The curious case of audiobooks vs. podcasts & lessons for podcasters
Last December Deloitte published its Technology, Media, and Telecommunications Predictions 2020 and inside you can find a lot of useful data. I was struck by the comparison of global revenue numbers of audiobooks and podcasts.
The Deloitte report is pretty comprehensive and has a lot of chapters, the one I am addressing below is on The rise of audiobooks and podcasting.
The report says:
Although the United States in 2018 had 60 percent more podcast listeners than audiobook listeners (21 percent of Americans for podcasts versus 13 percent for audiobooks), podcast revenues for that year were roughly 33 percent lower than for audiobooks (US$500 million compared with US$750 million). This means that each audiobook listener generates more than 2.4 times the annual revenue of a podcast listener. And it isn’t just audiobooks that podcasts lag behind when it comes to monetization. In the United Kingdom in 2017, commercial radio generated 2.8 pence of ad spend per hour of listening, while podcasts generated just 0.5 pence.
OK, now look at the data below 📊
You are looking at predictions, those numbers aren’t real, yet, but podcasting is expected this year (2020) to become a billion-dollar industry worldwide.
Audiobooks will become three times bigger in terms of revenue, even with 2/3 of the userbase podcasts have. Turns out those fewer users are happy to pay from $20 to $30 per audiobook or subscribe for $10 per month.
Does podcasting have a monetization problem?
😢 Well, yes.
There are several more ways for podcast publishers to earn money compared to audiobook creators. The problem is, audiobooks aren’t free (in general). You have to pay to get them.
Podcasts are free to listen to. If publisher X decides to put the shows behind a paywall, I can go to publisher Y with more less the same shows and continue listening for free.
Because there is more podcast than audiobook listeners, with higher CPM ads (more than $5, sometimes even over $25) you should be earning more.
Maybe if your podcast is listened to by hundreds of thousands or millions of people…
How many shows like that are there? Out of the reported more than 900.000 podcasts, there are less than 1% shows like that, which might be even less than 0,1%.
Anyway, in podcasting, you have a few super high earners and the rest, not even a middle category. Don't believe me, look at the data over here: 99% of all podcasts aren’t profitable.
Now a super niche audiobook will cost the listener almost the same as a global bestseller.
From the perspective of an independent podcast creator, you are left with crowdfunding campaigns, merch, memberships, live events, etc. Which is not a bad thing, just more work on your part (not to say that it is easy selling audiobooks).
Lessons for podcasters: What can podcasting learn from the audiobook industry
Create products you can sell
I want to come back to the idea of podcasting as a habit creating exercise which is best done by daily news podcasts (also weeklies to a lesser extent).
Publishers can build upon this habit with a premium product, for example having a premium podcast feed for subscribers with extra content or start creating audio versions of articles behind a paywall (this seems to be very successful for publishers like Harvard Business Review, The New Yorker, or The Economist, read this report).
Back to habit-building via podcasts — the new onboarding flow findings by the Wall Street Journal resulted in these percentage change in new habit building (this is how they reduce churn after people subscribed):
Download app: 400%.
Play a puzzle: 2253%.
Build watch list: 1718%.
Read opinion review: 332%.
Play video: 650%.
Go to podcast platform: 1100%.
Subscribe to alert: 1900%.
Submit interest: 1100%.
Yes, that means podcasting is a nice way to maintain subscribers for your subscription business.
Independent creators need to be a little bit more creative, but there are ways — for example selling merch:
- T-shirts seem to be a popular option
- Also, mugs are very popular (with its own Etsy category)
- There are plenty of other options, including stickers, hats, posters…
Memberships & subscriptions
A lot of successful audiobook businesses have a subscription option, o lot of times based on credits you get every month and can exchange for an audiobook of your liking.
For publishers with a paywall or a membership program this is a no brainer as I mentioned above, though I will add that in exchange for money, you have to add value.
Of course, many publishers tend to think behind the scenes content might be interesting for listeners. It might, occasionally, but Slate found that listeners want in exchange for subscription more of the regular content (like bonus episodes for those premium paying subscribers):
JAIN (NiemanLab): Have there been any interesting or surprising insights over the course of that research?
MOON (Slate): At the beginning, we thought that there would be more of an appetite for behind-the-scenes type content. It just didn’t have as big of an impact as say, the additional bonus advice content, so we phased it out over time to focus editorial efforts in the places that are most fruitful.
For independent podcast creators, there is Patreon and other similar services
Another way to get inspired by the audiobook industry is the referral program. Audible used to have one, but not anymore (since 2015), but some other audiobook publishers assign loyalty points when you refer a friend.
Referral programs are also popular among newsletters, here is an excellent write-up of how the Morning Brew newsletter referral program was built.
Now, with podcasts, as you might now, the situation is very tricky to track a single subscriber's path to your podcast subscription.
For example, Apple runs an affiliate program, which they say “provides a unique way for you to create links and track clicks to your podcast”. I haven't tried it, but they do not advertise you can also track conversions if someone really subscribed.
Another way is to use Smartlinks by Chartable, which says “SmartLinks track clicks and downloads regardless of which podcast player your listeners use”.
The tricky part is that you would have to generate several unique smart links for each listener manually.
As for independent podcast creators, there is no easy way out. We are still a few years away from “audio programmatic ads for everyone” (meaing a time when it will be possible for any podcaster to run ads no matter which podcast host they use or country they live in — just like Google Ads).
At the moment only a few podcast hosting platforms allow you to run programmatic ads and they cost a lot, sometimes 10x the rates you are paying for your hosting now.
You have the Anchor Sponsorships program, but that's just for podcasters based in the US and honestly, I haven't heard so far from anyone to make a living on that (I might just not have the knowledge of it, if you come across any such example, send it my way).
Once we hit this breakpoint, I imagine we will know the exact threshold (in overall downloads) of how big of an audience you need to create value out of programmatic ads.
Jack Rhysider, the creator of the podcast Darknet Diaries, sums up the current situation like this:
The average podcasts gets 129 downloads per episode. That’s no where near cutting it for making any money with the show. It’s not until a show is getting 40k, 60k, 100k downloads per episode that you can start considering quitting your job to podcast full time. And to make a show that gets 100,000 downloads per episode is extremely hard.
🤔 Final thought: It took mobile a couple of years to get the ad revenue that was equal to time spent (here explained), I think the same will be true for podcasting. I would say podcasts and radio will be similar in development as were mobile vs. newspapers (sorry, radio people).
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