July 11, 2005

Podcasts Get iTunes Stamp of Approval

LOS ANGELES -- If Apple Computer podcasts, they will come. Or so it seems after the company added support for the new broadcasting technology to its latest version of iTunes.

In the days following Apple's June 28 release of the update, podcasters saw significant boosts in press and traffic. And just two days after launching the service, Apple reported more than 1 million podcast subscriptions from the new directory.

"We were certainly very, very pleased with the results we saw," Apple VP of applications Eddy Cue says.

Although podcasting -- a method of publishing audio files online for delivery at regular intervals to subscribers with the appropriate software -- has been around for more than a year, Cupertino, Calif.-based Apple is first in the race to combine quality programing and easy-to-use software. The company is aggregating more than 3,000 podcasts -- by everyone from media giants like Disney, the BBC, ESPN Radio and abcnews.com to smaller podcast pioneers with cult followings -- for a pleasant and simple user experience.

"The bottom line is Apple does a great job presenting a clean and easy-to-understand user interface," says Evan Harrison, executive VP of Clear Channel Radio's online music and radio division, which has several programs in the iTunes directory. "What Apple is doing will absolutely move the mark in moving this market further. I think other people will jump onto this bandwagon, which will continue to help define this market."

Podcasters included in the Apple launch were pleased, if somewhat overwhelmed. Unlike Apple's music tracks, which it hosts on its site, its podcast content directs traffic back to the source. Some smaller podcasters were not prepared for the demand.

Noncommercial triple-A radio station KCRW Santa Monica, Calif., which had two programs featured on the iTunes podcast home page, reported a tenfold spike in traffic the day Apple launched the service. According to Will Lewis, KCRW's management consultant, the leap from a daily average of 10,000 downloads to 100,000 forced the station to upgrade to a larger Internet server.

"We weren't ready for it," Lewis says. "I've never seen a phenomenon like this. It's like the killer app."

Demand for "The Dawn and Drew Show," a podcast created by a married couple from their Wisconsin farmhouse (and described as a mix of "The Howard Stern Show" and "A Prairie Home Companion") reportedly rendered the show's Web site inaccessible for two days following the launch.

Adam Curry, whose "Daily Source Code" is another program in the iTunes podcast directory, predicts "tens of millions" more subscribers in coming months. For its part, Apple reported a "significant" uptick in the number of submissions from podcasters requesting placement on the service.

Industry observers expect Apple will not be alone for long. Many predict podcasting will become a standard feature of any Internet portal, just as search engines, blog tools and instant messaging are now. The goal will be to offer a one-stop shop for users' Internet navigation needs, rather than provide one program to find podcasts, another to find music and so on.

Forrester Research analyst Ted Schandler believes Yahoo will develop such a service, and "Google probably will. These companies that have desktop tool bars and are in either the search or music business, you'll see them make this simpler as well."

It is unclear whether Apple's podcasting presence will encourage major labels to allow their music to be included in podcast programing. Because of ongoing licensing complexities, most podcasts that include music only use the work of unsigned acts or those who own the rights to their music.

"Creating a business model around music podcasting is a wide-open game. No one's doing it yet," Schandler says. "Once there's a rights structure in place, that will certainly make podcasting more interesting."

But until the podcasting format generates significant traffic, there is little incentive for labels to work toward a solution.

"Podcasting has gotten a disproportionate amount of press compared to how many people even understand what it is," Harrison says. "As the demand picks up for content in this format, the market as it relates to rights will work itself out."

Apple's involvement in this effort is expected to play a role similar to CEO Steve Jobs' aligning the major labels to embrace online music stores. With 1 million subscribers onboard, Apple's podcasting initiative could spark the demand needed to bring the labels to the table. But while the recent spike in traffic is certainly eye-opening, it might be just the result of curiosity or experimentation.

"There's a lot of 'hmm, let's try it' kind of behavior," Schandler says. "In the early going of something like podcasting you see a lot of that. What will win is quality programing."

Not surprisingly, Apple has made music a focus of its podcast directory. Among the programs are several created by indie labels to promote their acts. Apple also produces its own podcast, "iTunes New Music Tuesday," featuring 30-second clips of new releases recently added to its store. It remains the most-requested podcast on iTunes.



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