One of the first authors to distribute his fiction via podcasting was Scott Sigler with "Earthcore" in 2005. He occupies a niche within the horror genre. Here's how he defined in a recent interview at dreadcentral.com:
“I consider myself what I call a hard science horror writer. It’s very different, as far as horror goes, because there’s not a lot of people writing what I consider to be pretty hard core heavy horror, but using it from a scientific bent. Most people are approaching it from the supernatural – you know it’s ghost stories, vampires, werewolves, etc. As far as people who are writing just straight-on horror novels but with a really hard science background, outside of Michael Crichton, whom I count in that camp, Jonathan Mayberry is one that comes to mind and not a lot of other people.
Sigler has used podcasting to build a following over the last few years and it led to a publishing deal with Crown/Random House. His newest release, "Ancestor," just came out. It's about a genetically engineered creature going wild on a secluded island. He actually wrote it in the late 90's and turned it into a serial podcast in 2006--proof that there's life for your older writing.
Could you use podcasting to develop a following for your fiction? I suspect it works best for a genre novel, where you can tap into an existing fan group for that category. Further, it probably helps to find a niche within that niche that you can occupy.
PS: So far I haven't done any fiction podcasting, but my "Creativity Rocket" podcast is available on iTunes and a new screenwriting podcast is coming soon.