Podcasting - An Overview of Legal and Commercial Issues
- by Michael Easton
- in Contract Guides
- posted 23 March, 2021
In this seminar paper I provide an overview of the legal and commercial matters relating to the production and distribution of podcasts, and discuss some of my experiences working as a lawyer in this area.
1. A Short History of Podcasting
A convenient place to start the story is in the 1990s, with the launch of internet radio, which allowed anyone with a modem access to stream radio programs online, and access content from virtually anywhere, making it possible for audiences to listen to music and talk shows outside of their local broadcast radio markets.
In September 2000, MyAudio2Go.com was launched - the first service for the selection, download and storage of serial episodic audio content on PCs and portable devices. Unfortunately, its owner, early MP3 manufacturer i2Go, was a victim of the dot-com crash, and the service folded a year later
Following a number of other unsuccessful ventures, in May 2004 the first commercial podcasting service Audioblog was launched – it subsequently changed its name to Hipcast and survives to this day.
Initially these services were known as ‘audio blogs’, or ‘voicemail blogs’. The coining of the name ‘podcast’ has been attributed to Guardian journalist Ben Hammersley in February 2004, and by October that year – the word had 2750 hits on Google. In the UK, the BBC was an early adopter, with Melvyn Bragg’s In Our Time its first show being made available as a podcast in November 2004.
In June 2005, Apple added podcasting to its iTunes software and started building a directory of podcasts. iTunes provided everything listeners needed to subscribe, organise and download their podcasts, and other Apple apps such as GarageBand and QuickTimePro software were promoted to assist the production of podcasts.
The popularity of podcasting grew steadily, and eventually, due to its widespread accessibility, and a few blockbuster shows such as Serial in 2014 – which is known as one of the most downloaded podcasts of all time, with over 420 million total downloads. Other shows pushing the profile of podcasting were Dirty John in 2017 and here in Australia, Teachers Pet in 2018.
In April 2018, there were 550,000 podcasts globally with a total of 18 million episodes available. Coming forward to January 2021, there are 1.75 million podcasts with a total of 43 million episodes available, and it is claimed that over 90% of these podcasts attract over 1000 listeners per episode.
There are, of course, many different types of podcast. Initially they tended to be a time shifting and/or audience expansion of existing radio programs such as In Our Time. In Australia we saw, a renaissance at Radio National and exponential increases in listener figures for some of its programs such as Conversations).
Soon the evolution of podcasts entered its Cambrian explosion phase, with a flourishing diversity of content: enthusiastic unaffiliated amateurs exploring and sharing their obsessions – the History of Rome podcast, launched in 2007 being an early favourite of mine. They became an incredible educational resource – in particular, for anyone studying a language. There are hundreds of comedy podcasts – for example Becky Lucas and Cameron James’ The Becky and Cam Hotline. Podcasts such as Coronacast are an invaluable tool to disseminate public health and policy information. There really is no topic too niche or too obscure to be the subject of a podcast.
As audiences grew, production standards rose and became tailored to the new medium. This American Life, which started podcasting in 2006 has consistently been one of the most-listened to podcasts, averaging around 2.5 million downloads per episode. RadioLab from 2009 showcased innovative techniques, and podcast production studios started to emerge such as Gimlet Media founded 2018 (Mogul) and Pineapple Street Media founded 2016 (Winds of Change).
Here in Australia, podcasts became, it seemed, a rare media platform where investigative journalism was thriving. In additional to Teachers Pet, podcasts such as Bowraville, Ballarat’s Children, Who the Hell is Hamish and Phoebe’s Fall were devoured by listeners who would never spend a Sunday morning reading such a story in the newspaper. Some commentators have noted that podcast advertising is now a fundamental revenue stream for newspapers such as the New York Times with its successful podcasts such as The Daily.
An interesting recent example of the changing podcast landscape in Australia is provided by the NSW Police Force, which launched its podcast State Crime Command in August 2020. In this show listeners are engaged by asking them to help solve crimes. Recently Corrective Services NSW has also launched a podcast Behind the Walls, produced by crime author and former journalist Michael Duffy.
For producers, there are minimal barriers to entry – equipment is cheap and easy to use, inexpensive hosting services and distribution are freely available. There are also a number of potential revenue streams, as I will discuss later.
For listeners, podcasts are generally free and easily accessible. As well as the intrinsic appeal of spoken word content, in a time pressed society it is incredibly convenient – the only media you can consume while walking the dog or washing the dishes. One survey, for example, notes that 64% of people listen to podcasts while they are driving.
2. Podcasting and My Practice
Over the last few years, podcasts have become a significant part of my practice to provide a sense of this, here are some of the podcast matters that I have been dealing with:
- Comedians engaged to produce a weekly show for a major radio network – such networks are currently manoeuvring to extend into the podcast space;
- True crime commissions from new players such as the Amazon-owned Audible keen to exploit this popular genre;
- Site specific downloads to listen to while exploring venues such as museums and historic spaces
- Adaptations of television series or books, similar to but different from radio-plays or audio books
- Corporate and Branded Podcasts – a new offering from clients who have previously produced corporate and in-house videos. For example a comedy series about moving house funded by a bank, a series about true cybercrime funded by Norton, or a website with podcasts about gout funded by a not-for-profit working in that area
- Ancillary production – clients who are required to deliver podcasts as content ancillary to a television series
- Development – production of a podcast as part of the development process for a project in another media;
- Education – a client working with universities, producing podcasts to promote their research and make it more accessible
- Networks – development of podcast production and distribution systems
- Production Work – funding, co-production, contractor, releases – that is the same sort of work you might do for a film production.
3. Current Marketplace for Podcasts
For the first decade or so, until the mid-teens, podcasters lived a fairly simple carefree life in the Apple walled garden. It was easy to upload and distribute podcasts on RSS (Really Simple Syndication) feeds, a standardised open web format. Most people listened to podcasts through iTunes or the Podcasts app pre-installed on Apple phones, and Apple took a passive approach: podcasters could publish their shows up for free, on a non-exclusive basis, Apple did not try to take a cut of any advertising revenue, nor did it produce or favour its own content.
However, with the rise in popularity of podcasts, and thus their potential to generate revenue, concerns are arising that this benevolent, hands-off atmosphere is under threat. It has been claimed that some advertisers are willing to pay more on a CPM ‘cost per mille’ basis (that is per 1000 listeners), than for a SuperBowl ad in recent years.
Recently, the Economist reported that podcasts generated $1.3 billion in global revenue in 2020. For perspective, that is about 6% of recorded music industry revenue in the same period, or less than half of the takings of one Hollywood blockbuster - Avengers Endgame.
Why, then, are big media businesses getting so excited?
Firstly, there is growth. Global podcast listeners are expected to exceed 2 billion by 2025, from 800 million in 2019. And advertising sales are expected to triple to $3.5 billion. Industry consolidation may make the market more attractive to advertisers who currently find it too fragmented.
Secondly, it is a business which allows players to own content, which they cannot do in relation to music for example. It allows Spotify to avoid the situation it faces with recorded music, where it is required to pay about 70% of its revenue to the record labels.
And thirdly, by acquiring exclusive content, streaming services acquire a way to differentiate themselves. Currently Spotify, Amazon and Apple offer roughly the same library of music and podcasts. With exclusive content, they start to resemble video streamers such as Netflix.
With the internet giants circling, will the open podcasting ecosystem succumb to the monopolistic tendencies that have been problematic in other internet industries (for example the dispute between Epic Games and Apple regarding the terms it applies to sales through the App Store). Are we moving from the Cambrian Age to the Age of Enclosures?
Particular concern has been expressed about streaming giant Spotify making moves to carve out a vertically integrated space in the podcast ecosystem. It has purchased prominent production companies such as Gimlet Media, and reportedly paid $300 million to purchase Wondery, producer of Dirty John, which will now be funded directly to produce shows in competition with other podcasters. It has purchased podcast service provider Anchor with the potential that Anchor will create tools to integrate directly with the Spotify platform.
Most notably Spotify has been cutting exclusive lucrative deals with top podcasters like Joe Rogan on the basis that they remove their shows from other platforms. The Wall Street Journal has reported that Joe Rogan was paid more than $100 million to bring his show to Spotify, and Spotify has made other deals with Amy Schumer, Kim Kardashian West and Barack and Michelle Obama’s production company Higher Ground. And of course, there is the $54 million deal Spotify struck with Harry and Meghan, which might seem savvy at the moment given their profile.
Changing the delivery technology from downloads to streaming has also opened possibilities for what has been called ‘surveillance capitalism’ – micro-ads targeted with dynamic precision based on information such as when people are listening, where they are listening and even whether their phone is in their hand or in their pocket, sucking advertising revenue away from less sophisticated platforms relying on the scarcer data that can be garnered from downloads.
Spotify’s podcast moves have seen its share price increase, however rivals like Amazon and Apple can exploit and build on their other properties in audio, video and gaming. They can also take advantage of their hardware with Alexa defaulting to Amazon’s podcasts, and iPhones sold pre-loaded with the Apple podcast App. It is very early days in this struggle.
What is the current environment for podcasts in Australia? A study published by Reuters in 2020 provides some interesting statistics
In Australia, podcast listeners have increased from 27% of survey respondents in 2019, to 32% in 2020, basically the same level of listenership as the US.
To compare globally, in the 40 countries surveyed by Reuters in 2020, the average was 41%, Podcast listening is the most popular in Turkey (86%), followed by Kenya (70%). In a number of countries more than half of consumers are listening to podcasts; Mexico (61%), Brazil (60%), the Philippines (57%) and South Korea (54%). In the UK the figure is quite low at 22%.
As a side note, in some of these countries, news podcasts appear to be fulfilling the needs of citizens who are dissatisfied with mainstream news coverage. The share of respondents who listen to news podcasts is higher amongst those who live in countries where press freedom is “difficult” (28%) and “problematic” (20%), compared to those who live in countries where the press freedom is “good” (11%) and “satisfactory” (16%).
Australia’s most consumed podcast genres are current affairs (36%), comedy (28%) and true crime (25%).
According to the ABC’s 2020 podcast survey, nine-in-ten Australians were aware of the term ‘podcasting’. During the COVID-19 lockdown, there was a15% increase in podcast listening.
By the end of 2020, the annual revenue of the Australian podcast market exceeded $47 million, and according to PricewaterhouseCoopers the market is expected to reach $110 million by 2022.
A review of the current (March 2021) top 10 podcasts in Australia, based on figures from Apple, provides a snapshot of the market
- The Sure Thing – published by the Australian Financial Review, a true financial crime podcast about Australia’s biggest insider trading scam
- Casefile True Crime, published by, and interestingly with, an anonymous host
- Conversations, published by the ABC, long form biographical interviews
- Life Uncut, published independently by two finalists from The Bachelor, providing love, relationships and life advice
- Unraveled: Long Island Serial Killer, published by Discovery Plus, a true crime podcast about an unsolved, ten year old case involving eleven bodies found on Long Island in the US
- Hamish and Andy, published by Southern Cross Austereo on its LiSTNR platform, comedy
- That’s Enough Already with Urzila Carlson, published by Acast, comedy
- Mamamia Out Loud, published by Mamamia Podcasts, discussion and life advice
- Something To Talk About with Samantha Armytage, published by NewsCorp’s podcasting arm NewsCast, conversation and interviews
- She’s on the Money, published by a small financial services advice firm of the same name, financial advice targeted at women.
4. Making and Distributing a Podcast
The podcast production process is broadly similar to that of a film or television series, although that many of the steps are likely to be much simpler due to the nature of the medium.
If your client is working with a partner, or being commissioned to produce the podcast, then you need to have the usual discussions about copyright ownership, division of responsibilities, allocation of risk, credits and revenue share.
Where the podcast will be based on a book or pre-existing work, then the rights will need to be secured as they would for a film. Though in this case, thought may need to be given as to how your client’s podcast rights might co-exist with a film adaptation. If the podcast is successful, might your client want to option film rights as well. Or if a third party is going to option the film rights, does there need to be a holdback of some sort.
Music clearance is another issue to deal with, which I will discuss in more detail below.
If the podcast is biographical, or based on real life events, does your client need to have the participants sign a release? It will need to be made clear to the participants that the podcast producer has the final editorial control, and they must be happy to be involved on that basis. Does your client require some kind of exclusivity from them?
What about the title of the podcast? It should be original and distinctive – both to avoid confusion in listener searches, but also to avoid conflicts with any current trade marks and to allow for trade mark registration by the producer, if that is an avenue they wish to pursue. Before a producer commits to a title, they should search not only the main podcast directories, but also google and the register of trade marks maintained by IP Australia.
If your client is engaging talent to present the podcast, what are their responsibilities – including in relation to promoting the podcast. If they will be required to read advertisements, what terms will apply then. Given the detailed analytics which are readily available to measure podcast audiences, are incentives payable where certain level of streams or downloads are achieved?
Next, the question of distribution. Unlike some of the other sectors I work in, for podcasting this appears to be relatively fairly straightforward and transparent.
The podcaster needs to select a hosting service – basically where their podcast episodes will live. There are a large number of podcast hosting services with some of the more popular ones being: Buzzsprout, Wooshkaa, Libsyn and Omny. These services charge a monthly or annual fee to host the podcast, and feed it to the major podcasting apps or directories They also offer a wide range of ancillary services such as production, advertising sales and analytics.
The podcaster creates an account with the hosting services, provides the show details (title, description etc.), and the host then provides an RSS feed – a unique URL that the hosting service provides to the podcast directories or apps such as Apple, Spotify, Google Podcasts, Audible, Stitcher etc. - so that listeners can find the show.
Currently, Apple Podcast is still the top podcast app used by 32% of listeners, Spotify is next with 25%, then Google Podcasts with 2.6% is the first of a long tail of minor apps.
5. Issues for Podcaster and their lawyers
Here are some of the particular issues and considerations that I have encountered in connection with advising podcasters.
(a) True Crime
True crime podcasts – particularly those investigating unsolved or contentious crimes, are incredibly popular, and naturally attractive to those podcast producers looking for new subject matter.
However, unless the podcast concerns a historical crime, where all participants are deceased, there are some serious traps awaiting the inexperienced producer, primarily in the areas of defamation, contempt, and the liberal use of suppression orders in some jurisdictions such as Victoria. As my colleague Sally McCausland has observed, there are also the ethical and moral issues inherent in crime reporting whatever the genre – taking a personal tragedy and turning it into entertainment – a game of Cluedo to be solved by the podcast host and their listeners.
One difference I have found, in relation to podcasts, is that my new clients have been individuals, rather than media organisations. Typically experienced journalists who may have retired or have been made redundant, but who are taking advantage of the opportunity to produce shows in this new medium independently. The issue here is that while they have the skills and the background, they don’t necessarily have the benefit of resources for deep research, detailed legal advice, and corporate insurance policies.
Insurance is of particular concern here, especially if they are planning to publish themselves or are being commissioned by a party that expects to be indemnified against these risks. Policies to cover such projects are very hard to source, as true crime is an area that many insurers in the area will not touch. Policies are generally provided on an annual rather than a project-by-project basis, have premiums that may be unaffordable in the context of a low-budget podcast, and be contingent on answering a detailed questionnaire.
Independent podcast producers, who are not affiliated with an established media organisation, may also face issues such as refusal of access to court suppression order lists, or uncertainty as to whether they are covered by shield laws under various Evidence Acts in relation to the protection of confidential sources.
In relation to Defamation is I will simply note that my advice to budding true crime podcast producers is to look very carefully at the information they have and can rely on – ideally official court transcripts or even better, judgments of a trial that has run its course. If they are relying other sources, are these sources willing to be identified and testify if necessary. And in particular, attention must be paid to clarity and precision of language. Does the script mean exactly what they intend it to mean, or have they inadvertently said something else which they cannot defend.
The Teachers Pet podcast is an interesting example of the issue of contempt. In one of Australia’s most popular podcasts, over 16 long episodes, investigative journalist Hedley Thomas from The Australian, re-examined the cold-case disappearance of Lynette Dawson in 1982. I’m sure many of you listened to it. Released in 2018, you can still find it on podcast apps. Try to access the podcast today though, and you are told that it is ‘temporarily unavailable’.
Since, and it seems highly likely because of, the podcast, Lynette’s husband Chris Dawson has been charged with murder. In April 2019 he pleaded not guilty. However this podcast also almost derailed the trial, with Mr Dawson’s defence team seeking a permanent stay of the trial, due to both the delay in the prosecution, and the prejudice arising from the ‘media storm’ around the podcast which had been downloaded 28 million times before it was suspended.
The judge, Justice Fullerton, granted a temporary stay until June 2021 to allow this storm to abate, saying that:
…the unrestrained and uncensored public commentary about Lynette Dawson’s suspected murder, is the most egregious example of media interference with a criminal trial process which this court has had to consider … The risk that an overzealous investigative journalist poses to a fair trial of a person who might ultimately be charged with an historic murder (or another historic criminal offence or offences) is self-evident.”
Compared to other media, podcasts tend to be distributed internationally. So Australian true crime podcast producers may find themselves compared to, and in competition with, the big US hits, produced in the land of free speech and the First Amendment.
I am not aware of any legal actions relating to podcasters other than the Teacher’s Pet, but it is notable that the most popular true-crime podcasts to date have been produced by “legacy media” newsrooms with access to good legal advice and other resources. Trying to emulate this success, future independent producers may find themselves butting up against Australia’s more restrictive rules.
(b) Keep Podcast Rights in Mind
This is a short point – simply that podcast rights, as relatively new and potentially valuable rights, are something we all need to keep in mind when negotiating agreements in other media. My experience is that current precedents do not tend to account for podcast rights.
For example, should a film option and purchase agreement include, or exclude, podcast rights. If you are negotiating a book deal, do you need to consider podcast rights, and distinguish them from audio books or straight reading, and reserve them?
(c) Music Rights
Clearing music can be tricky for film and television producers, so it may not be a surprise that it can be just as difficult for podcast producers!
A podcaster wishing to incorporate commercial or pre-existing music into their podcast must licence the publishing and master rights in the same way that is necessary for a film or television series. Rates may be less for this limited usage, but podcasts tend to be longer in duration, with a higher frequency of episodes and much lower budgets.
Further, podcasters may not have the advantage of the division of labour that applies to the clearing of music in the screen industries – where producers typically clear the ‘synchronisation rights associated with incorporating the music into the production, and the broadcaster looks after the performance and communication rights. Typically, your podcaster has to clear everything.
One approach is to use production music with broad licences available at reasonable rates. There are specialty aggregators of music for podcasts such as Songsforpodcasters.com. Or alternatively, the podcaster may be able to commission a musician friend to produce their theme and other music.
Shows such as Song Exploder which break down and discuss classic recordings may rely on the fair dealing for criticism and review provisions of the Copyright Act.
APRA has introduced an Online Mini Licence which grants rights to include music in podcasts. Fees range from $275 to $1100 per year, depending upon the percentage of music in the podcast and the number of downloads per year. However, as a small paragraph at the end of the licence information sheet advises, you need to licence the sound recording separately, and the PPCA has yet to introduce a complementary licence. Further, the territory of this licence is limited to Australia and New Zealand.
Spotify has introduced a ‘Shows with Music’ scheme which allows podcasters to include tracks in their podcasts which play off Spotify, however the rules are quite restrictive, don’t allow the tracks to be blended in to the podcast, and are not available to listeners who don’t subscribe to Spotify premium.
(d) Brand Funded Content
As mentioned above, I have noticed more activity in the area of clients producing what we might call ‘branded funded content’ – everything from a podcast sponsored by a brand because the subject matter is of interest to their market, to a podcast that directly concerns the product or service they provide. The potential of such podcasts to engage customers who may be difficult to reach by other media is self-evident, not to mention their relatively low cost and high flexibility, availability of analytics, lighter regulation that television or radio advertising, and compatibility with other digital or social media campaigns.
Some of the points that may need to considered in relation to agreements relating to brand funded content are:
- clear outline of the benefits to be provided to the brand;
- extent of brand approval rights over content production, extent of editorial independence (if any);
- clearance requirements for talent and music, the brand may seek unlimited use without being aware of additional costs – also note that clearance costs may be higher where brand endorsements are involved;
- warranties that information provided by the brand is correct, and that products and services comply with relevant laws and standards, taking particular care where the podcast concerns subject matter such as medical goods and services, or gambling;
- Producer’s rights in content – is the producer entitled to re-purpose for further exploitation (especially where content has broader appeal);
- Brand rights in content for further exploitation, especially online.
6. Funding and Monetising Podcasts
Finally – the most important question - How do you finance and make money out of podcasts?
Given the simplicity of the medium, funding may not be necessary at all. There are many podcasts that are fuelled by love of the topic, self-promotion, or which are ancillary to some other endeavour.
If it is a commission, is the brief clear as to what your client is delivering and when. What are the approval rights and how will they be exercised. Is the cashflow appropriate. Does your client have to deliver and assign copyright in everything they record, or just the final product (this is a question that comes up more often than you might think).
If the podcast is to be funded by a brand or sponsor, then there are other issues to consider which I’ll deal with in more detail below.
Podcast, in its infancy, does not currently enjoy the type of the government funding or support that is provided to the film and television industries. However there have been occasional grant funding schemes available. For example, the ABC has previously made $1 million available through its Fresh Start Fund, and Create NSW has made $240,000 available through its Frequency program.
Many podcasts are supported by advertising, which comes in two main types – and I don’t mean mattresses or electric toothbrushes.
The producer may be able to sell direct advertising which they integrate into the podcast, whether in the form of a separate commercial, or as a live read by the presenter of the podcast. Live reads, which directly tap into the relationship between the presenter and the listener are usually charged at a premium.
Otherwise, most podcast hosting services are willing to sell programmatic advertising on behalf of the podcast producer. In this case advertising slots before, after or in the middle of the podcast may be auctioned off, and typically the fees are then shared equally between the podcaster and the hosting service.
Direct listener payments through platforms such as Patreon are another popular method to monetise podcasts. Here listeners subscribe, usually in return for additional content or other benefits, and the platform takes a commission of around 5-10%. Patreon currently claims more than 6 million monthly active patrons.
According to one commentator, once a podcaster has passed the threshold of 400 – 500 downloads per episode, it is time to consider other forms of monetisation.
Podcasters may adopt the ‘freemium’ strategy, commonly encountered in apps and other areas of the online economy. That is, provide a podcast that is freely available to general listeners, and premium versions and content that is restricted to those who pay. Such premium content may comprise:
- bonus or extended episodes;
- Q&As with special guests
- early access to episodes that will be free one day
- ad-free episodes
- live-streamed episodes; and / or
- back catalogue of older episodes (eg Dan Carlin’s Hardcore History)
And finally, podcasters may sell ancillary products and services:
- t-shirts, mugs and other merchandise;
- events such as tours, live speaking appearances and shows; and
- transcripts, lessons, advice, one-on-one coaching.
Paper presented by Michael Easton
Principal, Michael Easton Legal
https://www.michaeleaston.net.au
at Legalwise Film and Television Law Conference
16 March, 2021
Thank you to Sally McCausland for her assistance with this paper.