How much money do podcasts make?

Lately I've been wondering how much money podcasts make. Do people make a living doing this, does your favorite podcast really need your donation, is this a profit center for big media companies? I listen to several podcast each week, ranging from highly produced shows near the top of the iTunes charts to shows with a few people talking about tech over Skype. There isn't much reliable data available, so I had to look at various rumors and reported figures, make some assumptions, and connect the dots for a few podcasts I'm familiar with. I think we can draw some interesting conclusions, though.

2 guys talking over Skype

Let's start with a baseline from two niche shows that have some solid data available. The Accidental Tech Podcast (aka ATP) and John Gruber's The Talk Show both have estimated audiences of 80,000 and a sponsorship rate of $4,000 listed on the sponsorship page. Both podcasts typically have 3 ad slots per episode, and the ads tend to be direct-response (use a promo code to sign up for a free trial or get a discount on your first order kind of thing). I rarely miss either of these shows, and the 3 ad slots always seem to be filled. If these numbers are accurate they imply a CPM of $50 per ad. ATP would do revenue of about $528,000 per year, and The Talk Show about $384,000, based on the number of shows they do. Other smaller shows on have CPMs up to $100.

The cost structure for these two shows is likely on the low-end of popular podcasts. I believe both are recorded in home offices over Skype. They don't include sound effects or licensed music that would require more complex editing and higher costs. It's basically a few people having a free-form discussion for a few hours. ATP has three co-hosts, and I believe the show is edited by one of them. Other costs would include hosting the podcast audio files, microphones and other audio equipment, and editing software.

Top of the iTunes charts

So a $50 CPM is the baseline for direct-response ads on a highly targeted weekly show with an audience of tens of thousands. What about a bigger show? The Adam Carolla Show is a mainstay at the top of the iTunes charts and has the Guiness World Record for most downloaded podcast (as of 2011). A recent article citing Adam Carolla's CFO claims the podcast made a total of $4.4M in 2014, with $3.1M of that coming from advertising and the rest coming from a variety of sources such as selling tickets to live podcast recordings and comedy shows, product sales, and Amazon affiliate fees on Adam Carolla's website. Adam Carolla has two co-hosts on the show and the aforementioned CFO. Carolla does about 225 episodes per year, which would be about $13,800 per episode in advertising. Each episode contains multiple ad spots, but without any reliable data on the audience size it's difficult to estimate a CPM. It's probably somewhere on the order of $10-$20 with an audience of a few hundred thousand.

The BS Report from ESPN's Bill Simmons is rumored to receive about 650,000 listeners per episode. If we assume a $20 CPM and a single pre-roll ad, that would be $13,000 per episode. There were 122 episodes in 2014, for a total of $1.59M in revenue.

Serial, podcast's breakout hit of 2014, is a bit trickier to estimate. It had a short run of 12 episodes, and several advertising spots were likely sold up-front. It was reported that the show was the fastest to 5M downloads in history after episode 10, which would be an average of 625,000 per episode. Let's assume the buzz around the show pushed the average audience to 1M listeners per show by the end of the season, and again assume a $20 CPM with a single pre-roll ad. That's revenue of $20,000 per episode, or $240,000 for the full 12-episode season.

I didn't remember how many ad slots there were in each episode of Serial, so I went back and listened to a few. Interestingly, they were populated with new ads from Audible, not the MailChimp ad I recall (see, podcast advertising does work). It's interesting that they re-sold those ad spots for people that are still discovering Serial or re-listening to it. Non-perishable content (scripted series, not the nightly news) can be monetized as long as it remains popular. TV networks do this by syndicating content to lower-tier channels, licensing it to Netflix and Amazon Prime, and selling DVDs. The open nature of podcasts means it's up to the owners of each show to do this on their own.

How much  money do podcasts make? Mind the business model

I feel confident stating the top daily and weekly podcasts can do a few million per year in revenue, but not tens of millions (yet). Smaller shows are able to earn hundreds of thousands building a loyal audience and controlling costs. It's interesting to note how the business models of these shows vary.

Adam Carolla supports a small staff, but also monetizes by promoting his comedy shows and driving his audience to his website. He and other independent podcasters such as Joe Rogan are obviously hustling to build multiple revenue streams.

Bill Simmons earns his salary by writing and doing TV. His podcast may be somewhat under-monetized, but it's a drop in the bucket for ESPN.

Serial grew out of another popular public radio program and probably has the highest per-episode production costs of any podcast. Multiple producers/journalists worked for months to create just 12 episodes. They've apparently been able to re-sell advertising spots due to the non-perishable nature of the content, though. In all likelihood, they really did need donations to make season 2 happen.

Keep in mind that all of the podcasts mentioned here are helmed by very talented, accomplished people. Bill Simmons is one of, if not the most widely read sports writer in America. Adam Carolla had multiple TV shows and hosted a nationally syndicated morning radio show before moving into podcasting. The hosts of the tech shows I mentioned have been admired for years in the tech community for what they've accomplished as developers and other side projects on the web. All of these people built audiences with years of hard work before going into podcasting.

It will be interesting to see how this all evolves. I'd expect the big podcasts with broad audiences to attract more general brand impression advertising (Ford, Coca Cola, Tide, etc) as analytics improve and marketers get more comfortable with the medium. Podcast 'networks' are popping up to help independents manage sponsorships, hosting, and other tech. Public radio continues to produce some of the best shows available, but must do a better job at monetization. Serial re-selling ad spots is a step in the right direction. Podcasting is one of my favorite mediums, and I believe it has a bright future.