The Podcast Business Is Growing Up

Alex Cooper is nearing a $100 million deal for her “Call Her Daddy” podcast with Sirius. Trevor Noah is in talks to reup for a second season with Spotify. Joe Rogan inked a deal with the audio giant worth up to $250 million. And it’s looking like football’s Kelce brothers’ show could be next in line, as the No. 4 podcast in the U.S. 

The Wall Street Journal reports the podcast industry was initially a way for a crowd of voices from culture watchers to true-crime nerds to talk about everything from murders to science and sex. All you needed was a decent microphone.

Now, podcasting is turning into an industry of megastars who command the most money and the biggest audiences. There are still nearly 450,000 active shows that have published recent episodes, according to Podcast Industry Insights. But the top 25 podcasts reach nearly half of U.S. weekly listeners, according to Edison Research. The top talents have tours, merchandise and multiyear deals in the nine figures. Big advertisers want in.

WSJ Graphic

Podcast distributors, like Spotify and Amazon, are capitalizing on this dynamic. Some are experimenting with selling subscriptions for their top shows, in the hopes of persuading audiences to pay more to listen without ads, get early access or exclusive bonus content. They are making video versions of podcasts. Some are selling more ads to bigger brands like car manufacturers and alcohol distributors that spend much more than the startups that peppered most podcast ads for years, such as mattress-makers, health supplement brands, mindfulness apps and meal kit delivery companies. 

In Cooper’s anticipated deal with Sirius, the podcast would have to hit minimum audience targets, people familiar with the negotiations said. That kind of provision is becoming increasingly common. 

Noah’s deal with Spotify allows the streaming platform to recoup its initial multimillion-dollar investment and share any additional ad revenue with him, people familiar with the matter said. That structure has become a model for the audio streamer’s pared-down roster of talent deals.

“The business model used to be simple: create a new podcast, make a deal, and sell ads,” said Max Cutler, who was Spotify’s vice president of talk creator content and partnerships until leaving to launch media company Pave Studios. Now, other revenue streams including subscriptions, live events, and merchandise are core to making podcasts profitable, he said. “Diversification is crucial.”

Nearly 100 million Americans age 12 and older listen to podcasts every week, according to Edison. Podcast advertising revenue is projected to grow 12% to more than $2 billion this year and hit nearly $2.6 billion by 2026, according IAB and PwC.

Podcasters regularly record both audio and video of episodes and post them on YouTube—and they get a cut of revenue from any ads sold against those videos.