There’s no denying that podcasting has grown a considerable amount in the past decade. It’s now at a point where most tech users are familiar with the format, even if they’re not avid listeners. But one thing that hasn’t quite been figured out is the future of the business model.
Indeed, for all the buzz around podcasting it may be surprising to learn that it doesn’t capture nearly as much airtime as its popularity seems to indicate. According to Neiman Journalism Lab, “terrestrial radio occupies 52 percent of all audio consumption; satellite, another 8 percent. And in total, those two comprise 74 percent of all audio revenue. (Music streaming and downloads nab most of the rest.” Meanwhile, podcasting only captures 2 percent of all audio consumption. These statistics leave many people wondering just how podcasts can become a viable business model for creators.
Currently, the main revenue scheme for podcasters is to accept sponsorship deals in the form of host-read advertising. Many people have posited that these host-read ads are especially valuable to advertisers, as podcast listeners tend to be directly interested in the programs they listen to and have a trusted connection with the host. It’s been said that hearing a host they love read an advertisement that’s interspersed with content—rather than having it as a separate, stand-alone ad read by a third party—is worth more in terms of advertising dollars than alternative forms of advertising. However, unfortunately this has not borne out financially. Host-read advertising on its own does not garner the kind of revenue needed to make podcasting economically viable, and without mass listenership podcasters simply can’t command the same rates that terrestrial radio does.
Despite this audience reality, the format seems to evolve and progress at an impressive rate each year. First there was the success of the 2014 podcast “Serial”, which broke records for downloads, serving as a major turning point in popularity. Then more recently, podcast king Marc Maron interviewed none other than the President of the United States on his podcast, which he recorded in his garage. Perhaps it’s because of all this innovation and buzz around the medium that predictions about the long-term economics of podcast space have persisted, despite the fact that it hasn’t garnered mass adoption.
Indeed, amidst all this forecasting, one prediction has stood out: the idea that the internet built into cars would be a game changer for the podcast space. While this infrastructure already works in a slightly more complicated form—you can stream a podcast on your mobile device via bluetooth in your car—it doesn’t exist in a way that encourages mass usership and so-called “discoverability”, or in other words, the only people streaming podcasts while they drive are people who are interested in podcasts to begin with. If the medium is to cross the chasm into mass usership, it needs to figure out a way to reach people organically, those who might not otherwise seek out podcasting. Making it easier to listen to podcasts in cars with the help of existing distribution networks like A-Cast and Stitcher might help create a situation where that is feasible.
One thing is for sure, the quality of content coming through the podcast airwaves is unparalleled in the audio space. For this reason, many say it’s only a matter of time before the podcasting model rises to the be the cream of the audio crop. As one industry consultant put it, “Podcasting is now poised to finally gobble up that aging radio audience. With superior programming delivered in a better experience at less cost, there’s no reason that podcasting can’t overtake satellite radio. This will happen surprisingly fast.”