In this blog, I want to look at the money drivers for podcasts. It’s a truism of society today that nothing is free. But, that doesn’t mean that a lot of people haven’t done a lot of things on the internet that have lost money, and eventually failed. Currently, the internet appears to be experiencing a contraction of revenue as ads seem to be in a down cycle. I have read that the utilization of ad-blocking software on smartphones doubled in 2015. This has directly corresponded to many advertisers pulling back on their internet ad purchasing.
I see monetization of podcasts taking three primary forms: direct ads, web traffic generation, and finally prestige for established web brands. Of course, several of these podcasts blend these concepts. Let’s look at these forms.
Direct ads are the simplest. Just pause every few minutes, and insert the sound clip extolling the virtues of whatever product. It’s important that we all have a Ring Video Doorbell for home security, DDP Yoga will save our life, get some Sherri’s Berries for your valentine, and please buy your books through my link to Amazon! Interestingly, most of these ads are on a pay-per-referral basis. This is the least lucrative form of ad revenue, as even though the kickback for every successful sale may be large, the customers that actually purchase through may be only a tiny fraction of one percent of all the listeners. This form of ad is the smallest revenue generator in traditional media, as so few people do actually purchase while listening to a show. Proof? – There’s a reason that infomercials are on my television at 2AM. A quick perusal of two popular podcast sites: Podcastone.com and Blogtalkradio.com, tells me that these sites, which are in business and presumably making money, want a C-level celebrity to host the podcast, and hopefully drive enough downloads as to be noticeable. I gather that ITunes rankings with all its flawed methodology is the preferred measuring metric.
A few podcast hosts have a website that they hope to drive traffic to, and make their money off the traffic. For example, Robhasawebsite.com, pwtorch.com, and fool.com all have established websites. (Each of those podcasts also have direct ads as well.) Each of those websites sell some sort of “Premium Membership.” I suspect that if a small business can target a small niche of listeners, and offer a relatively inexpensive membership, the break-even point is relatively small as long as enough members upgrade to premium.
Finally, we have what I have identified as “prestige sites.” Unfortunately, the best example in my mind is Grantland.com. After Bill Simmons and ESPN parted ways, ESPN pulled the plug on Grantland after a suitable waiting period. I would argue that any podcast that doesn’t have a strong raison d’être is living a precarious existence, at best. Strangely, however, a few contributors continue to post podcasts even though the parent site is an inert archive. Maybe someone else has listened to one of the podcasts where Jalen and Jacoby clear this up?
I have not examined various radio programs that are recordings of live radio. Just about every CBC Radio program, NPR, and the like have a great many shows. However, I am not sure if they are considered by the podcast community as true podcasts, or not. More importantly, I haven’t the first clue about how to unpack their finances.
I freely admit that I do not listen to a broad spectrum of podcasts, maybe my observations are not a fair representation of the podcasting universe. Please feel free to comment.