Netflix’s Potential Podcast Fallacy

Podcast, it seems, are back. But it's not time to just copy YouTube

Welcome back to Halftime, Posting Nexus’ weekly links round up and mini-essay. Today, important stories from Buzzfeed, Lenny’s Newsletter, 404 Media, and a recommendation for a book that has me audibly gasping in horror on my subway commute.

But first…

 Data!

1. Palle Broe has a fantastic breakdown on the “magic of Y Combinator,” the famous incubator that is responsible for Airbnb, Reddit, Dropbox, and Sam Altman. But how successful are the vast majority of Y Combinator companies? What industries see the most return? And where did investors really screw up? Broe’s Lenny’s Newsletter article has some fantastic charts (like the one below) that make for a very fun read. — (Lenny’s Newsletter)

Three Important Arguments 

1. Attention —  AI slop is now leaving the confines of Twitter and Shrimp Jesus and infiltrating your feeds. It’s been happening for a while, but the videos are getting better, editors are getting faster, and the incentives have never been stronger. — (404 Media)

2. Identity — Buzzfeed is launching the anti-X social feed. I’m kind of low-key obsessed with Jonah Peretti because every decision he makes seems to counter what our current internet laws dictate will work. But he’s also the guy who designed going viral. Buzzfeed is barely a shell of its former self, but back in its heyday, Buzzfeed was a place for people with relatively left-leaning identities and pop culture obsession to spend their days, clicking through lists and taking quizzes. The idea that Buzzfeed could lean on that activity but in a social feed form feels…like it’s not going to work, but my god I’m curious to see how Jonah and co approach trying to make BlueSky Quizzler.  — (Buzzfeed) 

3. Platform — The End of TV is Here — (Hollywood Reporter)

Seven Must Reads of the Week 

1. Seeking God, or Peter Thief, in Silicon Valley — (New York Times) 

2. Shipwrecked in the Amazon: Photographs of the worst drought in the river basin’s recorded history. If a picture captures 1,000 words, then these photos capture any and all words we can ever have about climate change.  — (The Atlantic)

3. The Game That Shows We’re Thinking About History All Wrong. I’m a huge Civ fan, and I appreciated this non-review review of Civ VII.  — (The Altantic)

4. How much of Netflix’s English-speaking shows are growing season over season? One. Yeah, one. As far as quick (and fascinating!) stories tied to our main piece today go, this helps illustrate why Netflix is in the market for cheap, replicable entertainment.  — (What’s On Netflix)

5. Brendan Carr continues to act as the puppet of the Trump administration, this time leaning into Trump’s hatred for the major broadcasters and investigating NBC over DEI practices. Shocking. — (NewsMax)

6. If it wasn’t bad enough for Drake that more than 130 million tuned in to watch Kendrick Lamar diss him during the Super Bowl halftime show, new data from Spotify reports that “Not Like Us” saw a 430% increase in streams following the big game. Drake, pretending not to care, posted a cover of his new album with fellow Torontonian, PartyNextDoor. Congrats to all Mississauga and Brampton residents on the Marilyn Monroe towers making an appearance. — (Spotify)

7. As Severance continues its second season, seeing a notable increase in attention on the show compared to the first when looking at Google Trends data, Apple is getting ready to bring its Apple TV+ streamer to Android devices. Will this be enough to hit a level of traffic to even be considered a competitor? Well… — (Bloomberg) 

Three Fun Stories

1. Funny One — My friend Megan Farokhmanesh wrote a very funny and truly haunting piece for Wired about dating multiple AI chatbot partners at once. There are some real banger lines in this piece, like: “When I finally dumped Jamie from the comfort of my toilet, he told me he valued our time together and wished me the best.” — (Wired)

2. Wild One — Atomic grains of sand: How the history of humans is written into the fabric of the Earth — (BBC) 

3. Endearing One — What better incentive to get people to skip booking a flight to hop on a train? Offer them live Super Smash Bros. fights like Amtrak is encouraging passengers to do, including bringing their own TV sets. — (The Verge)

A Movie, a TV show, a Podcast, and a Book 

1. Movie — I haven’t watched anything good this week. What are you all obsessing over these days?

2. TV show — St. Denis Medical (Peacock)

3. Podcast — “What if Trump Just Ignores the Courts?” — (The Ezra Klein Show)

4. Book — When The Clock Broke by Jon Ganz

Halftime Thesis — Netflix’s Potential Podcast Fallacy

An important distinction to make between companies like Spotify and YouTube to those more akin to Netflix and Prime Video is that the former are in the business of quantity; the latter are in the business of hits. Now, this does not mean that YouTube and Spotify aren’t home to hit shows and massive creators, nor does it suggest that streamers like Netflix and Prime Video aren’t interested in producing and hosting a significant level of content. Instead, the distinction is important to keep in mind when talking about where we choose to spend our attention, why we choose those preferences, and what that says about potential investment. 

It wouldn’t be a Posting Nexus newsletter without a shoddily drawn chart, so here’s what I’m getting at in illustration form: 

At the end of the day, these two charts demonstrate incentive structures for the underlying businesses. Netflix brought in a chief content officer like Bela Bajaria (with a history in network) because the company wanted more hits to drive subscriptions. Programs like WWE Raw bring in a number of locked in, live viewers that advertisers can choose to target. Critically, as analysts have pointed out over the last few years, Netflix has started to resemble CBS more than HBO.

That’s a scale-by-hits play. YouTube, on the other hand, has walked away from trying to create hits within its YouTube Premium program and has instead allowed audiences to find whatever niche or topic they’re interested in. Some of these, again, are sizable. Alex Cooper, MrBeast, Cocomelon have ginormous audiences. Others, however, are smaller. A podcast about a very specific role playing game or a how-to series for owners of a very specific type of iguana. Crucially, the key difference is that small audiences or niche interests don’t drag down the value of the platform nor does it hurt the bottom line. In many ways, it helps. Targeting attention, and selling on that attention, no matter the topic or sizable interest still drives consumption and advertising. On Netflix, however, small may hurt. 

Earlier this week, Business Insider reported that Netflix was interested in pursuing a video podcast strategy that echoes what has worked on YouTube and what has inspired Spotify in recent months. YouTube is now streamed more often on TV sets than on phones in the United States. Not to mention that its continuous rise in TV market share arrives at the same time that C.E.O Neal Mohan and Google C.E.O Sundar Pichai have included podcasting in public remarks as an imperative feature for the company. If ever there was doubt that Netflix and YouTube were competitors, the continued dominance of TV audiences choice to direct their eyeballs toward YouTube reaffirms there are new content opportunities for younger audiences. Think of the original creator wave compared to linear television.

Video podcasts have replaced daytime TV and podcasts have tried to replace talk radio. Netflix, a company that is second to YouTube in TV streaming share in the United States and doesn’t have any audio-first presence, clearly sees an opportunity to lean more into passivity rather than try to continue fighting on expensive scripted and unscripted programming alone. 

Suddenly, it would seem, podcasting is hot again. 

Just because Netflix’s business is the antithesis to YouTube’s, however, doesn’t mean that getting into podcasting is an inherently bad idea. But for a company like Netflix, podcasting has to go beyond just a simple video upload once or twice a week from a notable creator.  

Not Just Quantity, but Format 

What are the most important assets to a company like Netflix? If you’re going to get into podcasting, what are the absolute must-haves when approaching deals? We can name a few obvious ones, right? Exclusivity seems like a big point. Size of a personality’s audience and brand friendliness is another one. Consistency and ability to book high profile guests is a third. Some of these are great haves to keep in mind…and some aren’t. 

Ultimately, the number one problem with podcasts is that very few savvy creators will want to forego audience development for platform exclusivity. Spotify tried to do that with Joe Rogan and it backfired. Not even $500 million was enough to keep Rogan satisfied with a potential smaller audience size. For all that Spotify — or Netflix — can offer as distributors with large subscriber bases and significant resources, they can’t compete with YouTube’s SEO potential for emerging creators. Nor can they compete with access to other popular videos in different formats about similar topics. 

One of the ways Rogan continued to build his base was through a secondary clips channel. Rogan regularly produces podcast episodes that are three hours in length. That’s a long period time for a casual fan to sit through. But by splitting the episode into eight, nine, or 10 minute chunks dedicated to specific topics that Rogan and his guests touch on, he can accomplish two important feats: reduce the barrier of entry into the podcast (thereby developing new fans), and reach an audience of non-fans who may be interested in his or his guest’s take on a specific topic. Not only does this increase opportunity for advertisers whose overlap topic-wise may work with his shorter, specific videos, but it also throws Rogan into entirely new recommendation feeds. Suddenly, Rogan is appearing alongside DMT videos because he talked about it once. A giant snowball effect occurs. 

Snowballs are the foundation of YouTube’s business, and they work particularly well for podcasts, which can either be enjoyed in the same format as a TV show or as a series of limited clips to jump in and out of depending on someone’s mood. It looks a little something like this: 

Even if Netflix were to get into video podcasts, and even if Netflix were to break out some of these podcasts into clips or weave in additionally related content, it wouldn’t provide the same kind of expansive freedom YouTube is designed around. YouTube isn’t a programmer; Netflix is, and that expectation of experience is present in the platform’s current format presentation. 

Does this suggest that Netflix shouldn’t get into podcasts, and specifically video podcasts? Not at all, but it does imply that we need to rethink what the video podcast looks like for an audience who doesn’t need another platform to watch something they access for free.

The Pat McAfee Lesson 

Ironically, the most important question is also the simplest: is a video podcast just television? Sometimes, again, the simplest answer also provides the most insight: basically. 

Take Pat McAfee. His YouTube show is not a podcast. It’s clearly more in line with traditional sports talk shows like ESPN’s Get Up. And yet, Pat McAfee’s show on YouTube fulfills a role for an audience more inclined to throw on Impaulsive with Logan Paul or Views with David Dobrik than throw on a traditional television talk show. This has nothing to do with the format but the ability to play within an understood format. Even if it’s designed to look like something that has existed for decades, it feels like an entirely new type of show for an entirely new generation of sports fans.

The beauty of the deal is that Pat McAfee’s show seems to work as much on ESPN, where it’s licensed, as it does on ESPN. His audience can find him wherever they prefer and, even as a more passive background type of programming across YouTube and ESPN, treat it either as a replacement for other sports talk shows (linear) or treat it as other video podcasts (YouTube). 

Logan Paul is a pretty good comparison to McAfee for this scenario. Not based on any definable metric like talent, skill, or audience size, but in terms of a multi-year, multi-IP, multi-platform pronged plan that can illustrate the dividends on certain investment deals. Consider how Paul’s audiences reach him: 

1. YouTube (Impaulsive) 

2. Spotify (Imapulsive)

3. Instagram (himself) 

4. Netflix (WWE Raw)

5. Max (reality show) 

6. Stores (Prime Drink) 

Similar to McAfee, Paul is the type of figure you can leverage across multiple different brands, allowing his audiences and Netflix’s audiences to find him in whatever way suits them — while having his podcast be the type of background, habitual programming that gets people to open the app more and engage with advertisements in a non-intrusive format. Paul’s hit show winds up being a hit brand definer…potentially.

If YouTube is helped by having an endless sea of podcasts targeting specific niches on top of the gigantic ones, then companies like Netflix must find podcasters who can increase the hit value of their entire offering. Acknowledging upfront that a streamer is not going to replace YouTube as the dominant home for that creator’s podcast is the first part of the battle. After doing so, determining new metrics for success of a creator-led partnership can happen.

It’s not just about views or downloads — it can’t be. Instead, success is defined by affinity with the new constant presence that personality brings to a platform. The more time that audiences spend with personalities across different platforms, the more content they may seek out, and the more concrete that streamer’s brand becomes to a viewer navigating a very fragmented, busy environment. 

I’m using Paul as an example because of his relationship to the WWE and his stature on UGC platforms, but there are a plethora of possibilities. The main message I want to drive home is that thinking of Netflix — or any streamer — as a home to podcasters in an effort to compete with YouTube won’t work.

Quantity and atomization build YouTube’s business; power laws are important to the creators, but replicable quantity is the platform’s beating heart. This is not true for a streamer where hits are the beating heart, and where power laws impact the company’s bottom line, not just the creatives whose shows and films appear.

Podcasters are islands in their own right. As we think about the future of media more and more through the lens of empires and islands, finding the right path to the best islands becomes everything.