Wondery CEO Hernan Lopez believes the podcast industry’s is already bigger than what the Interactive Advertising Bureau (IAB) revenue numbers indicate. The annual report released last week showed marketers spent $479.1 million to advertise on podcasts in 2018. But those figures are based on data self-reported by 22 companies and Lopez said in an interview on the latest episode ofKindredCast that he thinks the industry pulled in $500 million last year. “This year I think we will get to $700 million in the U.S.,” Lopez said. Even more boldly, he predicts that U.S. podcast industry revenue will hit $1 billion in 2020.
As podcasters develop more revenue streams, and expand their global footprints, Lopez says it’s helping the industry gain more attention in corporate board rooms. “You’re going to see a realization in a lot of the large traditional media companies that audio deserves taking a second look at,” he said.
Lopez launched Wondery in 2016 with funding from 20th Century Fox after working in television for a number of years. “When I started Wondery, I was obsessed with Serial and I wanted to replicate the success story,” he recalls in a wide-ranging interview with Kindred Media president Chris Peterson. But that wasn’t as easy as it sounded. Lopez said they had a “number of flops” in the first year that helped the company forge its path. “It’s interesting to see how you learn what doesn’t work,” he said. “We created a number of very good audio dramas but we found out the ceiling of audio dramas was far lower than what it needs to be in order for the numbers to work. People wanted to hear true stories like Serial and StartUp and it’s not as easy to create a true story.”
Eventually Wondery carved out its niche, producing podcasts with slick Hollywood-style production values. “It’s more about distinctiveness than quality because you can argue shows produced by Gimlet and Pineapple Street are every bit as good as the Wondery shows” Lopez said. “It’s just that our shows sound very much like a Hollywood movie in a way that I believe most other podcast publishers don’t sound like.”
That’s helped the company make the leap into television. Bravo’s adaptation of the Dirty John podcast, which it coproduced with the Los Angeles Times, is the most successful such project to date.
“Television adaptations are not an afterthought, but they’re not essential to the business model,” Lopez said. “They’re not an afterthought because, yes we do think about whether this show can be converted into something else, both the story as well as the rights. We maintain the chain of ownership of IP in many cases by us coming up with the idea and then commissioning writers, sound designers, and producers to execute our ideas. The most important thing for us is that the story works for audio because audio is still 85% of our revenue.”
Dirty John may have helped further spur interest in Hollywood for podcasts. The TV series premiere became Bravo's most watched scripted telecast in the cable network's history, and the show finished its run as a top 10 cable scripted series in adults 18-49 for all of 2018. It also earned Bravo its first ever Golden Globe Award nomination in the network's history.
The success of the Wondery-L.A. Times partnership has brought other media companies to the podcaster’s doorstep. It is also working with the Boston Globe and Bloomberg on podcast projects. “Since the L.A. Times, all of these publishers have approached us because they want to create a story that is as compelling in audio as Dirty John or Dr. Death was. They also want to get in front of as many listeners,” Lopez explained.
As the largest independent content studio, Wondery shows continue to be found on just about any app that features podcasts. Lopez said they have a “maximum distribution model” releasing shows to every free platform. “We want people to continue to listen in the podcast player of their choice so we don’t have our own app,” he said.
Wondery has also dabbled in subscription business too. It is among the creators working with the subscription service Luminary producing the Hollywood & Crime and Locked Up Abroad podcasts. “We’re really pleased with our relations with them and the early results that we had on the subscription numbers,” Lopez said. He did not, however, off any hints as to how many subscribers Luminary has to date.