While there’s been plenty of discussion on how podcast listening activity has fared in the coronavirus era (we’ve chimed in, too), what’s been for the most part overlooked in all this talk is paid podcasts. That’s in part due to the protective nature of paid podcast companies over their numbers, but also because ad-supported free podcasts are dominant.
Still, paid podcasts should be paid attention to because they represent another potential monetization avenue for publishers and creators that likely could use another predictable revenue stream as many brands pull back their ad spend.
Below, we provide more information on two companies that have adopted a paid podcast platform business model, which stands to gain if more consumers open up to paying for podcasts as they remain refined to their homes.
- Podcast startup Luminary launched in June 2019 and offers ad-free podcasts for $5 per month. In March 2019, the Chicago-based company raised $60 million in new funding, bringing its total funding to around $100 million. Luminary offers over 40 exclusive shows ad-free from big-name entertainers like Trevor Noah, Lena Dunham, and Hannibal Buress. And in January 2020, Luminary announced some of its exclusive shows from stars like Noah and Dunham would return for second seasons. Though the company is focused on selling subscriptions, it still offers free ad-supported and non-exclusive podcasts that are available elsewhere in the podcast market. The paid-podcast platform is still somewhat young, although it did get off to a bit of a rough start in 2019 as several big name podcasts like “The Joe Rogan Experience” pulled their shows from the platform shortly after its launch. Major networks’ issues with Luminary seem to mainly stemmed from perceived licensing issues, although Luminary’s paid aspect could have contributed to their pulling out (perhaps some networks didn’t want to contribute to a service that heavily promoted the idea of paying for podcasts). But Luminary’s exclusive content may still allow it to fill the gaps left by fleeing podcasts and attract consumers to give it a try. Regardless, signs indicate the company has yet to set the world on fire. For one, the company has yet to publicly announce a paid subscriber count. Secondly, Luminary also lowered its monthly price to $5 from $8 and rolled out an annual $35 plan for the first time in January.
- Another podcasting startup called Brew launched its app in March 2019 and charged listeners $5 per month to access its shows. Although Brew appears to have been inactive for some time, it aimed to be a Netflix for podcasts-of-sorts like Luminary. Brew differed from Luminary in that it didn’t offer a freemium model. Access to Brew was originally $5 per month, and the app had signed on certain popular YouTubers, such as Jack Vale (1.4 million subscribers) and Boogie2988 (4.5 million subscribers), to launch original ad-free shows on its service. A notable thing about Brew was that it planned to pay podcasters that distributed their shows on its platform based on their number of unique listens, whereas most podcasters are paid (if at all) by doing sponsored ad reads. Brew also differed from Luminary in that any podcaster could sign up to distribute their show on the platform. In order to become Netflix for audio, the platform had to ”be for all creators, not celebrities like Trevor Noah”, Brew CEO Jijo Sunny said in March 2019, an obvious reference to Luminary’s model.
Paid podcast platforms can help grow the podcast listener base because they can encourage certain popular personalities to enter the podcast space. Certain big name personalities may be more compelled to create their own podcasts if there’s a guaranteed upfront payment from a company like Luminary, as opposed to the more time-consuming way of monetizing a podcast — gradually building up an audience and eventually attracting sponsors to generate revenue. This financial incentive becomes more compelling when coupled with the fact that podcasts are another way celebrities can consistently provide content to their fans between major projects. And when a big name personality starts a podcast, some of their fans who weren’t previously podcast listeners could begin listening to their shows on platforms like Luminary in support and end up tuning into others.
But at the end of the day, it’s important to remember we’re probably far away from paying for podcasts being a widespread behavior among the broad podcast listener base. The amount of free high-quality podcasts available likely makes paying for podcasts a tough sell to the average casual podcast listener. So companies that are aiming to charge for podcasts in the coming year are likely better off targeting heavy-podcast listeners.
This is an excerpt from Variety Intelligence Platform’s “Podcasts Go Boom” special report on the U.S. podcast business. Subscribers can access the full 30+ page report here.