As subscriptions to video streaming services such as Netflix Inc. have become essential in households across the country, podcast companies are betting there is similar interest in subscription audio. The hard part: getting podcast listeners to pay for something they are used to getting for free.
Podcasting has become more popular in recent years: Spotify Technology SA reported 320 million monthly active users for the third quarter, and iHeartMedia and Wondery had more than 250 million and 60 million global downloads and streams, respectively, in the month of September, according to industry analytics site Podtrac.
Frequent podcast listeners tend to skew more male and significantly more white, according to an Oct. 8-11 Morning Consult survey conducted among 1,287 adults who said they listen to podcasts at least a few times a week. Millennials also listen more than other generations, while Democrats tune in more than Republicans.
Yet the medium is still foreign to many consumers, and subscription podcast platforms are even less well known. Plus, since their inception, podcasts were freely available to anyone with a computer or smartphone, “so there’s an element of how listeners have been trained,” said Jen Sargent, chief operating officer of Wondery, the podcast company founded in 2016 behind titles such as “Business Wars” and “Dr. Death.”
For this reason, podcast company executives said, shifting from an advertising-based business model to one more equally reliant on subscriptions will take at least a few more years, if not longer. But podcast platforms, as well as Morning Consult data, have identified potential demand for paid services right now and what drives people to pay.
Ad sales are “by far the largest part of our revenue,” said Chris Bannon, consulting executive producer for podcast company Stitcher, an early entrant to the subscription podcasting space with the launch of Stitcher Premium in August 2015. But he said binge listeners’ interest in a paid product was the impetus for the premium service, and that interest is growing.
For instance, when Stitcher dropped the second season of narrative podcast “Unfinished: Short Creek,” with the first episode available for free and the rest behind the paywall, many listeners couldn’t resist signing up to access it all at once.
But there were still listeners who opted to wait for each episode week to week without subscribing, so Stitcher continued to release them in front of the paywall with ads, generating more revenue from the same show.
An Oct. 8-11 Morning Consult poll found that among 2,171 U.S. podcast listeners (those who tune into podcasts at least a few times per year), 21 percent currently subscribe to a paid podcast service. Among the listeners who don’t currently subscribe, one-fifth said they’re open to paying.
Among frequent podcast listeners, 30 percent said they currently subscribe to a podcast platform, and 27 percent said they’re likely to do so at some point.
Another benefit to operating a paid platform is that it can provide data about listener engagement and what content consumers will pay for, something major podcast platforms such as Apple Inc. and Spotify don’t tend to share.
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