Why Subscriptions are not the solution for most podcasters
The New York Times recently announced plans to shift many of its podcasts behind a paywall to generate new revenue, mirroring its successful strategy with games, cooking, and other niche content. In the past, The Times has cited soft advertising revenue for its podcasts, so the paywall move may prove to be a more lucrative path for them. However, it’s a tough model unsuitable for most podcasters. Here's why the subscription podcast approach, despite its allure, might not be the golden ticket many hope for.
There Is a Lot of Churn in Subscription Land
Many pundits, including Evan Shapiro, an astute observer of the media landscape, have highlighted an issue plaguing the video subscription model: churn. Churn is the rate at which subscribers cancel their subscriptions, and it’s on the rise. Platforms like Netflix and Disney+ invest heavily in original content to attract subscribers but struggle to retain them. According to Shapiro, the retention rate for premium streaming platforms has fallen by 73% in two years. People are bailing.
The Saturation of Video Subscriptions
It’s easy to understand why the exodus is happening: the video subscription market has reached a saturation point. Those credit card bills can be brutal. Most consumers already juggle multiple subscriptions, including Netflix, Hulu, Disney+, Max, Peacock, Paramount+, and Amazon Prime. The sheer number of available services and the cost of maintaining multiple subscriptions have made consumers more selective.
Podcasts in the Subscription Universe
On the audio side, people are already paying for subscriptions to Spotify and other services. In fact, Spotify is one of stickiest. But podcasters face unique challenges to subscription success. Expecting audiences to pay for another show or podcast network subscription is a tough sell. The audio landscape is saturated with excellent free content. Listeners have an overwhelming array of choices. This accessibility is part of what makes podcasts so popular and widespread.
To ask people to pay for your podcast you need to be exceptional, and your content not easily duplicated. A high bar.
Good news: Some people are willing to pay. Bad news: not a lot of people.
Jeff Vidler, Founder/President at Signal Hill Insights, tells me that 16% of all monthly podcast listeners in Canada say they have a paid subscription to a podcast or service. He says those numbers typically track with U.S. data. Reversing the number, it means 84% percent of podcast listeners are not paying. You can view that as fertile terrain if you would like.
There are multiple ways to start a subscription business.
Apple was early, but it’s hard to discern how things are going since they rarely share data. What we hear is that even for remarkable shows it can be tough, involves a lot of time, and many (most?) have struggled to hit their subscriber goals.
There are exceptions. The top creator in all of Patreon is a podcast, Matt and Shane’s Secret Podcast, with 95,000 subscribers. In fact, 10 of the top 15 Patreon earners are podcast creators. With 14,000+ subscribers, Last Podcast on the Left is pulling down just shy of $100,000 every month. Impressive but rarified air. By the time you get down to the 40th most popular Patreon podcast, they have just over 2,100 supporters. You can see the top Patreon podcasts for the past three months here.
Blend Freemium with Premium
A more viable approach for podcasters starting with subscriptions is often the freemium model, where core content remains free, but additional, exclusive content is offered at a premium. This approach can cater to casual listeners and dedicated fans willing to pay for extra content. It balances accessibility and monetization, helping podcasters grow their audience without sacrificing revenue potential.
Consider the case of podcast networks like Wondery, Pushkin, and Lemonada. These companies offer subscriptions, which have helped diversify their revenue streams beyond advertising. That feels like a smart – though, not easy - mission.
The Podcaster’s Dilemma
I am a huge admirer of the New York Times audio initiative. Years ago, they schooled the podcast business on how to do a daily show and have pushed the envelope numerous times.
Even in the case of The New York Times, podcasts are going to be a mix of paywall and free. For example, the newest episodes of The Daily will be free for a few days, with the library behind the paywall.
Who knows where it will end up. Anecdotally, use of their own audio app has been mixed. Even today, they monkey with the mix. The Headlines podcast, which was exclusively on the app, often appears on the front page of The Times website.
Should you?
Many podcasters are wondering if they should try subscriptions. The New York Times putting podcasts behind a paywall is a notable experiment, but it's not a one-size-fits-all solution. The reality is the average listener, bombarded with content, is unlikely to pay for a podcast unless it delivers exceptional value.
The high churn rates in subscription TV services serve as a cautionary tale. Creating high-value content, fostering audience loyalty, and exploring diversified monetization strategies is a more sustainable path for most podcasters. As the media landscape continues to evolve, adaptability and audience connection will remain the cornerstones of success in podcasting.
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Thursday morning at Podcast Movement