How Important is Anchor's Free Hosting?
Although Anchor started offering free hosting last July, with their pivot to podcasting creation tools in Anchor 3.0, I starting wondering: what are the implications of Anchor offering free hosting?
As Anchor says:
We don’t believe in charging creators to make or store their stuff. We’re all about democratizing audio, which among other things means making sure it’s accessible to everyone - so Anchor is completely free to use. No storage limits; no strings attached.
Well, of course there are some strings attached. They do insert a post-roll ad for Anchor on all your content and their Terms of Service offer no guarantees (which I think is fair enough for a free service):
You acknowledge that we may establish general practices and limits concerning use of the Services, including without limitation the maximum period of time that Content will be retained by the Services and the maximum storage space that will be allotted on our servers on your behalf…
We reserve the right to, but do not have any obligation to, (i) remove, edit or modify any Content in our sole discretion, at any time, without notice to you and for any reason…, or for no reason at all and (ii) to remove or block any Content from the Services.
Let’s consider this business strategy. Free removes any financial barriers that casual podcast creators may have had to starting a podcast (I still think that the hardest part is having content rather than any technology hurdles, but that’s a post for another day). Anchor makes a quick grab for market share (why wouldn’t you want to go with free hosting?) and creators move away from entry-level hosting companies like Podbean, Soundcloud and Simplecast.
Providing storage of data as Ben Thompson wrote in Stratechery in 2014:
Pure storage isn’t a great business. The cost is trending towards zero, as noted by Levie himself. Data, though, is priceless; it can’t be replaced…
If we look at the competition, free hosting is something that other “pure” (that is, their only revenue is from charging customers for hosting) hosting companies can’t offer – they aren’t VC backed and they aren’t going to kill their only source of income, so they will have to move to complete on other features than just hosting. Offering storage for a monthly fee is something anyone can do, the competitive advantage comes from what you can do with that data. And this is another area where Anchor is competing. While podcast consumption is so fragmented, making sure your RSS feed is submitted to all the right places is a pain, Anchor is making a play as the easiest distribution platform. Their headline feature is 1-click submission of your new podcast to Apple Podcasts, Spotify and Google Music. As far as I know, they are the first to offer such a feature.
An unknown area is customer service. The beginner creator is also the customer that needs the most help. Are Anchor going to be able to provide first-class customer service for free? I can imagine that they could offer a tiered approach, free hosting with no support and $10 a month for those who need more help.
It seems like the markets aren’t too worried by Anchor’s renewed push into free podcast hosting. LibSyn’s (who are the market leader in podcast hosting with a nearly $40M market cap) share price has remained stable over the last month at around 1.60USD.