Podcasting is booming, but podcasters’ tools still lag far behind.
In 2005, Steve Jobs announced podcasts were being added to the iTunes store saying “Podcasting is the next generation of radio, and users can now subscribe to over 3,000 free Podcasts and have each new episode automatically delivered over the Internet to their computer and iPod.”
In the nearly 15 years since Apple kicked off the podcasting era, podcasting has exploded, but the tools have remained shockingly rudimentary. I started podcasting over 3 years ago at Tech In Chicago and use many of the same tools today. Podcaster workflows often include a bunch of apps that aren’t designed for what they are used for.
Here is where I see major opportunities for improvement.
Monetization is where podcasting lags the furthest behind. It is the place to start when thinking of how the industry could become 10x bigger.
Looking at Nielsen data, we find that podcasts monetize on average at only a penny per listener hour. This is more than 10x less than radio, the closest competitor, and far below ad revenue per hour for other types of media in the US. If anything podcasting should be monetizing at a higher rate because ads are especially effective and tracking should be significantly better with the digital format.
Why does podcasting lag so far behind? The biggest issue is an inability to monetize directly on Apple Podcasts, which is the dominant platform with ~55% of the market. If you are a YouTuber, you can easily run ads to monetize your channel. If you are a blogger, you can run banner ads. Podcasting is much more complicated.
Podcast monetization has been synonymous with advertising. It is still very old-school. The traditional host-read ads you are accustomed to hearing are often placed by an agency that negotiates the rate over the phone and email. The bulk of podcasters struggle to even monetize (only ~15% of podcasters run ads) this way because advertisers only want to work with podcasters with a significant audience.
Some small podcasters are getting smarter about this and moving away from CPM (cost per thousand impressions) and touting the value of their audience. They may only have a few hundred listeners, but if all the listeners are the CEOs of a specific industry then reaching that audience is quite valuable.
There is also a transition to programmatic ad placements, which are easier to use, but result in lower CPMs because they aren’t as effective as host read ads. Any business providing this will always have Apple and the other big tech companies as existential threats. Google and Facebook are so dominant in ad targeting that it is difficult to build a new large company based exclusively on advertising.
Subscription / Memberships
Subscriptions have seen increasing interest lately. Charging listeners directly has always seemed like the natural way to monetize.
In exchange for becoming a paying member, listeners get access to exclusive paid content, bonus material, and sometimes social recognition. Podcasters used to have to cobble together solutions with Patreon, etc., but now dedicated apps like Glow.fm and Supercast make this easy.
Tim Ferriss recently tried moving to a subscription model and it didn’t work out at all, but I suspect he is a unique case.
"99% of my listeners are totally OK with ads, and many of them look forward to finding new products and services through my sponsor reads. It’s industry standard for high-download podcasts to have ads, anyone who wants to skip over ads can skip ahead, and people generally do not want to support multiple podcasters by paying for them à la carte.”
As a self-help guru, his ads are not terribly different from his actual material and listeners don’t mind hearing them.
Other Monetization Ideas
Appearance Fees: Having a guest on your podcast is basically free and effective content marketing for them. I was wondering if there was an opportunity to make a podcast guest / podcaster appearance fee marketplace. I suspect it is too much work on the guests' part to be worthwhile and better done quietly so your show doesn’t come across as an infomercial, but I do think there is an opportunity there. Being a podcast guest is great exposure and minimal work for the entrepreneurs out there looking for a marketing arbitrage opportunity.
Most of the podcasters I spoke to about appearance fees were vehemently opposed to the idea, but some are already doing it at scale. EO on Fire charges an appearance fee of $6,500 per guest that reaches out to be on the show. He is actually making more from appearance fees now than from advertising. Sponsored interviews are pretty much the podcasting native-ad equivalent.
Podcasts can also act as brand building for your main business and don’t have to be directly monetized.
Connecting podcasters with their listeners is a start, but there is a much bigger opportunity to connect listeners to one another. Building a network or community around a podcast is a route to a defensible moat. This is a clear place that podcasting should be different from radio. There is an opportunity to add a social layer to podcasts to capture conversations.
Some podcasters have hacked together solutions with Facebook groups, Twitter, or Reddit, but with any social network, you are subject to the whims of the platform. An email newsletter with your own website is something you can own forever, but it isn’t an ideal setting for conversations. Slack, Discord, and Mighty Networks work reasonably well for this, but aren’t podcast specific. Flick is an interesting one that is podcast community focused.
Once you have a community, it becomes self-sustaining with members talking with other members and much easier to monetize. Ideally, there would be a turnkey platform for creators that makes building a network and jump-starting discussions an easy process. For now, it is labor-intensive and some creators have more of a nack for community building than others.
Podcasts are just MP3 files that are turned into RSS feeds. Players monitor these RSS feed updates and make them listenable for subscribers.
Every podcast has a host and there a lot of companies that do this well enough. Libsyn is the largest podcast host. Anchor became the default host for amateur podcasters by being the easiest way to create a podcast (record, edit, and publish from your phone). Transistor (my favorite) and Auxbus are trying to position themselves as the professional alternatives. It is tough to make a host significantly better than any other.
Many hosts also provide analytics, which is still rudimentary on podcasts. We were limited to downloads for a while, and just recently got some more limited analytics like geographic data and listeners by minute. Subpar analytics has hurt the ability to efficiently manage advertising. This goes back to Apple again where they keep most of the data for themselves.
Many companies have popped up to make podcasting easier. Anchor is known to be the easiest. Zencaster, Zoom, Squadcast (my favorite), and Skype all make recording remote interviews relatively painless.
Descript has been the most innovative in making podcasting editing easier. Spext is similar to Descript. Both need to improve quite a bit to compete with a freelance audio producer, but they should become competitive eventually and they are already pretty good.
Boutique podcast agencies like Dante32, have also popped up and take all the hard work out of launching and running a podcast.
Discovery / Promotion
It is still very difficult to get new listeners as an independent podcast host. If you are a celebrity host with an existing audience or part of a major podcast network, it is certainly much easier. One way hosts can get good early exposure is to make sure they are featured in the “New & Noteworthy” on Apple Podcasts with these tips.
The most common ways of getting podcast listeners are still SEO and social networks. Podcasts can be the anchor of a larger content marketing strategy. Episodes can be repurposed for blog posts, Instagram, Youtube, Twitter, etc. Many startups are popping up to take audio, split it into segments with video, waveform, and captions that perform well on other platforms. Some examples are Audiogram, Headliner, Shuffle, Wavecut, and Bitcast.fm.
Everyone talks about “peak podcast” and how many podcasts are out there today, but I suspect we are far from the peak. There are roughly 700,000 podcasts today with 2,000 to 3,000 more being launched every month while there are over 500 million blogs. Only 1/3 of Americans consistently listen to podcasts. AirPods (60M sold this year), Alexa smart speakers (200M worldwide by 2020) and other new audio tech make audio consumption easier and easier.
Podcast studios have produced the biggest exits to date and will likely continue to do so. Gimlet, producer of Reply All, StartUP, etc., sold for $225M in February 2019 after raising $28M. Stuff Media, producer of 25+ shows, sold for $55M in Sept 2018 after raising $15M. Parcast, producer for true-crime shows, sold for $100M in March 2019 without raising any money and launching only 3 years earlier.
Podcast studios have minimal startup costs and desirable unit economics. Once up and running they can cross-promote and quickly get new podcasts listeners. I believe there are still many opportunities for podcast studios to service niches like health, sports, culture, etc. They are prime acquisition targets for media companies. They are efficient sources of IP and an easy way for listening apps to differentiate based on content, much like Netflix and their exclusive shows.
Full-stack audio-first content apps are similar to podcasts, but they have the potential to monetize better. By combining audio content, community, blog posts, and interactive apps, creators can make something significantly more valuable than a traditional podcast. Examples of this “luxury audio” are Headspace/Calm/Shine for meditation, Dipsea for erotica, and Aaptiv for fitness. These services are delivered through purpose-built apps that are monetized with one-time fees or subscriptions instead of advertising. For paying up, consumers get heavily-edited content in planned out segments instead of the typical meandering discussions. This keeps things fast-paced and interesting.
Consumers have shown a much higher willingness to pay for “luxury audio” apps that are aimed more towards education than entertainment and with experiences tailored to their verticals. Podcasters with expertise in certain areas should look at packaging their content in this fashion if monetization and education is really their goal. I suspect we will see many more “luxury audio” apps pop up targeting a variety of niches.
If you’re building something in podcasting or audio in any of the categories above, drop me an email at firstname.lastname@example.org. I’d love to chat.