How Do Podcasts Make Money?

What is a podcast?

It is a fancy word for a pre-recorded audio series distributed over the internet.

The term itself was invented by a BBC reporter by combining the words “iPod” and “broadcast”.And the first podcasting apps came to smartphones in 2005. Later that same year, the most popular podcast was getting over 4.5 million downloads. And by 2014, the top podcast would get the same amount of downloads in half the time. And that kind of growth is pretty indicative of the industry itself. It took podcasts 8 years to reach 1 billion total downloads. And within 5 years, that number has gone from 1 to 50 billion. There are over half a million podcasts out there. And the most lucrative among them can make $70,000 or more an episode off ads. But in reality, only a small number of podcasts are lucky enough to make any money at all.

But who is making money in podcasting?

The answer’s more complicated than it seems. Podcasts themselves make money the same way all media does. They sell ads. Those ads are sold on a CPM (or cost per thousand) basis. And the industry average seems to be between $20 and $50 per thousand listeners. Even at that relatively low cost, advertisers still only put $316 million into podcasts in 2017. Which is tiny compared to the $17 billion spent on the radio or the $68 billion spent on T.V. But the figures are all relative. Because while broadcasting TV and radio is expensive…distributing audio files on the internet is essentially free.

Podcasts are free to host, free to post and, in most cases, they’re free to listen to. But they’re never free to make.Because regardless of what kind of podcast you’re making – you’re going to need a microphone. And microphones aren’t cheap. That’s why there’s a bunch of pro-sumer audio companies that popped up around the same time podcasting did.And they’ve done incredibly well for themselves.Sales of the most popular USB microphone, grew by 89% in the last three years making $55 million in 2017.And they aren’t the only ones taking advantage of the trend.

The microphone industry, as a whole, is expected to reach $1.8 billion by 2020.

The cost of a microphone is just the minimum buy-in for podcasters who want to produce their own show.But a lot of people getting into podcasting don’t have the technical know-how to make one themselves. And that’s extremely beneficial to two other kinds of businesses.

First is recording studios – who usually rent by the hour and allow you to produce a high quality podcast without the upfront cost of buying all the equipment or hiring the engineers to pull it off. The industry has seen an increase of more than $100 million in the last three years. There’s companies that specialize in podcast production.They’re dedicated entirely to making high-quality podcasts for other people or companies. Basically, every big name or branded podcast uses one. Which has opened up a whole new avenue of advertising, where a company can become the content instead of the ad. Which brings in money to both the company that pays for the podcast and the company that makes it.

There are a lot of podcasting apps that improve the listening experience in different ways. And there are a lot of developers making money from creating them.On the creator end there are a handful of programs that allow users to easily monetize their podcasts with intuitive ad placements. Which makes it incredibly easy for podcasts with an audience to start making money from ads. So podcasting is becoming a way to make a living for both podcasters and their fans.

The world of podcasting and podcast platforms is always expanding.Which is great because the more big companies invest in these platforms the more opportunity there is for people to become career podcasters.And that matters.

Because podcasting, at its core, is about sharing.Sharing passions and sharing skills, whether that skill is making hardware, making software, making products, or making podcasts.And it’s about sharing conversations, ideas, and stories. And, in some small way, about sharing profits.