How Podcast Players Generate Revenue

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The podcast industry is growing. The more growth, the more money will go into the industry. Podcast players make money from consumers and businesses through several methods.

Consumers

Most podcast players are free. Some podcast players offer premium features to create a better experience for consumers.

Podcast players make money through ads. If consumers pay for the premium service, they will not have to see or hear any player's ads. Some podcast players have exclusive content available on their player. A consumer that pays for the premium service will have access to the exclusive content. Consumers might have audio content that they want to listen to, but it is not a podcast. Some podcast players allow premium members to upload content of their own.

The range for premium features is from $8 a year to $14 a month. The price depends on the player and the features.

Hosting

Every podcast needs hosting. Hosting is the storage of audio files and the distribution of a podcast. Some podcast players will offer hosting. Hosting will bring more consumers to their player.

Some podcast players allow podcast hosts to add a paywall to their content. This gives podcast hosts an incentive to promote their podcast on the podcast player. Since they will make money every time an episode gets downloaded. The podcast player takes a cut of the money that a host makes from subscriptions. The podcast players charge 3-5% for hosts to use their paywall feature.

When promoting a host will bring in new consumers to the podcast player. The podcast player's goal is to get the new consumer to switch over. Meaning they listen to all their other podcasts on their player. If a new consumer gets onboarded, they can make more money through advertising.

The podcast player wants the next popular podcast host on their player.

Ads

The ads in the podcast player are based on the category of podcasts. If an ad client wants to target business listeners. They will pay based on the number of impressions.

The more people using the podcast player then the more they can charge for an ad. They can charge more because the number of clicks the ad will get increases. The person paying for the ad will get more return on their investment.

The ads are not popups. They are small squares at the bottom of the player that the consumer sees at certain times. The price ranges from $100 CPM to $1000 CPM.

Some podcast players have ads that interrupt the content and play. These ads are invasive and more expensive. They are more expensive because the odds of a consumer hearing them is higher.

My Opinion

There is a limit to the number of ads that a podcast player can show. Consumers will only tolerate seeing so many ads. Let's say a podcast player has 10 spaces for each category. If one person is building the player and the $1000 category is always sold out, that's $10,000. The $700 category might get sold out every month too. The solo developer is making $17000 with 20 ad spaces.

But $17,000 is not enough if a team or department builds the podcast player. The team would need multiple income sources for the player. They might use their budget to pay influencers to create content exclusively. The influencer would bring their audience to the player. People hearing that a famous person made money might lead to a surge of people creating content. Hosting new podcasts on their platform will only benefit the podcast player. If they only charge for using the paywall, they will make money when the podcast makes money. The fees for hosting the new content are minimal. There is not much downside. The podcast player can delete content if no one is consuming after a while.

To fill up add spaces and categories that are not sold out, they could offer bulk discounts. Instead of paying $100 for 2 ad spaces, they could pay $95. It is better to have the ad space filled for a discount than to have an empty space.

Right now, many podcast players only advertise podcasts. That gives podcast players a market of 1.4 million potential clients. The 1.4 million clients get split between the 20 or 30 podcast players in the market. The divide splits up any one podcast player's market to ~100,000 potential clients. Podcast players could open up their advertisements to other audio content. Then, their potential market would increase.

Although the number of podcasts available grows every month. Getting people to start listening to podcasts and pay $10 a year is more scalable. Compared to getting podcast hosts to pay $100 CPM. A podcast player can frame the premium membership as an investment for consumers.

At the same time, there are more podcast listeners than there are podcasts. A podcast might have 100,000 listeners on one player. If the podcast does four episodes a month and charges $2 for an episode. The podcast player's percentage of that money is $40,000 if they get 5%. The podcast player would make more money every month if 5% of that same podcast audience gave them $10 for the year.

Conclusion

Usually, a company makes more money when they work with businesses than consumers. In the case of podcast players, the opposite might be true. The number of podcast listeners exceeds the number of podcasts. That gives podcast listeners more buying power than podcast hosts. As the number of podcasts grows, the number of podcast listeners grows. This is because each podcast host will introduce new people to podcasts. The latest podcast consumer will listen to more than one podcast soon. It will be interesting to see the changes that occur with growth.