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Summary
- Podcasting is the fastest growing medium in the world, but it hasn’t yet realised its monetary potential.
- A meagre one per cent of podcasts accounts for the lion’s share of revenue despite there being over 1.7 million podcasts worldwide.
- The money spent by advertisers in the podcasting medium has been increasing sharply since the beginning of podcasting, even reaching highs last year despite the COVID-19 pandemic.
Podcasting is the fastest growing medium for ad revenue but, despite this, that revenue remains relatively small compared to other mediums. Being a relatively new medium compared with radio, it seems the podcast industry still hasn’t quite found a way to cash in on its listeners completely.
According to Edison Research, the industry, as a whole, brings in less than US$1 billion annually despite 90 million people consuming podcasts monthly. As such, it has yet to fully realise its economic potential.
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So, What’s the Deal with Podcasting?
Currently, the returns seen from the entire podcast industry are achieved by the top one per cent of podcasts. According to Libsyn Research, in 2019, one per cent of podcasts made about US$35,000 per episode, with the top two per cent making approximately US$20,000 per episode. After that, the numbers flail off quickly, with the average per episode return sitting at just US$124.
One of the issues with podcasting is its sharing ability. While podcasting has been around for almost the same time as some social media platforms, the medium has yet to achieve the viral potential that platforms like YouTube, Facebook and TikTok experience on a regular basis. If someone uploads a video of a dog on a skateboard on TikTok, that clip can be shared worldwide within hours. However, even the most popular podcasts can’t achieve this viral ‘shareability’.
Head of Marketing at podcast hosting website, Buzzsprout, Alban Brooke, said recently on an episode of the Smart Passive Income Podcast that podcasts are regularly found through word-of-mouth rather than file sharing on social networking platforms. This is mainly due to the nature of the medium. A podcast is usually an extended format with some podcasts lasting up to three or four hours per episode. Unlike videos on YouTube that can be recommended to users via an algorithm, podcasting has no established platform where it can benefit from the use of algorithms.
The Big Players Make the Big Bucks
As the podcast world has developed through the years, it’s gone from a do-it-yourself medium to a network medium. Much like the movie business where the top studios like Disney, Netflix and Warner Brothers account for the largest revenues, big podcasting networks have slowly evolved in the digital world to host the world’s biggest podcasts. Therefore, they enjoy the vast majority of the revenue. A podcast network is basically a company that produces and releases a collection of podcasts under its banner.
For example, WNYC – one of the larger podcast networks – hosts some of the most listened to and most critically acclaimed podcasts in the world, with their stable consisting of the popular Radiolab, Death, Sex & Money and 2 Dope Queens. They are like the HBO of podcasting.
There are just a small number of these networks, and yet they rake in the vast majority of the industry’s revenue.
How Do the Podcasts Make Money?
Advertising
The first and the most obvious method of monetisation for podcasts is advertising. The money spent by advertisers in the podcasting medium has been increasing sharply since the beginning of podcasting. In 2018, brands spent US$479 million advertising in the podcast landscape. This figure was up 53% from the previous year.
Despite 2020 being ravished by the COVID-19 pandemic, podcasts went from strength to strength with total ad revenue in the US alone climbing to US$842 million from US$708 million in the previous year.
The most popular method of advertising is what’s known as ‘direct-to-brand’, which considers the podcast’s demographics and lines it up with the product they wish to sell. This method is achieved through pre-roll, mid-roll and post-roll ads usually read by the podcast host.
One of the fastest advertising alternatives is called ‘programmatic advertising’. These are ads which appear in the middle of the podcast, which is non-host read.
Advertising is a major source of revenue generation for podcasts (Source: © Utah778 | Megapixl.com)
Subscription-Based Podcasts
Apart from advertising, there are subscription-based podcasts. This is where the podcast is put behind a paywall which is only available to paying subscribers. These types of podcasts are usually ad-free. Spotify is an excellent example e that offers a subscription-based service, although audiences also have an option to consume the podcast without a subscription.
Premium Content
A revenue option for podcasts, which has become more popular in the past few years, is the ‘premium content’ podcast. This is where podcasters will put a special episode of their show on a platform that users must pay for, like Patreon. This means that podcasters can secure a revenue stream without having to rely on advertising.
Live Podcasting
If a podcast has a solid following, it can choose to put on a live podcast. Although the pandemic has put heavy restrictions on this in recent times, many comedy podcasts, in particular, have made money by selling tickets to audiences at live venues, such as theatres or comedy clubs.
Do It Yourself
The best thing about podcasting is that it’s available to anyone with a laptop and a microphone. In fact, according to mypodcastreviews.com, there are over 1.7 million podcasts worldwide. However, Alban Brooke of Buzzsprout points out that one million of those haven’t released an episode in more than ninety days and around half of the 1.7 million didn’t make more than ten episodes.
So, apparently, if you are willing to simply be consistent, you will be ahead of more than half the pack. Brooke adds the reason people quit podcasting is the lack of passion and boredom. To combat boredom, Brooke advises to identify the piece of the process that seems boring and outsource it. For example, a common part of the process people often find monotonous is editing.
Source: © Rassco| Megapixl.com
Getting People to Find Your Show
Brooke advises if the podcast is about a niche topic, the trick to finding listeners is to search for online groups that are tailor-made for that topic. Thousands of social media groups exist for the most niche of subjects. There’s a Facebook group dedicated to episodes of Seinfeld, for instance. He says once you have established that group, release snippets of the show, which provide value for free. It’s not enough to provide a minute-long clip of a show which just teases - value must be provided. He also urges people not to post whole episodes. Podcasts by nature are not viral material, clips are though.
He also emphasises the importance of adding a visual component to the audio clip. Called a ‘visual sound bite’, people are much more likely to listen if there’s an accompanying visual component.
Finally, while trying to promote your podcast, it is wiser to choose one social media platform rather than scattering it on every single platform, Brooke suggests. He recommends picking one platform and bring insights from the podcast to that platform. If it’s good enough, people will share it or listen to the entire episode.
