The Rise of the Podcast: How It Became Profitable and Popular

Ryan Bhandari |

Maron.jpg

With the invention of Apple (AAPL) iTunes came the advent of a new form of entertainment that intrigued all of the company’s new customers: the podcast. By definition, a podcast is a digital medium that contains an episodic series of audio or digital radio. Podcasts are traditionally subscribed to and downloaded through the Internet to a mobile device or laptop. Podcasts surfaced in the early 2000’s and have recently experienced resurgence after going through a diparound 2008.

But with the immense popularity of the investigative crime podcast Serial that aired in Fall 2014, podcasts have made a remarkable comeback. Serial was the fastest podcast to reach five million downloads. The podcast went over the murky circumstances of a fifteen-year-old murder in Baltimore, one that put Adnan Syed behind bars the rest of his life, despite many reasonable doubts that he was the actual perpetrator. In the wake of this podcast, Adnan has a hearing to get a retrial on his case.

Just last week, Marc Maron had the president of the United States on his podcast – a clear indication that podcasting has officially gone mainstream, and the influence of podcasters is growing. However, many people are still mystified as to how podcasting as a business is able to make any money. Here, we’ll look into whether or not podcasts have become profitable, examine some of the most popular podcasts and perhaps introduce you to a few podcasts you might enjoy listening to.

Lend Me Your Ears

In the past, podcasts really didn’t make any money. After all, who would actually wait for the podcast to download onto the computer and then sync it their phone every morning? Apparently not a lot of people, because podcasts used to make no money. Now though, podcasts have become far more popular. RawVoice, a company that tracks the popularity of different podcasts, claims that the number of unique monthly podcaster listeners has tripled from 25 million to 75 million in just five years.

The going rate for an advertisement on podcasts is $25 per thousand downloads or streams. For a podcast like Serial that had 19 million downloads or streams, this amounts to $475 thousand. And, because podcast advertisements are read by the host of the podcast, listeners are much more likely to listen to these ads than traditional television ads.

Big podcasts are therefore very profitable nowadays, and Serial proved just how far one podcast can reach. But advertising isn’t the only way that podcasts can make money. There are a variety of ways that podcasts can generate revenue.

Get Creative (Alternative Revenue

Podcasters often do more than just plug companies by reading their pitches. If they want to succeed, they need to get creative. For example, they establish promotional products and deals with these companies that are accessible to people who listen to the podcast. A podcaster may establish a bundle on Amazon.com, Inc. (AMZN) that he or she recommends.

Another option for podcasters is to create a product or instructional course. For example, if you have a podcast about the market, you might consider creating a course about investing for listeners to enroll in. Or, similarly, you could offer individual sessions with listeners where you advise them about smart investing.

Another source of revenue could involve premium membership. Podcasters can offer listeners the chance to sign up for exclusive membership that gives them special features like access to old episodes.

Finally, a perhaps surprisingly effective way to earn revenue is through donations. Asking listeners for donations works very well. Consumers of podcasts understand that it’s not free to produce them. Podcasters certainly have to develop a loyal fan base though before this becomes a realistic option.

All in all, podcasts have become very popular, and the potential for profit is pretty big if you can garner a big enough following. So if you feel you have something interesting to talk about, why not start a podcast? You never know what might happen…

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 109.74 0.63 0.57 19,107,006
AMZN Amazon.com Inc. 763.83 4.47 0.59 3,180,297

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