Introduction
"On-demand" is a concept that is now also available for radio: Podcasts are radio programs in digital audio format (MP3, AAC) that can be downloaded from the Internet and synchronised with any MP3 player (not only with Apple’s iPod as the name would suggest). They are distributed via the Internet exclusively, in contrast to traditional broadcasts. What makes this new concept of radio programs very appealing is that podcasts can be subscribed to over RSS-feeds (Rich Site Syndication, an XML-based summary of a webpage). This means that each new radio show is automatically downloaded to the PC and synchronized with the portable player and can be consumed whenever and wherever you want.

The production of a podcast is almost as easy as subscribing to it and requires not much more than a PC and a microphone. Many podcasts are, therefore, produced by amateur broadcasters and cover everything one can imagine from weekly reviews of books or movies, over daily English lessons, to morning and evening prayers ("Praystation Portable", "Godcast"). Podcasts are the audio equivalent to weblogs and are – as weblogs – a tool for narrowcasting as opposed to broadcasting (narrowcasting is the use of media to reach a specific audience).

The popularity of podcasts has lately been boosted by Apple’s new iTunes version 4.9, which now supports podcasts. (While there are also videocasts, they are not the focus of this article.)

First steps from niche to mainstream?
A growing number of public and private broadcasters, e.g. BBC, Disney or Newsweek, as well as a variety of companies are experimenting with the new medium. So far, most podcasts are freely available on the Internet and do not contain commercials or advertisements. This could change, however, with the growing popularity of podcasts. The research company Forrester expects that by 2010 12.3 million US households will listen to podcasts (Forrester Research 2005).

Apple’s support of podcasts in its latest version of the iTunes software can be regarded as a first step from niche to mainstream. Within the first two days after release, iTunes-clients subscribed to more than one million podcasts. iTunes allows customers to search for podcasts in a directory of more than 3,000 shows and to easily subscribe and synchronize them.

Copyright licensing schemes need to catch up with podcasting technology
The main factor that is currently limiting the potential uptake of podcasting is copyright. Most podcasts are limited to talk-radio today, because copyright legislation and existing licensing schemes do not appropriately cover music podcasts. "Indeed, copyright law has yet to catch up with the technology of podcasting" (Didden 2005).

The problem is that a music podcast does not only involve the public performance and broadcast of musical works, it also involves the playing and possibly the reproduction of a sound recording, since podcasts are downloads and single songs could be extracted from them. While public performances of works are handled by the performance rights organisations like GEMA in Germany, PRS in the UK or SACEM in France, artists or their labels have the right over sound recordings. Playing music in a podcast, therefore, requires the approval of a collecting society as well as of the artist or its label. However, neither the collecting societies, nor the major record labels have developed common licensing schemes for podcasting yet.

While in the US, the collecting societies ASCAP and BMI have claimed the rights to performance royalties arising from podcasts, the German GEMA, for example has no concept for podcasting until now (Sixtus 2005).

Some artists and small record labels explicitly allow the use of their works in a podcast. Creative Commons (CC) offers an audio license that covers the use of musical works in non-commercial podcasts. The open music record label Magnatune, for example, licenses albums with a CC license for podcasts. Customers that want to buy the music can pick the price, starting at $5 (Buckman 2005).

Podcasts that feature music without the approval of artists or labels risk being sued by the music industry. So far, podcasting hasn’t been popular enough to interest lawyers but this could well change soon.

New Business models for podcasts?
Copyright issues might become especially relevant if podcasting moves from homemade, not-for-profit, to commercial. With podcasting gaining so much popularity, we can expect that podcasts will be commercialized. Possibilities to make profit with podcasting are podcasts as a marketing tool, sponsoring and advertisements, or paid subscriptions.

One of the first companies that wants to help podcasters make money is BoKu Communications, founded by one of the inventors of podcasting, Adam Curry. BoKu produces successful podcasts and sees itself as a leader in commercializing the podcast movement through marketing, advertising, commerce and other vehicles. BoKu claims that “Podcasting is the ultimate narrowcast environment. Podcast listeners are early adopters. Podcast producers are early influencers.” which makes podcasts an ideal tool for marketers. Podcast listeners represent an attractive demographic of early adopters that are young and technically savvy (Rubel 2004) and podcasts often target a very narrowly defined interest group.

Marketing
Podcasts are already used as a tool for marketing and to improve customer relationship. Large broadcasters such as BBC or ABC news surely have their customers in mind when offering own podcasts. Another example is Virgin Atlantic that offers podcast-travel guides as a customer-relationship-tool. In the US, politicians like John Edwards and Arnold Schwarzenegger have been using podcasts during election campaigns.

But podcasts can also be used to promote content, especially music. They are a promising way for unknown musicians to gain exposure. The BMI, for example, is offering its own podcast “See it Hear First” to promote newcomer artists. In another case, a Scottish music fan used his podcast to expose the world to tartan rock (BBC News). Podcasts can provide more information about the artist and direct interested listeners to an online music store, where the featured tracks can be purchased. For music labels podcasts could become another viable distribution channel – on the condition that licensing problems can be solved (see below).

Sponsoring / Advertisements
Podcasts can also be used for advertisement by inserting audio spots in the podcasts. This, however, diminishes the attractiveness of podcasts to their users, since commercial-free radio shows are seen as a major advantage of podcasting over traditional broadcasting.

Another possibility is sponsorship, where companies underwrite an entire podcast. Condom manufacturer Durex, for example, became one of the medium's first advertisers paying for product placement on the "Dawn and Drew Show", a very popular podcast where a couple talks about their private sex life. The ads are not typical radio "spots" – Durex is paying the show's producers to talk about the condoms as part of the show's content.

Paid subscriptions
While so far most podcasts are offered for free, very popular shows and premium content could charge subscription fees in the future. However, one has to keep in mind that few media giants have been able to sell enough subscriptions to their web-based content to be anywhere close to profitable (Knowledge@Wharton 2005).

In addition, when podcasts are offered for money, the question arises, how the illegitimate distribution of these audio files could be prevented – and here the question of copy-protection and DRM comes into play.

DRM-protected podcasts?
DRM and copy-protection could become relevant for podcasting in two respects: First, if a business model for paid podcasts should emerge, the distribution of the audio files needs to be controlled. Second, if podcasts are to feature music, DRM-issues arise. Generally, many labels will most probably reject licensing their music for podcasts if it is not DRM-protected, since single songs could be extracted. And, commercial podcasts cannot use CC-licensed music, since the CC audio license is limited to non-commercial use.

We could imagine commercial, DRM-protected podcasts where DRM limits, for example, the number of plays and prevents the extraction of single songs. This would, on the one hand, make it easier for labels to license their music for podcasts, and on the other hand, not annoy consumers too much, since podcasts are not likely to be played many times and/or on different devices. It is rather the time-shifting feature and the automatic subscription that makes podcasts so attractive.

However, the prime problem of DRM technology today would strike here: lacking interoperability. One factor that makes podcasts so popular is the easy use of the MP3 format that is supported by a large variety of devices. Consumers will hardly accept DRM-protected podcasts that impair user experience – in particular if a parallel universe of free, unprotected podcasts exists.

Bottom line
Podcasting is one more step toward the disintermediation of media and is increasing diversity and customer choice. The format has already shifted from a pure amateur movement to being used as a marketing tool. It is still an open question, though, whether viable business models can be developed for paid podcasts. If podcasts are to incorporate music on a large scale, some use of DRM would be needed to make podcast licensing acceptable to music labels. As long as DRM systems are not interoperable and restrict user experience, however, DRM will be a no-go for podcast fans.

Sources

About the author: Nicole Dufft is a senior analyst at Berlecon Research. She has been analys-ing a variety of ICT topics ranging from mobile computing and application service providing to DRM. Currently, she works in the field "digital consumer". She is a member of the INDICARE project team.

Status: first posted 20/07/05; included in INDICARE Monitor Vol. 2, No. 5, 29 July 2005; licensed under Creative Commons
URL: http://www.indicare.org/tiki-read_article.php?articleId=122