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Everybody Makes Podcasts. Can Anyone Make Them Profitable?

The industry generates a lot of enthusiasm and little revenue, but that could be changing.


About a decade ago, Hank and John Green, fraternal YouTube stars, founded VidCon, an annual convention in Anaheim, Calif., that celebrates online video auteurs and their screaming teenage fans. As YouTube’s cultural impact deepened, so did VidCon’s. A constellation of amateur creators grew into an industry, with VidCon providing a stage for them to promote themselves IRL. Walt Disney Co. and DreamWorks Animation LLC bought up pieces of the YouTube ecosystem, confident they could transform fandom into fortune.As VidCon matured, the Greens noticed a stir of creative energy in another corner of the web. The audience for their comedy podcast, Dear Hank & John, in which they offer listeners questionable advice, was growing faster than that for their chatty web videos. So they decided to create a VidCon equivalent. In December 2017 the Greens and a few collaborators threw the first PodCon. Months later they sold VidCon to Viacom Inc. for an undisclosed sum.PodCon reconvened at a Seattle conference center in January with more than 3,000 people in attendance. Some wore T-shirts with podcast logos, while others dressed as their favorite podcast characters. In between panels they swapped practical advice, like how to make sound effects (rocking the legs of an old wooden table mimics a creaking ship) or how to avoid an echo (record under a blanket). People scribbled podcast recommendations on a wall and took selfies with stars. In a dimly lit auditorium, a few hundred people watched Griffin McElroy edit his family’s podcast—another comedic “advicecast” called My Brother, My Brother and Me—as his keystrokes were magnified on a Jumbotron.

Anyone who lived through the early days of the online video boom, when investment and hype outpaced profit, may have experienced some déjà vu—the same sense of exhilaration, the same thin financial rewards. “People are starting to realize it’s not super easy to make money in this world,” Hank Green says.

Even so, Hollywood and Silicon Valley are once again lining up to give it a try. Shortly after PodCon, Spotify Technology SA, owner of the world’s most popular paid music streaming service, made the largest deal yet in the space. In a filing it said it had paid $340 million for podcast company Gimlet Media Inc. and Anchor FM Inc., an app and web tool that helps podcasters record and distribute their work. (It was widely reported that it spent $230 million on Gimlet and $110 million on Anchor.) By investing in the medium, Spotify becomes less reliant on music, which requires paying royalties to labels.The company plans to spend as much as $500 million on podcast deals this year, a big bet that profits will eventually match enthusiasm. “Audio is only one-tenth of the size of the video market,” Chief Executive Officer Daniel Ek said on a February earnings call. “There is a massive opportunity here for audio to evolve into a more personalized, more immersive experience, much like how the video industry has evolved.”

The competition for attention is growing fierce, though. Newer podcasters are paying for studio time, upgrading equipment, and hiring artists to design logos that stand out in Apple’s podcast app. “There’s a much more savvy sensibility among creators,” says Gina Delvac, who produces Call Your Girlfriend, in which two friends talk about pop culture and politics. “You have to have that professional gloss to get any amount of attention.”The most popular offerings are a mix from podcasting companies (Gimlet, Wondery Inc.), individuals (The Joe Rogan ExperienceWTF With Marc Maron), traditional media (the New York TimesSlate), and radio giants (WNYC, IHeart). NPR is the largest podcaster, with 46 shows reaching more than 19 million U.S. listeners a month. Oprah Winfrey, Conan O’Brien, and Mike Tyson are podcasters.About 73 million Americans listen to podcasts monthly, up from 42 million in 2014, according to Edison Research. Industry revenue, though minuscule compared with that of radio, TV, movies, or books, almost doubled from 2016 to 2017, to $313 million. (For context, that’s about how much revenue BuzzFeed Inc. alone generated in 2018.) That figure is expected to double again by 2020, according to the Interactive Advertising Bureau and PwC. Several top podcasts make more than $1 million a year. Last year The Daily, from the New York Times, cleared more than $10 million in advertising.There are several lines of thinking about how to close the enthusiasm-revenue gap. One focuses on the programming logjam, which can make choosing something to listen to a frustrating experience. Several startup websites and apps, including Piqd, Listen Notes, and Podchaser, are trying to match listeners with lesser-known shows. Larger platforms such as Spotify and internet-radio giant Pandora Media Inc., which honed this functionality in music, are now applying it to podcasts.

The industry is also striving to broaden the market. Some fear that podcasting has become a community talking to itself—a coastal thing, like electric scooters and avocado toast, which may soon reach saturation. “It’s less exciting when it’s the sixth football podcast or the third comedian with a podcast talking to his L.A. comedy buddies,” says Amanda McLoughlin, co-host of Spirits, which describes itself as “a boozy dive into mythology, folklore, and urban legends.”

Courting the millions of Americans who’ve heard of podcasts but don’t listen will mean diversifying their subject matter. After the success of Serial, produced by This American Life in 2014, which began with an investigation of an old murder case in Baltimore, true-crime podcasts became as ubiquitous as TV police procedurals. While the genre is popular, the macabre material can be off-putting to many potential listeners. Tom Webster, a senior vice president at Edison Research, wrote in an August essay posted on Mediumthat the industry has to get out of its bubbles “and understand the real bottle­necks to the growth of podcasting.”These bubbles are demographic inefficiencies that traditional media—which has spent decades designing TV series, magazines, and radio shows to amass niche audiences—should be well-suited to address. Everyone from radio syndication heavyweights such as Westwood One LLC (The Mark Levin ShowAmerican Country Countdown) to supermarket publishers like American Media Inc. (Us WeeklySoap Opera Digest) have rolled out podcast ventures.

Companies such as Panoply Media LLC sell software to automate the advertising process and target listeners, while businesses such as Stitcher act like traditional media-­buying agencies, connecting hosts with brands hoping to reach a particular demographic. Owned by media conglomerate E.W. Scripps Co., Stitcher sells ads for more than 250 shows and pays out millions to podcasters each year. Ad brokers sell commercials for $25 to $50 per 1,000 downloads (an episode usually has two or three breaks). The money adds up—a top show like Freakonomics Radio averages more than 1.5 million downloads per episode.Larger advertisers haven’t fully embraced the medium, but they’re interested. Procter & Gamble Co., maker of Crest toothpaste and Oral-B toothbrushes, recently spent some of its world-leading ad budget on Chompers, a series produced by Gimlet. Kids can ask Amazon’s Alexa to play the two-­minute episodes and take trivia quizzes while brushing their teeth. Chompers is also available as a twice-daily podcast you can download on any platform.One of the reasons there aren’t more Procter & Gambles on board is that the medium’s best consumption metric is the inexact one of downloads. Who hasn’t downloaded a podcast and then forgotten about it or immediately deleted it? Apple, the dominant listening platform, has its app on every iPhone, but it doesn’t share as much data as it could, making it hard for a podcaster to access major ad budgets.Many podcasters supplement ad revenue with live tours. The night before PodCon, Welcome to Night Vale, a popular podcast about a fictional desert community where bizarre things happen, performed at the Neptune Theatre in Seattle. Tickets were $30. The sales for the two sold-out shows at the 800-person auditorium amounted to roughly $50,000. Over the next several weeks, Night Vale did more than 20 shows from Berlin and London to Austin and Phoenix. Co-writer Jeffrey Cranor says the show averages about 400,000 downloads an episode, but it makes more money from touring and finds it a more reliable business. “Advertisers are fickle,” he says.Several companies are betting that fans will pay subscription fees for exclusive content. For $4.99 a month, the Stitcher Premium app offers subscribers exclusive podcasts, including a fictional show about the character Wolverine, which is co-produced with Marvel. Luminary will also offer exclusivity when it starts later this year. In 2018, Spotify paid ­comedian Amy Schumer more than $1 million for the rights to her podcast, 3 Girls, 1 Keith, which will become part of the content buffet available to paying Spotify customers; during the quarter ended Dec. 31, it offered subscribers 14 other exclusive shows. For now, most Gimlet podcasts are universally available, but in the future more may be placed behind Spotify’s paywall.

Gimlet sees Hollywood as another income source; Matt Lieber, who co-founded the company with Alex Blumberg, says it wants to be “the HBO of audio.” The five-year-old business, which produces 24 podcasts, has a staff of 120 in a Brooklyn office designed by the architect who created studios for Jimi Hendrix and the Boston Symphony Orchestra. The company recently scored a hit with Homecoming, a psychological thriller Inc. adapted for TV starring Julia Roberts. An episode of Gimlet’s most popular podcast, Reply All, which mines internet culture, is being made into a movie. Directed by Richard Linklater and starring Robert Downey Jr., the film is about a con artist and an editor who tries to expose him.

Lieber says Gimlet wants to be both the Marvel and Bloomsbury of audio, with storytellers cooking up the superheroes and villains of Hollywood’s future. “It’s just as likely that the next Michael Crichton or J.K. Rowling will be a podcaster,” he says.Oren Rosenbaum is an agent with United Talent Agency, which has about 50 podcast-focused clients, including Ira Glass; Guy Raz, a co-host of several NPR podcasts; and Karen Kilgariff and Georgia Hardstark, co-hosts of My Favorite Murder. “We’re thinking about the economic deal terms,” Rosenbaum says, declining to elaborate on them. “How much can we get guaranteed? What are the revenue shares we can expect?”

Others sense opportunity. In addition to Spotify, there’s Google, which last summer started a podcast app for Android users and has begun including podcasts in search results. Last fall, Pandora introduced the Podcast Genome Project, which uses an algorithm to make recommendations. Recently, Audible, Amazon’s audiobook company, has made forays into podcasting.If Apple wants to hold its position, it might take a page from YouTube’s playbook. In the early days of online video, it was laissez-faire toward the creative community. Over time, however, as Facebook and Amazon’s Twitch tried to lure away creatives, YouTube embraced the culture. It signed deals with high-profile YouTubers and built lavish studios where producers got free resources to improve their craft. Spotify’s purchase of Gimlet signals that a similar fight for the podcast community is taking shape. “For publishers, it’s about who do you play with now,” says Nick Quah, who writes the industry newsletter Hot Pod.If online video offers ideas for nurturing a scene, it also presents warnings. Boosters used to make big predictions about video, too: Monetization would catch up with fan enthusiasm, Hollywood money would flow in, paying subscriptions would skyrocket. A half-decade later, the business model is still in flux. At the peak of the frenzy in 2014, Disney bought Maker Studios, which created and aggregated short-form videos, ultimately paying $675 million for it. For a moment, Maker was key to Disney’s future. Then it wasn’t. By 2017 it was laying off large portions of its staff. Podcasting has already faced similar doses of reality. Last year, a few dozen employees involved in podcasts left Audible, Buzzfeed, and Panoply through layoffs or restructuring.Much will depend on Apple. The company declined to comment for this article, but there are hints that it’s being more proactive. Last year some of its employees flew to Los Angeles to meet with “Dr. Phil” McGraw, the celebrity psychologist, who’d decided to start a podcast. McGraw says the reps gave him a crash course in the basics. They told him to keep each episode to about 45 minutes so fans could listen to half on their way to work and half on their way home. They told him the importance of a good microphone and a quiet room. “They give you an awful lot of information you just wouldn’t know otherwise,” McGraw says.On a recent episode of his TV show, he explained to viewers how they could listen to his podcast, Phil in the Blanks, in which he interviews celebrities. A screen behind him displayed a giant iPhone. “On your phone or iPad, you click on this purple icon,” he said. “It has the word ‘podcast’ under it.”McGraw says he plans to do a true-crime podcast next.