For most of podcasting’s 20-year history, subscribing was a simple question of clicking a button to sign up for free RSS updates. But with platforms renaming subscribers as followers, the scene has been set for paid podcast producers to begin charging listeners for content.
Takeaways
- 2021 was a busy year for the podcast sector. Spotify extended its presence in the field, entering another 80 markets. And we saw the rise and fall of the much-hyped social-audio app Clubhouse, threatened by the rising popularity of Twitter’s Spaces.
- But in the biggest market shift, 2021 was the year the word ‘subscribe’ took on a different meaning in podcasting. Many of the larger podcasting apps, setting themselves up to support paid podcasts, began to invite listeners to ‘Follow’ podcasts rather than ‘Subscribe’.
- Apple led the charge, announcing in April the ability for premium podcast creators to charge listeners, although the launch was delayed until June. Spotify followed later in the year, with an ‘open access’ play that lets creators integrate existing payment platforms like Supporting Cast and Memberful.
Paid podcasts
The release of payment tools by the distribution platforms marks a major shift in the podcasting ecosystem. Previously, the potential for paid podcasts had been stymied by the ‘complexity’ involved in gating content on an open RSS feed.
- Apple – currently the most popular platform for podcast listening – now makes it relatively easy for publishers to charge listeners and deliver perks like ad-free listening, exclusive content and early access. Apple charges publishers a $19.99 set-up fee plus 30% of revenue for the first year, and 15% for the years following.
- In direct competition for podcast dominance, Spotify has built its subscription engine in a way that allows third-party providers to integrate their existing paid podcasts. It has also provided publishers with options to charge at a broad range of price points and will not take a revenue cut in the first year.
- Elsewhere, Facebook and Substack are also eyeing the paid podcast market. Substack, already a major player in the paid newsletter space, sees podcasts as a natural extension. Substack co-founder Hamish McKenzie told Axios:
We’re in the very early days of podcasting on Substack, but some podcasts are already making hundreds of thousands of dollars a year through the platform.
Show me the money
Having the ability to collect payments is not the same as having an audience that is willing to pay. A recent YouGov survey found that 83% of podcast listeners said they were ‘not very’ or ‘not at all’ likely to pay to access podcasts. That still leaves a percentage who may be willing to pay for the right podcast content, but it does highlight the need to continue with a mix of podcast monetisation strategies.
The good news is that advertising in podcast streams is more widely accepted by consumers than TV advertising. A study by Magna and Spotify reported that podcast listeners trust ads more than TV viewers.
The bads news is there is a significant gap between the marketing budgets being allocated to audio and the time spent listening. A September study from WARC and iHeartMedia, reported that although audio accounts for over 30% of the average consumer’s media consumption, less than 9% of the average media budget is allocated to audio. More worryingly a quarter of advertisers don’t invest in audio at all.
No surprise then that publishers are experimenting with paid podcasts.
