Although there are currently over 660,000 podcasts on the market, many shows still struggle to monetize their content. Most podcasts relied on advertising and sponsorship revenue, but that’s even somewhat limited. There are currently severe limitations on the analytics podcasts can provide to their advertisers to prove their worth, at least on popular platforms like Apple Podcasts.
Like many podcasting companies, Gimlet Media relies on advertising revenue and crowdfunding to finance their assortment of shows. However, the recent $230 million purchase of Gimlet by Spotify, an audio streaming platform, could be changing the way all podcasts monetize their content.
According to a Vulture article by Nicholas Quah, Spotify’s purchase of Gimlet is a sign that podcasting is an important area of new growth for the platform. The acquisition could make podcast monetization much easier. Perhaps Spotify will soon be able to provide a better back-end product for podcast producers than Apple Podcasts, with more complete analytics for advertisers.
In an interview with Gimlet co-founders Alex Blumberg and Matt Lieber, Recode’s Peter Kafka discovered their reasons for selling their startup to Spotify. Unsurprisingly, they talked about reducing their risk and taking advantage of Spotify’s data and revenue stream.
As Quah pointed out, the purchase could also signify a noteworthy shift in the industry, where only a small amount of high-quality and high-budget podcasts can exist in a newly centralized environment.
“The podcast industry has never seen money like this before, and the shock waves are going to be intense.” – Nicholas Quah, Vulture
Podcasting isn’t alone — across the industry, media companies are struggling to make money. Like Gimlet, legacy media company Fortune was recently acquired, and it’s changed the way they make their money.
In an interview with Recode, Fortune CEO Alan Murray talked about how the media brand has changed over time and even stated that the magazine accounts for less than half of their revenue stream. Instead, they’ve mastered the art of capitalizing on their vast network of powerful business people and brand to create live conference events with lucrative sponsorships, as well as beefing up their digital business.
“Fortune is the one that had actually crossed over, where the majority of its revenue comes not from the magazine but from growth businesses.” – Alan Murray, CEO Fortune
After reading about all of these industry changes and the new revenue models for media companies, I wondered if the day would ever come where the media will no longer be forced to rely on advertising revenue. Obviously, not all media companies have the same network and brand as Fortune, so their growth business would rarely work for other outlets.
However, making money has proved to be a sticking point for all media companies, whether they’re legacy newspapers, digital natives or podcasts. Some companies, such as The New York Times, have had success with securing more subscription revenue, but I can’t see this working for all media companies, least of all podcasts.
Now, more than ever, media companies need to evolve quickly and find new revenue streams that work for them, because not all of them can rely on a billionaire or billion-dollar company to rescue them from the rising tide of uncertainty.