There’s been a lot of discussion lately in the world of new media about the future of podcasting – people wondering what the current state of podcasting is and where it’s going.

eMarketer forecasts that the audience for podcast consumption will double in the next two years, but even that relatively rosy forecast is disappointing to some.

We recently talked to Chris Spencer, CEO of podcasting hosting mega-network Wizzard Media, to get his perspective on podcasting and its future.

In the last year, Wizzard has acquired podcast hosting services Switchpod, Libsyn, and Blast Podcast. Wizzard made headlines in January when it announced that it had delivered over one billion podcast downloads in 2007. Earlier this week, Wizzard announced that it was now trading on the American Stock Exchange (”AMEX”) under the ticker symbol “WZE.”

In our interview, Chris shared his thoughts on what a billion podcast downloads per year means, what he expects that number to be in 2008, and his predictions on what will happen with podcast advertising.

Elisabeth McLaury Lewin: Tell me about this whole billion downloads number. What does that mean for you in particular, and for downloadable media industry in general?

Chris Spencer: It’s a big number, isn’t it?

For us in particular, it means our servers are running well. Let’s face it: some people wonder whether this accomplishment gets credited to Wizzard, or to our content creators. We feel strongly that it’s 95% our content creators – they create the quality content, and they go out and market their show, and grow their audience. We get 5% credit for being proficient and productive enough to offer a stable inexpensive hosting solution, and that takes a lot of work.

But it comes down to the podcast producers. It’s a big accomplishment for the podcasters we host. It’s a big enough milestone for them and for us, and we publicized it so much.

In reality, what we’re trying to do is raise awareness for podcasting, specifically with the advertisers and the sponsors. It’s a number that’s going to attract a lot of the bigger brands that didn’t realize how big the potential here is. If there’s going to be big audience for podcasts, then that’s going to draw advertisers. That’s why we publicize it, not just for us, but for the whole industry.

Let’s look at the whole podcast industry: Right now, the industry is too small to worry if it’s us, or PodShow, or Podomatic. Right now it’s all about getting the advertisers and sponsors to know more about and be more interested in podcasting. Period.

I could talk about this for hours: it comes down to trying to demonstrate that this is a viable alternative to reach target audiences. More importantly, it is a product that people are consuming, and they’re loving it.

Eisabeth McLaury Lewin: It’s amazing the breadth and variety of podcast content that people are consuming. There’s a little bit of everything out there.

Chris Spencer: It’s amazing how many people don’t know that. A lot of people presume this is a young person’s medium, but I was hanging out with my school age nieces recently. They got iPods for Christmas, and they didn’t realize they could get all kinds of free stuff via the podcasts in iTunes. There’s so much to be done to educate people about what’s out there.

Counting One Billion Podcasts

Elisabeth McLaury Lewin: Explain, for the record, how you tallied up that 1 billion number. You didn’t pull it from thin air…

Chris Spencer: Oh god no! [Laughs} Are you kidding?

The Libsyn guys are so ultra conservative when it comes to the numbers. You have no idea the filters that it goes thru, the hair pulling in the conference room when we’re calculating it. They are so cautious and protective over the numbers they allow us to release to the public. It’s just unvelievable.

It goes through all the standard filters, weeds out the bad requests, the bots and spiders, everything we can possibly do, and come up with the best number we possibly can. We have our numbers that get reported back from the cdns we use, and then we have some algorithms in there, weed out multiple duplicate requests from same location. It’s a complicated process, but I believe our filters are as stringent as any out there. We make sure that our numbers are as accurate as any out there… and then when we’re done, we round down. We always round down.

Elisabeth McLaury Lewin: Tell me about the role that Nielsen Net Metrics plays in counting process.

Chris Spencer: We only implemented Nielsen in August 2007– Nielsen’s servers were not counting everything on Day 1. We were going off the filters that we use and have been using and updating every month. These filters have been coming, refined constantly for 3 years, improving every month to get more accurate stats. Our relationship with Nielsen is basically we put their server, their solution in the middle, and the downloads requests get filtered by them as well. It’s as accurate as we can make it, and as conservative as we can make it.

Downloads vs Listens

Elisabeth McLaury Lewin: Out of a billion downloads, how many actual “listens” are there?

Chris Spencer: You know, you’re touching on the big problem in podcasting. The answer is, we don’t know.

Until iTunes passes that information back to the host (anonymously! we’re not looking to collect any data on anybody), there’s no way to know.

However, There is a way: You can see, if someone hasn’t listened to a podcast in a certain number of downloads, then it’s automatically unsubscribed. And so if you can sit here and start looking at the churn, you figure if someone’s downloaded six times, they’ve listened at least to the first one, or else iTunes would cut them off after the 4th time.

So there is a best estimates thing we can use, based on how many people we think have actually listened to this file. It’s a good protection they have, so that after for or five downloads, if you haven’t listened to it, it stops downloading.

Compared to TV or radio, let’s face it: you know it’s played, but you don’t know if anyone listened to it. I have, right now while we’re talking on the phone, 5– no, 6– TVs that are all on. All the news channels, the financial channels — we’re a public company so I gotta keep track of everything. But there’s no way I’m really watching all 6 TVs all at once, even if they’re all on.

Back to iTunes, I think the fact it stops downloading after 5 non-listens is actually a better gauge than traditional media at this point.

Elisabeth McLaury Lewin: If you had a total tally of billion for the year 2007, and back in March ’07, you announced that you’d had 70 million downloads for that month, and October ’07 was around 100 million… what was the most recent month for which you have totals?

Chris Spencer: I think last published number we had was October ’07, which was 111 million downloads, and that was a nice jump. And I can also tell you that I know we finished very strong in the fourth quarter.

Moving Podcasting Forward

Elisabeth McLaury Lewin: Is your experience, you think, unusual or unique in the downloadable media industry? Is that indicative of what’s going on in the whole podcast industry?

Chris Spencer: I hope it’s indicative of the whole industry, and not just us. Right now it’s all about the whole industry, not just us. In 2 or 3 years, we can fight it out and compete, when there’s some money in here to work with.

For right now, I hope it’s indicative of the whole industry. I don’t know why it would be just us. We don’t have any secret sauce, except that we try to work harder than anyone else. [Laughs again] I guess that’s our secret sauce, truly, that we try to work harder than anyone else.

I wish more companies would come out and publish their numbers. I think it’d be very hepful for the industry, you know, to have a collective number out there. It’d be helpful for the Association for Downloadable Media [ADM] to be able to tout it a little bit more.

I think it’d be helpful for advertisers and for all of our collective efforts, to get out there and get sponsors and advertisers for the producers.

Elisabeth McLaury Lewin: What do you forsee for the industry’s involvement w/the ADM? (Chris MacDonald, the ADM Chairman, is a VP of Wizzard and Rob Walch, the ADM’s Chair of the Education and Outreach committee is also a Wizzard VP, ed.)

What role do you think the ADM will play, and what has to happen to get the downloadable media industry where it needs to be, where it’s recognized by advertisers and sponsors and big media and big business?

Chris Spencer: The first step was to bring in some very credible people and companies into the organization and its membership and board. That was a brilliant move, whoever got them in there did a great job, bringing credibility to the organization.

Next thing I’d like to see happen is for them to be making a lot of noise.

Wizzard has a full ad sales force now, big shot sales guys. They call on so many potential advertising agencies on a regular basis, trying to get ads in here. But one of the biggest obstacles is when we go see them, we say, “We want to introduce you to this podcasting stuff.” They say, “We’re not interested in podcasting – we are advertisers, we have nothing to put out.” We go, “No no no , podcasting is also the *consumption* of all that media that’s created.”

Once we start educating them on it, they start coming around. They see the episodic and subscription nature of podcasting. They see that as so much better than, let’s say, the YouTube, casual content that’s up there.

It’s a more trusted way to associate their brands with a known, quality show. Once you start educating them on podcasting it’s wonderful. They really seem to like it a lot, and we’re starting to have the makings of a big success.

Unfortunately, this needs to be done louder, and more widely. Advertisers and sponsors need to know about it in a bigger way, not just from Wizzard.

I hope that the ADM will start making a lot of noise. I am hoping that eventually Apple and Microsoft will start putting out numbers on the podcasting industry. I think Steve Jobs has mentioned, something like 110K podcasts are out there. I’d love to see Zune come out with a number like that. I’d love for somebody else to start reporting downloading numbers. And then, the Association can gather all this up, and put out a credible report on the state of the industry.

That kind of news will get picked up everywhere, and people will start understanding downloadable media, knowing what it is, giving it credibility. “Look how big we are!” kind of noise out there. That’s what it’s going to take, building awareness.

Predictions On The Future Of Podcasting

Elisabeth McLaury Lewin: So, do you have a crystal ball estimate of what 2008 is going to be?

Chris Spencer: 2008 numbers?

Who knows? Well, I’d like to predict that the rest of industry getting better at reporting.

I’d have to guess that, oh, if i had a crystal ball to forecast Wizzard’s statistics, my educated guess is 1.5 – 1.8 billion downloads, and double to four times the ad spending of the past year.

Industry-wide, I think that for every one podcast that’s getting advertising right now, it’ll be four by the end of this year. Advertisers are definitely waking up to what is possible. We have worked for a long time to set up this success.

As the industry gains traction with the traditional media and advertising world, as extensive as our hosting and metrics are at Wizzard, we think, as we look to the future, that our system is a little too simplistic. Advertisers want scale, customization, tracking. You have to be able to report, track, verify — just in order to get paid! We have to set up a lot of security. The ad operations side is so complex, in order to be able to handle what advertisers require, just to get your clients’ money.

Of course, the payoff is going to be huge for the publishers, and also, by extension, for our company as well. Our job is to make money for our podcasters.

As we look to this coming year, we’ll building massive infrastructure to support them and our advertisers.

Looking at this coming year for the industry as a whole, if we work together, podcasting can be a major form of education and entertainment for consumers, and a significant platform for advertisers and brands to find their target audience.