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Podcasting continues to be one of the hottest segments of the digital media space. By some estimates, there are 2,000 to 3,000 new podcast shows launched every month, and it seems like every major media outlet has an entire roster of different shows, covering every possible vertical. All told, there are now more than 750,000 total podcasts. So it’s only natural to ask: Are any of these podcasts really making any money? And if not, why are so many people creating new podcasts?
Why podcasts don’t make money
The easiest answer is that, no, podcasts don’t really make any money. According to studies that have been done, 99% of all podcasts make no money whatsoever. As in $0. In fact, most podcasts seem to hit a wall after Episode 7 – this is approximately the point where the “newness” of doing a podcast has worn off, and the reality starts to sink in that audience size is not scaling as quickly as you had originally anticipated, and that advertisers have absolutely no interest in talking to any podcaster who doesn’t have at least 1,000 people willing to download a podcast episode on a regular basis. As a general rule of thumb, you need to give yourself at least 12 months to reach that mythical 1,000 download milestone – and that requires a lot of resilience and staying power.
A base case scenario
You can do a quick back-of-the-envelope calculation to see why even podcasts that make it past the first 12 months fail to make any substantial amount of money. You simply need to know three different variables: the overall size of your audience, the CPM rate that you can charge advertisers, and the number of ads that you are able to show during each podcast episode. Using these three basic variables, you can estimate how much money you can make from podcasting.
According to the numbers, only 7 percent of podcasts ever get more than 5,000 downloads per episode, but let’s be optimistic here and assume that you get 5,000 downloads because you are in a super-hot niche. Let’s also assume that you can charge $20 per 1,000 downloads (i.e. your CPM rate) because the standard rate is about $15-$20 per 1,000 downloads. And let’s also assume that you only have one ad per 30-minute podcast episode, a reasonable assumption. That means you are making approximately $100 per podcast from advertising. If you do one podcast every week, every week of the year, you might make a maximum of $5,000 per year. That’s some nice extra income, but not enough to get anyone to quit their full-time job.
Other ways to monetize podcasts
Of course, you don’t have to rely on advertisements to monetize your podcasts. Some people, for example, have turned to Patreon as a funding mechanism. While it might sound great that some people have thousands of “patrons” willing to give them money each month, the reality is that only a handful of podcasters ever reach he critical mass needed to make money. More than half (55%) of podcasts make less than $30 per month from Patreon.
The business case for podcasts
So, if the economics are this bleak, why do so many people persist in podcasting? One big allure, quite simply, is the ability to grow a brand. It’s always impressive to hand out a business card with information about your podcast on it. And, for a small business looking to take on a much larger rival, a podcast might be one way to generate grassroots momentum and media attention.
And, of course, you can simply think of podcasts as a promotional tool for bringing in other forms of revenue. For example, even if you don’t attract a big-name business to advertise on your podcast, you can always advertise or promote your own products and services. And, if nothing else, having a podcast can be a way to line up speaking gigs or industry event invitations. But whatever you do, don’t think of podcasting as a get-rich-quick type of endeavor!