Will it all pay off? This is the question podcast players are asking themselves.
Having found its audience, the sector is now wondering about its economic model. Platforms like Spotify and Apple offer audio show creators monetization solutions, but with varying degrees of success. We take a closer look.
It can’t have escaped your notice that podcasts are a hot item. recent statistics suggest there are 120 million “podcast listeners” in the US, a number that has increased by nearly 30% in the past three years and is expected to reach 160 million by 2023.
The pandemic has a lot to do with it. In pre-pandemic times, people listened to podcasts to entertain themselves in the car or on public transport. Now they’ve made their way into our homes, along with smart speakers, and it’s not uncommon to dive into one of these pocket-sized audio formats while cooking, gardening, or even bedtime.
A recent move into the podcast business in an effort to capitalize on this trend is the provision of paid subscription packages that benefit the creators of such audio content.
Spotify in the lead. The music streaming giant has been investing in various aspects of the podcast industry for several years now. So much that Hot Poda newsletter specializing in the podcast world says Daniel Ek’s company is “no longer a music company, but a company dedicated to podcasting.”
Spotify vs Apple
Last November, Spotify announced a new feature that allows podcast creators to charge for some of their programs. It has been rolled out in the US and in over 30 countries around the world. It can be used by all publishers, regardless of the audience level of their audio program.
They can build their own paid subscription offer, which starts at $0.49 per month and goes up to $150. Subscribers can find exclusive programs or listen to their favorite podcasts in preview mode and without commercial breaks.
Its competitor, Apple Podcasts, launched a similar offering a few months earlier. Podcast publishers have the option to distribute their content via the listening platform with an a la carte subscription at the desired rate. The American public broadcaster NPR lets listeners enjoy the episodes of “Code Switch” without any commercials, for US$2.99 per month.
Regardless of the chosen formula, Apple takes a 30% commission on the income from the subscriptions. In the second year it drops to 15%. Podcast studios must also join a program for $19.99 per year. Spotify will not take any commission until 2023. After that, it plans to charge 5% commission.
Getting consumers to reach into their wallets
Others have tried for them to diversify podcasting monetization opportunities between commercials, sponsorships, and subscriptions. Luminary is a perfect example of this. The company launched in April 2019 with the ambition to show that “podcasts don’t need ads,” as it proclaimed on Twitter at the time.
It quickly had to face some hard economic facts: Just 80,000 listeners had signed up for its $4.99 monthly paid subscription a year after launch. This was despite a paid offer around exclusive content, with celebrities like actress and producer Lena Dunham and talk show host Trevor Noah.
Meanwhile, US-based Glow is trying to stand out by offering listeners the opportunity to financially support the show of their choice with just a few clicks.
Once subscribed, they can enjoy premium content on any listening platform (except Spotify and Pandora). Other companies such as Stitcher, Acast and Sybel are also trying to convince listeners to pay for the podcasts they listen to, with varying degrees of success.
It must be recognized that it is not an easy task. How can audiophiles be convinced to reach for their wallets when so many podcasts are already available online? Americans don’t seem very willing to do that, even though they listen to more and more audio programs.
More than 80% of listeners say they’re likely to pay “not very” or “not at all” to access podcasts, according to a YouGov survey conducted for Variety. A third believes that such audio content should be available for free and financed by advertising.
Despite the best efforts of the podcast industry, paid content remains the holy grail in an industry historically built on free content. But it takes more to discourage some podcasters from picking up the microphone. More than one in ten Britons plan to launch their own audio program this year, according to a survey by Acast. Whether they can make money with it or not! Proof that when it comes to podcasts, passion still trumps reward.