Rising Podcast Star Gets Hollywood Cast, Apple Embrace

(Bloomberg) -- When a pair of producers left their jobs in radio and consulting to start a podcasting company in 2014, their first show -- “StartUp” -- chronicled their efforts to turn the new enterprise, Gimlet Media, into a going concern.

Two-and-a-half years and one podcasting boom later, Gimlet Media's new series illustrates just how far the company – and the medium -- have come. On Tuesday, the Brooklyn, New York-based network will unveil its latest slate of shows, including “Homecoming,” a scripted, fictional serial voiced by star actors Catherine Keener, Oscar Isaac and David Schwimmer. The show, which debuts Nov. 16, counts Apple Inc.'s iBooks division as the exclusive sponsor, a sign of confidence in one of the medium's rising stars.

Gimlet launched a few months before the debut of “Serial,” the surprise hit from the team at public radio show “This American Life.” The popularity of that show -- it was downloaded more than 5 million times in the first season -- drew new investors and large national media companies to the format. Today, about one-third of Americans say they've listened to a podcast, a proportion that's doubled since 2008.

The surge in interest has been good to Gimlet, which was valued at $30 million in December 2015, when it raised $6 million in venture capital. In addition to the new shows, ABC has plans to turn “StartUp,'' into a TV program starring Zach Braff. Meanwhile, the audio version is entering its fourth season and will follow American Apparel founder Dov Charney into his new venture.

All In-House

Unlike some of its peers, Gimlet only distributes shows it produces in-house. The company has increased its staff and output to keep up with the growing interest in podcasting -- and the surge in quality shows and competitors, from National Public Radio to Midroll Media, the advertising network for podcasts by Bill Simmons and Marc Maron. 

Gimlet's other new shows are more traditional, but include plenty of pedigree. The producers of HBO's documentary series “The Jinx” are behind “Crimetown,” set in crime-ridden Providence, Rhode Island, while Pat Walters hosts “Undone,” which examines what happens in places after a significant event.

“The bar for quality has gone way up,” said Matt Lieber, Gimlet's co-founder and president. “We felt like we need to do something really special. This is our attempt to do that.”

As with the rest of digital media, it's not clear whether podcasting is a money-maker. Gimlet is on track to generate about $7 million in sales this year, the company said on a recent episode of “StartUp.”

While that's not enough to cover its costs, which are expected to run to about $10 million, it's a huge jump from last year. NPR, one of the largest players in podcasting, has said it generates more than $10 million in sales. Advertiser spending on podcasts will reach $167 million in 2016, according to a March study by Bridge Ratings LLC.

Advertisers would like to spend more, said Derek Lu, a strategist at the Media Kitchen, noting that Gimlet and Panoply Media, which is owned by Slate Group, are raising rates.

“We're constantly running into situations where advertising inventory is sold out,” said Lu, who has worked with some of the major podcasting networks on campaigns for clients like Goldman Sachs Group Inc. “Podcasts appeal because you are sponsoring something people are already passionate about.”

In addition to the familiar spoken promotions before, during and after podcasts, Gimlet is experimenting with branded podcasts through its Gimlet Creative division. A podcast commissioned by EBay Inc. to target entrepreneurs was successful enough that a second season is under discussion. General Electric Co. produced a successful podcast with Panoply, “The Message,” about a team of top cryptologists attempting to decode an alien message. There are more on the way.

Post-Show Chat

With “Homecoming,” Gimlet is adding its own post-show recap -- an add-on that has become popular with TV shows such as “The Walking Dead” and “Game of Thrones.” Creator Eli Horowitz will talk for three to five minutes about the making of the podcast and the books that inspired the show.

The post-show was born out of the Apple sponsorship. Horowitz didn't want to interrupt each episode with an ad. “That's a big ask, but we were able to make it happen because Apple was interested in this idea,” said Nazanin Rafsanjani, who runs Gimlet's in-house creative agency.

Apple's podcast app remains the dominant listening app for most listeners, according to Nicholas Quah, who publishes a weekly newsletter on podcasting. “Apple is huge,” Quah said. “The word podcast is the result of an Apple affectation; Pod as in iPod.”

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net. To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Janet Paskin