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InContext / An inside look at the business of digital content

Podcasters explore diverse revenue streams in a bid for growth

March 28, 2024 | By Jessica Patterson – Independent Media Reporter
The topline: Media companies are expanding their strategies and streams to maximize revenue from their podcast IP. 

Advertising and subscriptions are popular podcasting revenue streams. As with all things digital media, revenue diversification is the name of the game. So, it is interesting to see media companies exploring alternative and creative revenue streams for podcasting. 

Deloitte predicts that a growing number of consumers worldwide will engage with audio entertainment overall in 2024—bringing the number of monthly average podcast listeners to more than 1.7 billion. Fueled by this demand, podcast advertising is also on the rise. In fact, it outpaces growth trends for the internet ad market, according to IAB’s U.S. Podcast Advertising Revenue Study 2023.  Podcast advertising revenues have grown over 115% from 2020 to 2022. And ad revenues grew 26% year-over-year to $1.8 billion.

So, it’s no surprise that for many publishers, networks and individual creators, advertising is still the primary revenue driver. Jenna Weiss-Berman is EVP, Head of Podcasts at Audacy, Inc. and Co-Founder, Pineapple Street Media (an Audacy Company). She believes that, while it is important to explore new revenue opportunities, advertising is too important to neglect.

“We all want to look into alternative models,” Weiss-Berman said. “But I think we are also very focused on the one that we know is working and how do we make that one work better? I think because we are seeing a lot of annual and quarterly growth, we want to make sure that that’s really the priority – focusing on the thing that we know works best.”

Ray Chao, SVP and general manager of audio and digital video at Vox Media, also believes that advertising is still a strong revenue model for podcasts. He points to a combination of new advertisers entering the podcast space as well as existing advertisers allocating increasing budgets to podcasting. “I think what that reflects is a real understanding of the fact that podcasts are one of the most engaging media channels,” he said.

Streaming ad innovations for podcasters

And, the research certainly backs up the level of engagement. Podcast listeners in the U.S. are expected to spend an average of 54 minutes per day tuned into programming in 2024, according to EMarketer’s February 2024 forecast. According to eMarketer, in 2024 digital audio will make up a fifth of all time spent with digital media in the U.S. and in 2023, almost 75% of U.S. internet users listened to digital audio. 

“This growth comes as no surprise to us,” said Emma Vaughn, global head of advertising business development and partnerships at Spotify. Spotify’s advertising revenue climbed 12% to €501 million last year—an all-time high, thanks to double-digit growth across both music and podcasts. With this kind of revenue opportunity on the table, Spotify is focused on evolving the advertising technology for podcasting.

“We’re continuously advancing the ad products we offer,” Vaughn said. The company just launched a music agency called AUX in February. “We’ll use our expertise to counsel brands about how best to use music to enrich their campaigns and leverage our relationships with emerging artists to help them reach new audiences.” 

The company has also been “been modernizing podcast ads in format and in experience through CTA Cards, an interactive, multi-way experience that transformed podcast ads from something that could only be heard, into an experience that you can also see — and, most importantly, click,” she said.

Vaughn also emphasized the need for measurement to mature in the podcast business, citing the global shift in consumption from downloads to streaming which has opened the door for advances in more data-driven podcast advertising measurement. “When we launched Streaming Ad Insertion (SAI), we introduced impression-level insight to podcast advertising for the very first time,” she explained. “Rather than relying on download data, advertisers now had access to standard digital reporting like impressions, unique reach, and frequency, along with unique audience insights and creative performance metrics powered by Spotify’s first-party data.”

SAI is a podcast ad technology available on Spotify that incorporates digital planning, reporting, and measurement for podcast advertisers – based on confirmed ad impressions. It was designed to “deliver the intimacy and quality of traditional podcast ads with the precision and transparency expected of digital marketing” according to Vaughn. 

Paid podcast subscriptions

However, Vaughn points out that at Spotify, subscriptions are a critical piece of their business.In our last earnings, subscription revenue increased 17% to €3.17 billion.” 

And, while most podcasts are ad-supported and free to listeners, some publishers are now offering exclusive podcast content only paid subscribers can access. For example, late last year The Economist launched an audio subscription ($4.90 US per month) that put the majority of its shows behind a paywall. The Economist’s entire collection of podcasts is exclusively available to Economist Podcasts+ subscribers. 

At Fox News Audio, the breadth of podcast content across the Fox Audio Network allows the company to attract a broader audience with diverse interests, explained William Sanchez, executive director of digital & business development at Fox News Audio and Fox Audio Network. Fox News is not new to podcasting or subscriptions. 

The company has been in the business for 10 years, and Sanchez says that “when we started our first venture into podcasts with our talk radio shows as premium podcasts. So they’ve always been a part of our strategy as far as subscription goes, and now is inclusive of Apple podcast subscriptions and ad-free listening on Amazon Prime for Prime members. Subscription continues to be, it was always a part of our plan or strategy, and it used to be a part of our roadmap.”

At Vox Media, while the company’s business model is primarily advertising-driven and their main focus is continuing to grow advertising. However, it’s also a priority to continue to diversify their revenue model, explained Chao. “We’ve done that through subscriptions and consumer revenue,” Chao said. “We’ve been operating Cafe Insider, which is a subscription business for several of our shows, including Stay Tuned with Preet. And, we recently launched Criminal+, which is a subscription product for Criminal. We’re excited about consumer revenue as a space to continue to grow and diversify our revenue model.”

Their strategy starts by looking at the show and thinking about its host, its team, the audience, and figuring out if there is an opportunity for a paid consumer product that allows fans of the show to engage more deeply with the content, Chao said. “So, for fans of Preet Bharara who are listening to Stay Tuned with Preet, they are excited about more content in the intersection of policy, law and politics. And, we deliver that each week through Cafe Insider.” 

Video audiences expand podcast audience and revenue

While podcasts used to be the medium of choice for multi-taskers, publishers are now filming their podcasts and distributing them on visual platforms with big built-in audiences like YouTube and TikTok. In case media companies worry that offering full length content might cannibalize an audio audience, there’s certainly a wealth of highlights to be clipped for social and promotional purposes, and a clear opportunity to expand podcast monetization. 

The fact is that people actually enjoy watching video podcasts almost as much as listening to them. A February YouGov poll suggested 33% of respondents favored listening to audio podcasts, while 25% preferred watching video podcasts. The visual appeal of video podcasts was one of the main reasons for 51% of respondents, while 29% preferred the variety of content and ability to share on social platforms. 

And, as users increasingly consume podcasts in both audio and video formats, leveraging YouTube for consumption, digital media companies are slowly expanding upon existing ad models to make video part of their go-to-market plans. Video-enabled podcasts represented just under 10% of revenues in 2023, according to IAB’s most recent U.S. Podcast Advertising Revenue Study. Which makes it a prime opportunity for advertisers to engage in cross-channel buys. 

Last year, Slate announced a partnership with YouTube to bring Slate’s network of podcasts, including favorites like Slow Burn, Political Gabfest, What Next and Amicus, to the platform. 

“We see this as a real opportunity to build scale and reach a new, untapped audience on YouTube, which has become the world’s most-used podcast platform,” wrote Charlie Kammerer, Slate’s president and CRO, in a release.

After introducing video podcasts in 2020, Spotify announced in June last year that they had more than 100,000 video podcasts on their platform, adding that the U.S., Brazil, Mexico, the U.K., and Germany published the most video podcasts.

Fox News Audio has success with video and its podcasts, according to Sanchez. “Our audio division lives among a video first world, so we get to tap into a lot of the resources and the expertise from the video side of the business that allows us to bring the audio-first business into the video world as well and capitalize our platforms like YouTube.”

So, while Fox News Audio has shows that come from the video side, they’re findinging that they have a much larger catalog that is audio-based. “We’re starting to move forward with bringing those to our YouTube channel. So, that’s another revenue stream opportunity for us as we all try to figure out what video role plays in podcasting.”

As Chao sees it, a podcast is just a direct to consumer (D2C) show that has been delivered through RSS onto platforms like Apple and Spotify. However, the ecosystem for podcasting continues to expand into new content categories, new creators and talent, and as consumer behavior continues to evolve and there are flourishing video platforms like YouTube and TikTok out there. 

“We’ve seen a lot of success with these direct to consumer shows, building an audience and a business on platforms outside of just traditional RSS feed podcast listening platforms,” said Chao. “So, if you think about podcasts more broadly than just an audio show, it’s actually a direct to consumer show that can be audio, can be video. That is really where we see continued expansion in the podcast industry for both audiences and advertisers.”

Podcast merchandise revenue: swag, gifts and more

Podcast networks and digital publishers are now hawking merchandise – from clothing lines to bags, water bottles and more. Fans, eager to show their allegiance to their favorite podcasts through t-shirts, mugs, or hoodies, discuss which podcasts have the best merchandise.

Indeed, podcast merchandise has become big business. Vox Media has some podcast-related merchandise in its shop, for Today, Explained, Vox’s daily news explainer podcast and its Future Perfect podcast. 

Fox News Audio offers some podcast-related merchandise as well. While it’s not a large part of their business, there is representation in the Fox shop, Sanchez said. 

American podcast network Wondery, home to podcasts Morbid, Smartless, Redhanded, MrBallen and other popular shows, has a merchandise shop that offers apparel, accessories, drinkware and home and office. 

Podcast revenue forecast

“The era of podcasting that we’re moving into now is that we need it to be a sustainable business and not just something that people are trying to get rich quick off of,” according to Weiss-Berman. “I think that it’s fun figuring out how a thing can be sustainable and a good long-term business. There’s a lot of opportunity for growth that we’re seeing and it’s actually not very complicated to make it a profitable business when that’s the focus.”

While 2023 was a challenging year for podcasters, with layoffs at NPR, Spotify, Stitcher and Amazon Music and lucrative deals with celebrities falling apart, the industry also saw growth in listeners and ad revenue. While it is heartening to see stalwart revenue models–advertising and subscription supported–holding strong for podcasting, diversification builds strong media businesses. Publisher investment in new revenue streams like video and merchandise comes from a desire to drive expansion, growth and sustainability

As Vox’s Chao put it: “As we think about continuing to grow this business and to continue to help it flourish, these additional revenue streams or diversifying our revenue model through expansion into subscriptions and consumer revenue and other types of revenue streams is a core component of how we’re going to continue to grow this business going forward.”

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