you have to monetize some stuff, which is usually the hardest part of all to do at any kind of scale to make any kind of business happen. Along the way, I think most people kind of see how digital media generally works. It becomes very easy to make a video. YouTube captures the entire distribution market. They now control monetization of video for tons and tons of people. Maybe if you're lucky Netflix comes calling.

You guys have, you haven't captured that, right? Like there's still Apple Podcasts. You're now on Spotify, which is a huge podcast distribution platform. You're talking about monetization, but there's a bunch of other companies kind of floating out of that ecosystem. Do you see that collapsing in that same YouTube way? Is YouTube your model? Is it something else entirely? Is it garage band your biggest competitor?

So I think the insight we had when we were building Anchor was that distribution of podcasts and audio is actually very, very different than distribution of video or text or 140 or 280 character text. It's very, the distribution of podcasts as compared to these other platforms. like Twitter and YouTube and Snapchat and Instagram is the distribution of the same format is fragmented. And it's because of RSS, right? So the way podcast works now is you have an RSS feed and that RSS feed can be consumed by a number of different players or, you know, consumption platforms. And so I think the insight that we realized was, well, we don't need to control the consumption experience to provide a ton of value to creators. We can just help make hosting and distribution really, really easy, right? So create the podcast either in your studio or on your phone, tap a button, and we'll do the heavy lifting for you to get your podcast distributed everywhere.

We'll make the RSS feed. You know, we'll get it up on Apple Podcasts for you. We'll get it up on Spotify for you. We'll get it up on Overcast or what any other app that your audience might be listening on. And I think that's to me, like that has always been the thing that I think we realize creators really wanted. new creators, especially new podcast creators, they want to be heard, right? They want to be able to build their audience. And so if you can bridge that gap for them and make it easy to reach their listeners wherever they are, you're doing a huge service to them. So for us, it's been about

solving that problem, right? Getting the audio to everywhere where people are listening. And that doesn't change today. So with ownership, you know, you mentioned you guys make the RSS feed. Who ultimately owns that RSS feed? Like the podcaster, can they, go back and get their back catalog of episodes? Can they check their own Apple podcast analytics? Things like that. Like how does ownership work with you? And then how could it work in the future with Spotify?

Yeah. So this is a question that has come up before. So we've said from day one because, you know, we knew literally before we wrote a line of code that it was going to be really, really, really important to us that creators own their content. Right. So we had come from before Anchor, my co-founder, Nier and I worked at a company called Aviary, which ended up being acquired by Adobe,

and that was all around empowering people to take and edit photos. Before that, I spent five years actually in the music industry. This is when I was geeking out over Spotify through the VPN. Ford had launched. It was at Atlantic Records. And in all my roles, it was really, and Nears as well, it was always about empowering the creator. And so before we wrote a line of code on Anchor,

it was like, if we're going to make this easy, like we need to make sure people are comfortable using our tools. And so since day one of Anchor, you've always owned your content like 100%. But what we realized was the concept of ownership didn't necessarily mean that creators didn't want to have certain aspects of their workflow simplified. So like RSS, we realized most new creators

don't even know what an RSS feed is or care about an RSS feed. And that's totally fine with us. You know, if you don't care about an RSS feed, we're making it easier for you. If you do care about an RSS feed, that's cool too. Like you own the content, you can grab it off our platform at any time.

If you want to log into Apple Podcasts, like we transfer over the account to you. But you've got to move it. I think what Ashley is getting at right now is the way the platform interacts with Apple Podcasts, it all comes through Anchor. So if you want to go and manage your own Apple Podcasts experience, you actually have to come off of Anchor and go do it manually. No, you can keep using Anchor. We just transfer the RSS feed to your Apple Podcasts account.

So you get to keep doing it. You get to keep submitting. Keep using our tools. No problem at all. We just sort of unbundle that. option for you. And our distribution is totally optional. Like if you want to distribute using our like one tap distribution, you can. If you don't want to from the get go, we can just give you the RSF's feed and you submit it yourself, no problem. So it's like an optional, easy feature.

Does that make sense? It does. I think this walks you into the big question, which is Apple podcast is the big dog, right? They control a huge share of this market. You are now owned by the medium dog. Spotify fundamentally is a music distribution service. Yeah. There are a music monetization platform as well. They do not have a ton of music creation tools. As far as I know, there's not like a drum machine for Spotify creators to go use at their office. The reason I set it up as creation, distribution monetization is Spotify is all about

being a single pointed distribution for people, being a single pointed monetization for people. How are you going to manage the fact that what you are currently offering is multi-point distribution monetization options with a platform that is very singularly focused on being that consumer aggregator, being that. single point for people. Yeah. So if you think back to what I said, well, I guess I don't know if the mics were on, but, you know, I was talking about how one of the reasons I was, you know, I was so excited about joining Spotify was I realized in talking to Daniel Eck, the CEO and Gustav, the chief

R&D officer, was that our missions were so aligned, right? Like a lot of people don't realize this, but Spotify's mission is around unlocking creativity and enabling enabling, enabling people to create and for their fans to consume and being able to earn a living, right? And that's very similar to Anchor's mission around democratizing audio and making it really, really easy for people to create. And so I think if you think about the stuff that Daniel mentioned on the day of this announcement and the earnings or the earnings call, he talked about how Spotify is on this path from going to the leading music streaming platform to being the leading audio platform, right?

And I think the way you do that, and he touched on this a bit, is around not just growing creation of podcasts like what Anchor is doing right now, but also just growing listenership of podcasts, right? Podcasts, you know, the three of us in this room have probably been listening to them for a really long time, but there are many, many, many people in this world that don't yet listen to podcasts. And so from my perspective, I want to help make podcasts easier for everyone in the same way that Spotify wants to make listening to podcasts more widespread and mainstream. It's very important to me and to Anchor that we continue to maintain the distribution that we have today because if we didn't, nobody would want to use it. Right. Like if you if you signed it

for anchor tomorrow and it was like, hey, you're only distributing on Spotify. People will be like, why would I want to use this? I have listeners everywhere. And so I think it's to answer your question, it's the way you distribute on anchor doesn't change because it would be really bad for creators. Is that in your deal? Do you get that in writing from Daniel Eck? I can't talk about the deal, obviously. How much did you sell it for? I can't talk about that. Blink twice if it was a hundred I'm looking at the ceiling and not blinking at all. He's never going to blink for the rest of this interview. Well, we heard it was 100 million dollars.

I'm looking at the ceiling. He really is. So what was their pitch? They came to you and they said, we want to buy anchor. You went to them and said, look, I got to get out. How did that process work? So I didn't say I got to get out. You know, fortunately, I had the opportunity to get to know Daniel a little bit over the years,

two companies building products in similar spaces. and beyond the mission that it was obvious we had sort of clear alignment around. Daniel said something to me, which I think is awesome, and which really resonated with us, which was that he and Gustav and the wider Spotify organization wanted to give Anchor superpowers. And what that meant was really around giving us the support and the infrastructure to be able to make better tools, to be able to offer better data. And in general, make podcasting better, right?

like podcasting hasn't really evolved beyond the RSS feed and the big microphones we're talking into right now. And so having the backing of the most forward-thinking audio company on the planet and the biggest music streaming platform on a path to be the leading audio platform. I mean, it was just like an opportunity that's too good to resist. You know, we're a 28-person team in New York. We've, you know, we've had a lot of success and growth over the past, you know, 12 to 18 months. We now power 40% of all new podcasts. But to be able to do it inside of an organization like Spotify that's so committed to audio and pushing podcasting forward, like that's like the dream outcome for a startup, I think. So what is it about Anchor that you think made this deal go through?

Like does Spotify want to be a place where creators can create? Do they want this insight? Because I know a lot of people are starting up with Anchor to podcast. Do they want insight into who the up-and-coming creators are so they can lock them into that Spotify? No, I think it's, I've been listening to podcast for a while. I'm assuming the two of you have been as well. It's been around for what, 10, 15 years. But there are very, very few number, a few number of people in the world who are actually making podcast as compared to people making video, people taking photos, right? I mean, how many videos are on YouTube right now? I'm assuming billions, right? I think the point is we're just at the infancy of what podcasting will become over the next five, 10, 15, 20 years. And I think Spotify's view is, hey, we can help make that better. We can help push the medium forward. Anchor is the company that's currently focused on that.

They're like, we need a bigger catalog. Bigger catalog, more creators and banking more stuff. I can do the YouTube comparison with you all day because it's super. Should we do it? I don't, YouTube doesn't make Premiere, right? They don't make Imovie. I think there's YouTube capture is the one app they make that's like, shoot a video and send it to YouTube. And as far as I can tell, it was not updated for like the iPhone set.

But there's a gap there, right? Like, there's a gap there in audio that doesn't exist in video and photos, probably because of the devices, right? These devices have these baked in cameras. Photo taking is a very natural part of the experience when you get a smartphone. Audio hasn't gotten there yet. There's all this friction in between having an idea or a thought in your head and putting it up on a platform. And I think that's where Anchor has been successful. It's like, hey, how do we bridge that gap for you and get that thought in your brain out into the world? as quickly and as seamlessly as possible. It's crazy to me that, like, in 2019, the medium that is, like, easiest to generate, you know, in terms of talking is actually the hardest one to get out to the world, right? Like, we're sitting in a room with four huge microphones and headphones, yet we're walking around with these phones that have microphones in them that are connected to the internet.

That was always the gap that I think we wanted to bridge with Anchor, and I feel like we're making some progress. The reason I keep coming back to you, YouTube. YouTube is huge. It has captured the entire sort of video distribution market. And the problems that they run into are very obvious problems for audio as well. Right. You know, last week, YouTube is like, we're not going to monetize conspiracy theories. We're not going to recommend in the algorithm. A few months ago, Spotify was like, we're going to stop recommending our Kelly songs. Like, you have this huge catalog of stuff. You're democratizing creation. You're controlling distribution and monetization.

there is just, I think, now a pretty well-understood set of problems, if not a pretty well-understood set of solutions. Do you see yourself playing a part in managing those problems now, or are you focused on we're going to help you create and send that to the platforms? Yeah, you know, I don't know. I think it's hard to talk about what the future looks like from that perspective. I will tell you something that we have always been really encouraged by and honestly kind of pleasantly surprised since the beginning of anchor is how thoughtful people are. and how sort of respectful we've found people to be in audio. I don't know what it is about voice versus, you know, video or text on the internet. But it seems like the conversation is more thoughtful and respectful. And like, I think people are just a little more mindful of what they're saying.

Maybe because they're focusing on their words and nothing else. You're like the last idealist. What's that? The last idealist in 2019. Yeah, maybe. But no, I guess my point is like the content has been like very good. And that's been really encouraging to me. Have you had to develop any tools to automatically detect?

I don't know what your terms of service are. Yeah, we do have processes in place to take care of, you know, obviously the things that really we don't think should be out there around hate speech and racism and misogyny and all that stuff. We've been surprised and delighted by how thoughtful people are with the platform. Yeah. So that brings me to the final piece of this puzzle, which I promise you I'm going to connect to RSS because I can sense.

Let's do it. That in your heart, what you want to talk about is the technical details of RSS. So right now, monetization, you're like looking at your PR person. They're like, how much can I trashed RSS? The technical problem you solved was RSS is a pain to manage. Podcasts are distributed as large files. So, like, an interesting problem we have as podcasters is we have the Vergecast feed. I want to drop Ashley's podcast.

Why did you push that button into our feed? And I get emails from people that are like, you just use part of my data plan, right? Like, we're going to automatically distribute 50 megabytes to somebody. there it is. That is not a problem for Spotify. Spotify is like, here's rap caviar. It's a list of songs. You pick what you want. We're going to stream them to you. The move from distributing a full file to streaming the audio allows you to do all kinds of crazy things with money, right? Because we're not baking the ads in. You can do dynamic insertion. You can do ad targeting.

You can do all this stuff, which I think people understand once again because of YouTube. There's a whole bunch of stuff you can do with ads on YouTube. There's a whole bunch of stuff you can do with ads on Instagram video, all these places where you're streaming. the video. You're streaming the file and set download me. Are you looking at we're just going to get away from RSS entirely? We're going to start streaming this audio. We're now partnered with a big streaming audio provider. We're going to start thinking about ramping up monetization with targeted ads and all that sort of thing. Two part answer. First part is the truth is people do listen to RSS right now. And back to my point earlier about making things easier for creators,

I think if we were to come in here and say, okay, RSS is dead. Podcasting, podcasters are not going to get to use RSS. It would be great for our show. You would lose all your listeners, right? No, I just meant for this one episode of downloads. I don't think that's realistic, and at least today, and we're certainly not thinking about that future today. What I can say is there are actually still a lot of innovations to be made and monetization with RSS.

So this is what Ashley and I have talked a bit about. Anchor came out with a feature two or three months ago called Anchor Sponsorships. So basically the premise for sponsorships was monetizing a podcast is really, really hard. You guys actually talked about this a few weeks ago when you talked about the Spotify deal. If you want to get an advertiser on your podcast, you've either got to go chase them down and prove to them that you are worthy of having an advertiser on your podcast or the other way around. A sponsor has to chase you down, right, and find your show and decide that it makes sense.

And then the two of you need to get together and do a deal and agree that you're going to do these live reads and then you have to figure out how to report back, et cetera. And there are some agencies out there that have obviously made this at least somewhat simpler. But it's still like a really manual process. And because of how manual it is, so few people can actually monetize their podcast. So there was some data that we saw that showed that only 1% of podcasts in the U.S. were being monetized via ads, which is the primary way the podcasts currently are being monetized. So we said, hey, we've got all of these podcasters.

We have scale. We've got, you know, 40% of all new podcasts. What if we were able to marry that scale with the creation tools we offer to solve this problem for monetization? And that's effectively what sponsorships is. Basically, we give brands and potential sponsors the ability to sponsor against our entire catalog. And when those brands get matched with a show, that show or that podcaster has the ability to decide whether or not they want to take advantage of that sponsorship, learn about the brand, learn what they stand for, and opt in to getting a message, a script, essentially, that they can then deliver to their audience via host red ads that we help them sort of insert into their podcast. And so just in like the first month after we launched that, we immediately doubled the number of podcasts in the U.S. that we're monetizing via ads.

We're getting like thousands and thousands and thousands of podcasters paid. And so what's your split? What cut does it? 7030, which we found in doing our research was really good for creators and they've been super happy with it. And again, back to just making it easy for creators, right? So who knows what's going to happen to RSS? But I think there's so much we can do to improve this format, even in a world where RSS is sort of dominating the medium. I have heard creators say they're, independent creators say they're worried about losing money because of the deals like this.

Because they, yes, it's more work. They go out and negotiate. But the people who are supporting themselves are saying, well, I get the full cut. I negotiate. I don't have. There's not all this big data behind it. Yeah.

It's kind of like I have a relationship with the advertiser. And so they worry that like with Rad even or with Spotify coming in and all this data, they're not going to be able to actually justify their advertisers anymore. So I actually think doing this potentially rises all ships, right? Like right now, there's such a limited number of podcasters that brands can reach. And it's such a manual process that you only have like a few brands playing in the space. I mean, we've all heard, you know, all the same brands on many different podcasts. Our advertisers are unique and special.

The promo code is promo code. So my point is, though, I think that by sort of opening up podcast sponsorships, you allow all of these new brands and these new, at all different amounts to come in and get many, many more people paid, potentially in many more different ways that I think it'll have a very significant net positive on the entire ecosystem and independent creators. So I'm encouraged. What do you make of the podcast analytics? Ashley just sort of made reference to it. But right now, podcast analytics are bad, just like kind of flatly bad. Like Apple will report some like listen times and drop off times. You report some stuff.

But there's no way to go out in the world and say this many people listen to a podcast. It's actually very, very difficult. And the pushback is that's great. Like view counts ruin everything. Clicks ruin everything. Like we hear it all the time. We're in every platform. Do you think that actually is going to have like a negative incentive?

you're just talking about how thoughtful everyone is. Is that just because they don't know how many people are listening to that? I think you're totally right. I think RSS has obvious limitations on data and insights and understanding what can be done with your podcast. Two things. I think, number one, whatever happens here, I think, again, we need to be really, really thoughtful to preserve what is special about the medium. And I think that goes back to really, really focusing on creators sort of at the center.

Like, it's all about the creator. and it's all about making their lives better. The minute that priority gets thrown out the window, that's when bad things happen. So I think that's number one. And then I think number two is I'm really encouraged because there are a bunch of people that are trying to figure out how to solve this problem. And without saying too much, one of the reasons I'm excited that anchor is a part of Spotify is because I think we can help improve data for the creators.

We can help them give a better understanding to the creators about, to the creators about what's working, what's not working within their podcast, who is their listener, where in the world are they, that sort of thing. I want to help push the medium forward, and I think we have a better shot at doing that within Spotify. How do you think about listeners data? Yeah, look, I think back to my point about creators, like we have to prioritize creators and make it better for them, but we can't do it at the expense of listeners ever.

Otherwise, listeners aren't going to want to listen because who would want to expose all their personal details to, you know, big gigantic corporations. So I think it's just about being thoughtful and learning from what has happened over the past couple of years in making sure. There's a crack in that idealism. Yeah, I'm like, this is a tall order, man. Good luck. Like, this is, all right. Look, I think creators first has been sort of our mantra.

I think, again, Spotify has shown to me and the anchor organization that they really, really care about their mission. And that's one of the reasons I'm so excited to be a part of them now. All right, we've got to take a quick break for an ad. We'll be right back. Support for the show comes from Framer. Framer is an enterprise-grade, no-code website builder, used by teams at companies like Perplexity and Muro to move faster. With real-time collaboration and a robust CMS,

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All right, back talking anchor with Mike McNano. So here's what we haven't talked about. We haven't talked about smart speakers. Yeah. How do you think about those? You think everyone should wake up in the morning and demand podcasts from their Amazon Echo. Like we've seen some data, you know, like I would love to make an Alexa.

a skill for the verge where like, I don't know, Deere just yells the name of a gadget at you like four times a day. Yeah. That would actually be great. If someone's out there wants to build that from me. Yeah. But we haven't figured out like, are people actually, do people want this from us? What do you think? Like, do you think that market is big? Do you think it's small? Do you think you need to play in it? I think it's super early days. Even though that these devices are now in so many millions of homes in the U.S. and that number, I'm sure, is just going to continue to explode over the next few years. That doesn't mean we're anywhere close to understanding like the impact and the potential and what the interface is and what the interaction is and what is the exact type of content that

people want from it. It's really, really early. I think that the companies that are building these devices are going to have an awesome opportunity ahead of them to invent like a whole new paradigm for interacting. I'm really excited. I'm obviously biased. I work for an audio company. So I have these things all over my house and like I talk to them. I, you know, I pull up podcasts on my smart speakers all the time. But even that discovery process is super messy. Yeah. Yeah. I could not predict when I'm like, play the verge cast. Is my echo going to do tune in? Is it going to find it from Spotify? Yeah. It's a lot messier than you'd expect. No, I think there's a lot of improvement that needs to be done there, obviously, on the discovery side. And I don't think it's a challenge that

anyone has really dealt with yet, right? Like, anytime someone has attempted to solve discovery, They've had the addition of a screen that they could take advantage of and put a UI in front of somebody. So I think it's a really interesting challenge. I'm excited for it to get figured out. I will tell you even with that challenge still existing, people are listening to this stuff. Like we see in the data, like people are listening to podcasts on these devices a lot, actually. So that's an interesting insight because, you know, I think it always goes back to like great content finds a way. Like if there's something that people want to consume, even if the discovery process,

sucks. Like, they're going to figure out how to get it, you know, in their morning flash briefing or narrative news rundown or whatever it is. So I'm personally just really excited. Are you worried at all that this market is getting totally saturated? And there's only so many hours in a day. Netflix just, in their last earnings was like, our biggest competitor is Fortnite. Like, we're like at the end of attention. Like, we're out of time for all the things. How do you see podcasts competing with all of the things? With true detective, Game of Thrones is coming up in April. Are you going to see podcast listens decline? Like, How do you manage against that loss of attention?

I think they're different hours. The way I always thought about it with building anchor is it's a different set of hours that you're fighting for or whatever. People listen to audio in certain situations, driving in their car, walking to the subway, on the subway, on a plane, whatever, while they're working. And then they look at video or text or whatever when they're on their couch or maybe multitasking with audio. So I don't see them as being super in competition with one another. I also think that, you know, I don't know if this is what you were getting at, but I don't think there's a lot of audio content out there, at least spoken word podcast content. Obviously, there's a ton of music content out there.

And Spotify has obviously done a great job of bringing that to people. But I think there can be so much more podcasting content. Like we have this guy, Dave, in our office, who he welds on the weekends and he's like really in a woodworking. And like there's this whole new. world of woodworking podcasts that were created on anchor that the three of us would have no idea about, right? But Dave has found these niche podcasts that, according to him, like, don't have a lot of

listenership. They're really tiny. They're these really niche audiences. He actually, like, wants to give them money and pay them and support these creators. But that's okay. There can be millions and millions and millions of podcasts. It's okay that maybe, you know, some of these podcasts only have a few listeners if, you know, if the creator is sort of getting, getting what they want out of it in terms of an audience or

potentially monetization. Again, I'm not sure if this is what you're asking, but I don't think we're anywhere near saturation in terms of the amount of content. We've talked a lot about ads. This is the primary way of monetizing. There is a world, Ashley covers it of like Patrions and Kickstarters. Are you thinking that, you know, woodworkers are, you know, 45 woodworkers should get together and give 100 bucks a year and, you know, the woodworking community should thrive. So, funny you should ask. By the way, just in case the listener did not track that wild thing. Are you thinking about subscriptions, payments? So funny. you should ask, we have a feature actually called listener support.

So sponsorships tends to get a lot more of the attention because advertising, to your point, is the primary way that podcasts are monetized today. But we do have a feature called listener support where if you enable it, I can, with a single tap through Apple Pay or Google Pay, give you a monthly recurring donation. Are people using it? Yeah, people are using it. People are getting paid. People are funding their passion.

At a meaningful scale or at a, hey, well, it's working. So I don't have the data in front of me. I know that people are really happy with it. Like we hear people all the time. They're so excited that they've got listeners that are literally just donating money to fuel their creative passion. But you can imagine that we probably spend more time on that and work on improving it. I do think that many different business models can exist within podcasting. You know, sponsorships, advertising is obviously the primary way right now, at least in the U.S.

But if you look to other markets like China, you know, there are completely different models working really, really well with podcasting right now. I'm optimistic that a number of different models can work here and should work here, right? If that welder has, you know, an audience of 50, 100 people that want to give him or her, you know, 10 bucks a month, like, why not? That's amazing. Like, maybe you can become a full-time welding podcast creator. And that is the dream of the internet. It's a dream. Like when Tim Bernersley invented the web, he's like, at the end of this, there's going to be a welding podcast. It's a full-time job. But like paywalls. I mean, that's the next, listener support is one thing.

Yeah. The next one is you don't get access unless you pay the money. The medium's going to have to figure out what works there. It's never really been tried in the U.S. at least. So I think we're going to have to figure out what works and what people are willing to do. I'll tell you what, there had been a paywall on the remaining episodes of cereal after like the first one. I would have paid. That's evil.

I would have paid. No, I probably would have paid. I would have paid like $100. And then you would have discovered the answer is we still kind of don't know. I mean, that's like a huge success story, but you have to build that demand. You have to build that marketing funnel. I could name a lot of podcasts that I would personally. This is just me.

Like, I would pay for. Because I think that people, I think creators should get paid for their work. So just be really clear. Right now, your business model is you help people sell ads and you take that 30% cut. So slight variation. I would say we help people monetize, right? We've got sponsorships. We've got listener support.

You can imagine there are other things that we could do. And then we share in the revenue with them from the value we sort of create together. Just to come back to the Spotify. We've now described like 15 potential features for Anchor. Is your feature map subject to their, to their oversight, or you just get to run? You know, can't get too much into future planning stuff. Don't want to spoil any surprises, obviously. But again, you know, it's only been a few weeks, but it's been pretty, pretty incredible to know that we have Spotify's support in pursuing this mission that, you know, the entire anchor team cares so much about. But I wouldn't be doing my job if I didn't push you.

Okay. Spotify is a public company. Yes. They have to turn in profit. Yes. They don't spend $100 million. I'm not blinking. Yeah.

No comment. Great. Whatever X million dollars, they spent some huge amount of money. They don't spend that money unless they want something. They didn't want to just make you happy. What did they want? Like, what is the thing that they want anchor to provide the Spotify platform? And what is the thing that you're ready to provide?

So the first part of your question, I think you'll have to get Daniel Eck in here. to hear about the Spotify strategy. What is the thing that they want to make better for us? They want to make it easier to go along on our mission of making podcasting really, really easy. Again, if you think back to what Daniel said around how he expects, I think he said, over 20% of audio or consumption to be non-music content, like we agree. Like, I think that I think that podcasting can play a huge role in that, especially given how nascent the format is in the U.S. So Spotify wants to give Anchor superpowers. No, it's great. They're a charity. That's how I think of large public companies.

Again, you should. We're working on it. Go back and send you're, you're, you got an at Spotify.com email address. I think for anchor in particular, I think these deals were announced. The first question was, is reply all going to be exclusive to Spotify? Right. And they spent their time answering that question. And I think there's some, there was more consternation over that because people love content. They don't want it to be threatened. I think there was legitimate excitement about a tech company and a tech like that make. sense in a way. The real questions are we're going to stay focused on multi-platform distribution. The sort of you're going to be a big company now with a lot of podcasters on your platform. Are you going to turn into the YouTube where the questions about how you monetize become very, very contentious every single day? I think that's all remains to be seen. So we'll have you back in a little bit. All right. Let's do it. To talk about it. But I do want to end on some actual lightning around questions. Echo or Google Assistant. I have both. I really do. Which one to use more?

I think I use Google more. iPhone or Android. iPhone. Although I, so I'm a product, I'm a product person. Like, you know, I say, I know the answer, all these is going to be both. No, no, no, hold on. No, listen, I'm iPhone right now. And I've been on an iPhone for the past year plus.

But I do occasionally do this thing where I like, I will switch. I'll take the SIM card out. I won't do the two phone thing. You know how some people like carry two? They like have an iPhone. You carry two? Which one's your main one? Oh, the iPhone.

Yeah. And then you have the Android like, hey, I'm going to test it out. I'm just going to, you know, I'm going to occasionally try it. And I have found that that never works for me. I just never end up using it. So I found that I had to really force myself. So I do the SIM card swap, usually once every year or two. AirPods, sound good or sound bad?

So I am not sensitive to sound quality. I know some people like our friend, Dr. Podcast, John, for those of you listening, he's our head of production at Anchor. And was our first podcast producer. He cares a lot about sound quality. I care more about content and substance, which people often tell me is ridiculous. because the whole first part of my career was in music. I grew up a musician, a drummer.

But I can't tell the difference between, like, an MP3 and like a flack, lossless audio. I have no idea what the difference is. I'm totally fine with AirPods. Like, I think the quality is just fine. Wow. Yeah. What about you? I think this sounds horrible.

Really? Mediocre at best, but very, very, very convenient. And I think... Super convenient. The history of the music industry tells us that convenience wins our quality every single time. Exactly. More podcast listening in your car or, like, commuting on the go. I have a car, but being in the, you know, the tri-state area here, I like, we never, we never drive it.

So I would say subway, you know, walking around the city. That's where all my podcast listening happens. If you could change one thing about podcasts, what would it be? I think we've done a pretty good job of making creation pretty easy, but there's still friction there, right? Like, still have to, like, take out my phone, put it on the table or hold it up to my ear. Like my dream is that I don't even have to like think about firing up the podcast. I can just like have a thought and somehow easily trigger it and say it. And then it's just sort of out there into the world.

Like I want to remove as much space as possible in between thought and you hearing it. Brain chips. Brain chips. Got you. This is like the worst AirPods feature. Like people just randomly narrating. It's like showing up and Spotify. God, no.

The idealism is great. I just, I'm nervous about like, I'm on the subway and it sucks here. being like that, that's not the song I want at all. Well, consumption is an opt-in experience, right? You can turn off my brainwaves if you want. It's all good. Last one, hardest one. You can't take the easy out because there's a super easy out here.

Favorite podcast. Ooh. I mean, you can pick Ashley's podcast. So you know what I'm listening to a lot right now is the recapables because I'm obsessed with True Detective season three. So that's like, I can't wait every week to watch True Detective. and then I'm so excited that I just get to jump right into the recapables and hear the recap. There's a whole story, a book, a sociology, PhD about the secondary media you consume after the first media.

Totally. Yeah. I do it too. I'm like, well, I just finished that video game. I'm going to read Wikipedia about it for a minute. Oh my God. Totally. All right.

Mike, thank you so much for being with us. I want to have you back maybe with Daniel in a few months. Talk to Pete. See if you guys are still biving. See if he's like, these superpowers are really? No, but it was a really great talk to you. congratulations. We'll have a vaccine. Thank you so much. All right, that was Michael McNano from Anchor, well, now Spotify.

Also, thanks to Ashley for joining me. She's so smart about this stuff. I love it. We'll be back this Friday with the regular Vergecast. And then next Tuesday, this will be fun. We're going to have our South by Southwest episode that we're taping live in front of an audience at Southby. You can come see that if you're going to be at Southby in Austin. Come to Vox Media's big house at the Belmont. It's called The Deep End. We love to see you there. Love to have you cheer for us. I'm working hard on some surprises, but we'll see how it goes. That'll be next Tuesday.