Podcasts are small but they have managed to develop a variety of stable business models. These models produce a wide variety and quality and content on podcasting platforms. Advertising revenue has allowed the largest podcasters to quit their day job and given the smaller podcasts enough money to justify the time investment they are making.
Advertisers are willing to pay a premium for the native, host read ads that have become commonplace among podcasts. In fact, the cost per thousand views, or cpm of podcasts are $18 for a 15 second spot whereas broadcast network television pays an average of $24.40 for a 30 second ad. Because the host personally reads the advertisement, the consumer feels a connection to the product as the host’s personal brand is attached to the product. In addition podcasts tend to have dedicated, niche audiences resulting in a better ad response rate and allowing targeting for highly specific demographics. Direct-response ads have become the most popular advertising method because they have a code that will measure how many listeners respond to a specific podcast’s ad which advertisers care much more about than how many people are listening to it. The advertiser can get an exact number stating how much business they are receiving based on a specific ad placement.
There are other ways podcasts have monetized the dedication of their audience. Some will directly ask their audience for support via crowdfunding sources such as kickstarter or patreon. Others will create ticketed events or merchandise, others have opted for a “freemium” plan where the regularly scheduled podcasts are free to all, but bonus content is available to paying premium subscribers. E.g. Marc Maron whose new episodes are free but back catalog is behind a paywall. Finally, a few podcasters have put all of their content behind a paywall, you pay for access to the content, and if you can’t pay, you can’t listen.
Podcasts are not the first digital media to struggle with monetization, and it is possible that monetization will become homogenized as podcasting becomes a larger part of the media landscape.