Have you heard? Wondery is the upstart podcast network that has expanded quickly to become the largest independent podcast network in the country, creating an innovative model for the future of the industry. In just three years, Wondery went from newbie to becoming a top five publisher of podcasts, and is expected to double its revenue this year to $25 million and turn a profit.
Up to 11 million global unique listeners a month tune into dozens of its podcasts, a number of which are being adapted into television series. It’s a story fit for “Business Wars,” one of Wondery’s own original shows, which chronicles the battles of companies such as Netflix versus Blockbuster, Adidas versus Nike, or eBay versus PayPal.
In Wondery’s case, it began when founder Hernan Lopez began listening to podcasts. Among the shows he was listening to was “StartUp,” a show about what it’s like to start a business from the ground up, and he was struck by how passionate his fellow podcast fans were about their favorite shows and their high levels of engagement.
“Any new idea that’s viable starts with a strong consumer proposition and has its own internal momentum. Podcasting has that,” Lopez says.
The statistics back up his observations. Podcasting is showing rapid audience growth. Last year, the number of people over the age of 12 in the U.S. who has listened to a podcast surpassed 50 percent for the first time, to 144 million. Big players like Spotify and Google are getting in on the action, and big stars, too—Alec Baldwin, Ellen DeGeneres, Amy Schumer and Shaquille O’Neal are just a few who have launched their own podcasts.
While Lopez had no experience in the podcasting world—he had a comfortable career in television as CEO of Fox International Channels—he saw a gap in the market and an opportunity to break new ground using his cross-industry knowledge.
The storytelling style of most podcasts (was) more akin to public radio, and few were telling stories with the style or production values of TV or movies, he shares.
So in 2016, Lopez took the plunge into entrepreneurship. He drew from his own funds and also raised seed investment from his former employer, 20th Century Fox. “This is the first business I created,” Lopez says. “If you’re going to start a business, I recommend doing it in a field in which you would be willing to work for free.”
“Any new idea that’s viable starts with a strong consumer proposition and has its own internal momentum. Podcasting has that.”
In their first year, Wondery produced a few audio dramas, and in 2017, they had their first number-one hit, “Hollywood & Crime.” Since then, they have gone on to launch a string of other hits such as “Dirty John,” which was made into a TV series for Bravo. “Dr. Death” is also being adapted for television—Alec Baldwin and Christian Slater both just signed on to star in the series.
Wondery raised $5 million in Series A funding last year, and just raised another $10 million in Series B funding. The Wall Street Journal says the company has been valued at more than $100 million.
“Hernan is a terrific leader,” says Bennett Pozil, executive vice president of corporate banking and head of the entertainment division at East West Bank. “He has the uncanny ability to see new opportunities beyond the horizon and that allows him to innovate—he has great vision.”
One of the challenges in the podcast industry is monetization. Money is primarily raised through paid ads, which are often read by the hosts of the podcasts. Given the growing audience, there is big potential. A recent study found that advertising revenue for podcasts grew 53 percent last year to $479 million, a number that is expected to top $1 billion by 2021.
A new study from Nielsen found that podcast ads perform better than other digital ads, and listeners can remember the brands featured on a podcast better than display ads on other digital media platforms. Sixty-one percent of listeners surveyed also said they have purchased a product or service they learned about from a podcast ad.
While impressive, podcast revenue is still dwarfed by television advertising revenue, which stands at $70 billion annually. Wondery has added a new twist by tapping into television as a major revenue source for its podcast business. Podcasts are a quicker testing ground for whether a story can build an engaged audience, and content-hungry broadcast networks are looking for ready-made shows to fill their slots. Lopez keeps this option in mind from the start when selecting content, “based on a combination of our business model and creative choices,” he says. At least six Wondery shows have been optioned for television, and most recently, Elizabeth Banks signed on to develop a series based on the popular podcast “Over My Dead Body” for WarnerMedia Streaming Service.
Lopez has now begun signing deals that secures the film pipeline right from the start, before the podcast even goes into production. Earlier this year, he signed an agreement with Universal Music Group to develop podcasts around stories about UMG artists, which then can be adapted into films or TV shows.
“If you’re going to start a business, I recommend doing it in a field in which you would be willing to work for free.”
If your business is looking to tap into podcasts to gain new customers, Lopez says partnering up with a podcast network makes the most sense for most companies. Upwards of 3,000 new podcasts are launched every month, and there are now around 700,000 podcasts, which makes for a crowded field. Lopez recommends leaving the costly and time-intensive creative and technical work of producing and marketing a podcast to the professionals who already have a foothold in the market. “We have made advertising seamless,” Lopez says. You can go to one of the leading podcast publishers or agencies that can match your business with the right show and target audience.
Wondery is now looking to expand internationally and to release shows in multiple languages and countries.