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Are podcasts missing out on a huge—and lucrative—audience?

From its first appearance in internet searches 12 years ago to blockbusters such as "Serial", podcasting has become a popular part of people's entertainment, but market-watchers believe the medium still has huge room to grow and offers lucrative rewards for content creators.

While the technology behind the medium has roots dating back to the 1980s, podcasting (a portmanteau of the Apple iPod and broadcasting) as a term didn't begin to emerge until the early 2000s. One of the earliest podcasts was Adam Curry's Daily Source Code, which debuted in August 2004, while "podcast" first appeared as a search term in September 2004, according to Google Trends. Apple didn't formally support podcasting until June 2005.

Since then, podcasts have massively grown in popularity. The percentage of the U.S. population regularly listening to podcasts has grown from 9 percent to 2008 to 21 percent in 2016, representing an estimated 57 million people, according to a study by Edison Research.

George Coppock | Photographer's Choice | Getty Images

For Karl Rosander and Måns Ulvestam, co-founders of podcast platform Acast, this means podcasting has plenty of room to grow.

"If you look at the demographics now, it's mostly educated people in their 20s, 30s and 40s who listen to podcasts," Rosander told CNBC during a phone interview.

"It's been phenomenal growth the last few years, but it still means that more than 70 percent of the population don't listen to podcasts. To get them to do it, it's like anything else: you have to have interesting content."

Paths to profit

Acast first launched in Sweden in 2014 and launched in the U.S. in November last year. The platform hosts, distributes and monetizes podcasts with targeted advertising. Normally, most podcast advertising takes the form of creators reading out sponsored message during the podcast, promoting merchandise to fans, or encouraging listeners to donate to a crowdfunding website.

However, the Acast founders are critical of these approaches.

"That's a very low form of monetization. That's like crowdfunding: it's not a business model, it's a supplementary model," said Rosander.

Måns Ulvestam (left) and Karl Rosander, co-founders of podcast platform Acast

"Without revenue, it is not a company, it is a hobby," added Ulvestam.

"We saw this opportunity to introduce a dynamic advertising model, where you allow advertisements [from companies] who actually want to know who's listening and when. For instance, if McDonald's wants to sell a new burger just in London, they can do that with our system, whereas before they could just have some generic message."

The economy of podcasts

One of Acast's largest customers is The Economist, which puts out several different podcasts each week.

"We get a total of about 5 million downloads and streams each month across our podcasts, and we reckon our audio output (which also includes the audio edition, a recording of the full text of each week's issue) reaches about 650,000 people each week, as far as we can tell," Tom Standage, deputy editor and head of digital strategy at The Economist, told CNBC via email.

The podcasts help new audiences become familiar with The Economist's content, according to Standage, but are not a major driver of traffic to its website or print edition.

"Instead it's a way for people to bake The Economist into their weekly routines and become familiar with the brand. In the longer term we hope some of them will become subscribers," he said.

While Acast is a large podcasting platform, there are many other platforms for consumers to access podcast. This ecosystem is currently fragmented and immature, according to Standage.

"In some ways that's good, because there is diversity and competition and choice; it would be a pity if one platform emerged as the dominant means of accessing podcasts," he said.

"But if it was easier to discover, subscribe to and manage podcasts I think many more people would listen to them. That problem has yet to be solved."

What's next

Meanwhile, new technology may soon impact on how we enjoy our podcasts. For instance, virtual reality (VR) headsets could allow us to watch presenters.

"We believe 'virtual presence'" will become an integral part of the VR experience in the upcoming years. Oculus has already demonstrated how two VR headset users (in different physical locations) can see each other and interact with one another online," George Jijiashvili, wearables and VR analyst at CCS Insight, told CNBC via email.

"With this technology, we expect to see new podcast formats emerging which will enable users to fully immerse themselves in virtual environments, while the hosts and guests of the podcast have relevant discussions. For example the VR user will be able to explore prehistoric earth while being guided by the hosts, or sit at a table with historians in the trenches of World War I".

Acast also sees opportunities to expand in new territories and the founders say South America is the next hotspot for growth.

"We see Latin America is exploding. Countries like Argentina and Mexico, podcasting is booming in those countries," said Rosander. "We can also see Germany is booming. Also we have Australia, that's our third biggest market, but we haven't even launched there yet."

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