Will people pay for your podcasts?
Last week’s announcement about Apple Podcasts subscriptions has everyone in the industry talking. Let’s break down what’s happening and answer some questions about what it means for listeners.
Who is subscription podcasting for?
There is one essential factor driving creator interest in podcast subscriptions, and it is not their audience. It’s revenue. Hang on to that idea for a moment – Apple’s podcast subscription announcement has little to do with pleasing an audience. After all, listeners are already getting terrific content for free. The motivation is purely on the side of the creator.
Just about every article and post I have seen since Apple’s announcement talks about the virtue of giving the creator money. The truth is many producers cannot easily monetize their shows. As a result, some will perish, and others will have to augment their income to survive.
At first look, Apple’s subscription initiative seems to favor podcasters who haven’t aggregated enough audience to make an ad model work but are still trying to hang in there.
This new revenue could be a lifeline for many of them. Think of it this way: a podcaster with 2,000 listeners willing to subscribe for $5 per month would gross $120,000. For each subscriber’s first year, the creator will give 30% of that fee directly to Apple. This cut has been a hot topic. Our take: while it might feel distasteful and onerous to some, any sales organization is already taking a fee anywhere from 15-25% and Apple removes all of the friction.
There is also a lot of value for the big guys like NPR, Pushkin, Lemonada, PRX, and Qcode, who are already on board to offer member benefits across multiple titles via a new “channels” feature coming to the updated app.
Ostensibly, Apple Podcasts is using its power as the largest podcast platform to streamline and enable customization of the clunky subscription process at scale. They have successfully done this in other categories.
What’s the downside?
Back to the consumer. Let’s be clear about another hot topic. Apple Podcasts subscriptions is not the Netflix of podcasts. So, we can dispense with that notion. It is important to understand the distinction from the vantage point of the audience. For a reasonable monthly fee, Netflix solved a massive consumer problem by aggregating and organizing a ton of content into one portal. This was a big win for people looking to watch movies and TV shows. Bravo.
That’s not what is happening with this Apple announcement. In this case, listeners would pay for specific networks or titles. For many consumers, Apple Podcasts subscriptions will be viewed as a pandering attempt to charge or upcharge for something they were already getting for free.
Inherently, it also introduces confusion – is the podcast free? What is the benefit? The archives? Do I care about commercial-free versions? If I click “subscribe,” what happens? Where is the fine print? How do I cancel? Are you going to make me call some 800 number?
We don’t yet know the value between podcast content and someone’s wallet.
That’s not all. While podcasting is primarily an Apple thing, increasingly, around the world, it is an Android and Spotify thing. Podcasters will have to consider limiting their content to just Apple or soon be forced to figure out how to gate their content on all platforms. Spotify is already headed down a similar path with 155 million credit cards on file and an announcement likely coming this week which is said to be friendlier to content creators. They are not expected to take a cut.
Rumors abound that Apple Podcasts for Android is imminent. As in, years overdue. Another game changer.
Typically, once the pay gate goes up, the audience goes down. It is hard to imagine a rush to limit the circulation and availability of most podcasts. Most shows will likely remain free with the subscription portion on the edge - back catalog, ad-free episodes, early access, and exclusive content. That may be a far less compelling offering.
With so many podcasters reveling in the success of the host-read ad model, the ad-free pitch is somewhat of a head scratcher. Are ads good or bad?
Lastly, for the future files, all of this has implications for hosting providers, the Patreons and Glows of the world, and potentially the fate of the RSS feed, too.
Will people pay for ala carte podcast titles?
We don’t yet know the value between podcast content and someone’s wallet. Ask Luminary what a bundle of premium podcast content is worth (and how to blow $100 million). For Apple, the play to offer subscriptions is a smart one. It is about retaining audience that uses Apple as their primary podcast consumption platform and offering a new revenue stream for creators in a rapidly changing marketplace.
Everyone wants to get paid. We live in an era of subscription services – HBO Max, Disney+, Paramount+, and yes, Apple+. Journalists are in the mix, too, seeking new revenue streams to be rewarded for their valued reporting, which explains the surge of reporters placing their writing behind paywalls such as Substack. We’re paying for content more than ever before, which may be a biproduct of people sitting on their couches during a pandemic.
We will see whether Listeners want to solve pain points for creators or if they will find value and benefit for themselves.
The elasticity of the credit card and the rate of churn is now on the mind of most streamers and publishers. How much is too much? I am paying for two great newspapers and two individual writers but reticent to go much further. And a few of the streaming services may not see my renewal.
Wherever you get your podcasts?
From the angle of the creator, Apple’s news and Spotify’s earlier announcement provide new monetization choices. For the current podcast consumer, it creates complexity. For potential podcast listeners – remember, only 28% of Americans currently listen weekly – it adds complexity and potentially a pay barrier. When the wall goes up… (see above).
I can hear it already. The ubiquitous podcast closing “wherever you get your podcasts” will be far more detailed and confusing. Get ready for “free wherever you get podcasts but try our new premium channel at Apple Podcasts or Spotify for $4.95 a month without commercials and episodes 48 hours earlier. If you listen anywhere else, it’s the same as it was.”
Podcast subscriptions may save the day for many worthy creators. That would be a wonderful outcome.
More than ever, however, people are empowered to assemble and arrange their entertainment mix. Providers are facing a hard fight to retain them. Now podcasters want to join in the fun and play for pay. As always, the fate of all of this lies in the hands of the listener. We will see whether they want to solve pain points for creators or if they will find value and benefit for themselves.
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