Nieman Foundation at Harvard
Welcome to Hot Pod, a newsletter about podcasts. This is issue 203, published April 9, 2019.
Luminary to launch at the end of the month. The paid audio content app, which has raised $100 million in venture capital pre-launch, announced last week that it will officially roll out to the public on April 23. This marks a slight change to the timeline originally announced in the startup’s shiny New York Times unveiling, which noted that the platform was “set to arrive by June.” The app will be available for download in the U.S., Canada, U.K., and Australia.
At launch, paying Luminary subscribers will have access to 24 out of the 40-plus exclusive podcasts currently planned for the service. That starting slate includes a mix of new projects — from folks like Adam Davidson, Topic Studios, Lauren Shippen, Guy Raz, Karamo Brown, Pushkin Industries, and The Ringer — and existing podcasts like Love+Radio, Roads and Kingdoms’ The Trip, and Wondery’s Hollywood & Crime that are moving behind the paywall full-time. Some of those existing properties will continue to be available on other podcast platforms until the end of May. You can find the full launch list here.
Some operating details to refresh your memory:
Here’s the big idea: Venture-backed and polarizing, Luminary is set to test the question of whether people will pay for podcast-style audio content at scale. I say “podcast-style audio content” in all its convoluted glory, partly because of the conceptual and practical controversies surrounding the service — should audio content behind a paywall still be called podcasts? is that a cynical co-opting of a term? what’s with the aggressive anti-advertising messaging? — but mostly because consumers have already proven that they will pay for on-demand audio content at scale, in context-specific services like Audible (audiobooks) and Headspace (meditation exercises). With Luminary, the specific question is whether folks will shell out cash for general and entertainment audio programming — which is vaguely similar to the question of whether people will pay for general web #content in the age of the Internet.
Much of this, obviously, will come down to programming and marketing over time. (On the latter, I’ve been hearing word from readers about ad spots appearing all over place: on Facebook, on host-read midrolls on various podcasts, on the side of a bus in downtown LA.) [Also on Instagram. —Ed.] The stage is set; let’s see how much programming and marketing success $100 million can buy you.
On a related note: From the great Sara Fischer over at Axios: “The Athletic, a subscription-based digital sports media company, is launching a multi-million dollar podcasting business. Over 20 exclusive, ad-free podcasts will debut behind the company’s subscription paywall on its app and website on Tuesday. The podcasts will be produced in-house by a team of 12 new hires.” We saw hints of this when The Big Lead reported last month that The Athletic was acquiring the Count The Dings podcast network.
Two things to note:
Anyway, we’re staying on the Luminary thread, but shifting gears a bit. This week, Caroline is kicking off a series on various different experiences and realities of making money in podcasting, and the first story involves a look at an independent creator developing a show with Luminary.
But there are of course entire financial ecosystems surrounding podcasts of all types, from smaller shows that cover costs with one-off listener donations to bigger independents and collectives running their own bespoke crowdfunding and advertising models. Over the next three Tuesdays, I’m going to be checking in on different aspects of this wider terrain, and asking what it means in different scenarios to make a podcast a paying concern.
We begin this week with Lauren Shippen, the creator of the popular fiction podcast The Bright Sessions and now the CEO of new production company Atypical Artists. Working almost entirely in fiction podcasting, she’s tested out a variety of business models and, as a result, has an unusually diverse set of money-making experiences to draw from.
When Shippen started The Bright Sessions in 2015, it was a project she tried to produce with as little cost as possible. As it grew, she experimented with advertising and Patreon support. Now, Shippen will soon launch a spinoff, The AM Archives, that will debut April 23 as one of the initial shows behind Luminary’s exclusive paywall.
Shippen is very open about the financial realities she’d faced trying to make The Bright Sessions. Throughout her time making the podcast, she still held a day job “to keep the lights on and the rent paid,” she told me. She launched the show’s Patreon account after the first season and the money initially went to “microphone improvements, increasing the bandwidth of our RSS feed, and things like that.” Eventually, the show started selling ads, but that income wasn’t substantial.
She was able to start paying the actors and production team by the third season, but despite all the work she puts into the show (each episode takes upwards of 40 hours to produce), she didn’t draw a regular wage — pulling some money only occasionally. “Usually what would happen is, at the end of the season, I would kind of look at our bank account and look at the next season and think like, ‘Okay, can I give myself a little bonus for the season’ to kind of help me pay my rent, you know,” Shippen said.
By the end of the fourth season, the show had “about 1,300-1,400 patrons” on Patreon, which netted her about $3,000 a month. Almost all of that went straight out of the account again immediately to pay production wages and the cost of keeping the show on the air. An average episode (which is usually just “two people in a room talking,” as she described it) cost a minimum of $2,000 to make. A larger cast recording in a studio typically required $5,000. The show’s special musical episode, with which it marked its 50th installment, cost $11,000. And all of that is less what Shippen’s own time and writing would cost. Despite the popularity and success of The Bright Sessions, the production was always living hand to mouth.
This matters, I think, because there’s a perception I’ve encountered a lot in my travels around podcasting that a hit show is enough to put a podcaster, even an independent one, on a sound financial footing. The Bright Sessions is unarguably a hit: critically acclaimed, with a large and loyal fanbase and a decently-sized crowdfunder. Shippen now has a deal to write books set in the same universe for Tor Teen, as well as that spinoff that will shortly debut on Luminary. Yet she didn’t quit her data entry job until August.
“I was working 80- to 100-hour weeks for about three years,” she said. “I mean, I still am but at least it’s all stuff that is creative, versus having to have a day job and pick up odd jobs as well.” This is partly why some of the negative reaction to her decision to work with Luminary has been a bit hurtful, she said. Some fans of The Bright Sessions have said that they feel “betrayed” that the new spinoff will live behind a paywall for the foreseeable, an idea that Shippen has answered in public several times. “The show wouldn’t get made at all” without the kind of money that Luminary could pay, she said in one response, and she echoed this when we spoke.
“Giving a lot of yourself to people and then making one decision for yourself, for your own personal life and mental health and your career growth and all that kind of stuff, and then them being like, ‘Oh well, now you’re a bad person because you’re not giving me the things that I want anymore in the way that I want it’…that lack of feeling makes you feel like you’re treated a little bit like a content machine,” she said. The budget she received to produce The AM Archives enabled her to hire new writers and actors and to double down on her commitment to represent the depth of diversity in audio fiction. None of that was possible without Luminary, she explained. “People are going to have to pay for my book,” Shippen pointed out, so it wasn’t so unreasonable that they should pay for her latest audio fiction project, too.
The idea of paying for the thing vs. paying for bonus content is one I’ve come up against a lot in my research for this series. Shippen, like many other independent podcasters, experienced the classic Patreon dilemma of wanting to ask listeners to support the podcast itself but instead providing the extra episodes and livestreams for which people paid. Making that additional stuff is a lot of work, and while the contributions might cover that effort, the core product — the podcast — remains something the creator has to do for free. Now, she’s part of a new model that’s asking people to pay outright for the shows they want to listen to. After years of cobbling together funding from lots of different sources, it was a great luxury, she said, to just have enough money to make exactly what she wanted to make.
Two Apple stories. I’d shove these deep in the back of my brain if I were you, ‘cuz they’ll probably come into play sometime soon.
(1) Apple Music has reportedly overtaken Spotify in paid U.S. subscribers. Citing “people familiar with the matter,” The Wall Street Journal reported: “Apple Music had more than 28 million subscribers in the U.S. as of February, compared with Spotify’s 26 million, the people said. Neither service publicly breaks out regional subscriber counts, and those figures include only paying users, excluding those in trial offerings that the companies can count in their public subscriber disclosures.”
Why does this matter? I recommend checking out the dude Peter Kafka’s analysis over at Recode: “If Apple wants to sell services, Apple can be very good at selling services” — with ramifications for the company’s gaming, news, and video services. And, of course, all the potential services that come after that. *cough* *cough*
(2) There’s a theory floating about, originated by a developer named Steve Troughton-Smith, that Apple has plans to break up iTunes and spin out Music and Podcasts as separate desktop apps. This is the relevant Twitter thread, and here’s an accompanying Cult of Mac writeup with some additional context.
I am now fairly confident based on evidence I don't wish to make public at this point that Apple is planning new (likely UIKit) Music, Podcasts, perhaps even Books, apps for macOS, to join the new TV app. I expect the four to be the next wave of Marzipan apps. Grain of salt, etc
— Steve Troughton-Smith (@stroughtonsmith) April 5, 2019
Looming giants and narrative control. You might have heard that iHeartMedia, the bankruptcy-fighting broadcast radio giant and podcast upstart, is preparing for a possible IPO in a bid to raise funds to keep paying off its debts. The New York Times report on the matter kicked off with this big lede: “Is there room for radio in the age of Spotify?”
Of course, the answer is probably no, not by itself. Which is why, sorting through iHeartMedia’s S-1 filing, you’ll find increased emphasis on emerging arms within the organization’s audio advertising business, including and perhaps especially podcasting. Indeed, in the document, the company aggressively positions itself as the market leader in “commercial podcasting” — a category utilized to make itself distinct from public radio organizations like NPR, which at this point in time delivers a slightly bigger unique U.S. audiences (and slightly lower global audiences) with vastly smaller portfolio of shows.
Here are a few key lines from the document that helps us grasp the story iHeartMedia is trying to tell:
But iHeartMedia’s narrative is not what I’d like to focus on today. Instead, I’d like to highlight a probable future, in the form of this question: How will iHeartMedia’s increasing participation in podcast advertising — which will likely involve in large part leveraging its own existing relationships and broadcast advertising assets in sales packages — impact the broader conventions, expectations, and conduct of how podcast advertising is sold? To phrase it more simply: How will iHeartMedia change the story of podcast advertising?
The relevant chunk in the S-1: “By adding other high CPM platforms into our mix, as well as providing unique and differentiated solutions for advertisers, we believe that we have the potential to see a CPM uplift. Although our primary focus is revenue, we also aim to maximize the value of our inventory. Moreover, we are continuing to develop platforms (including podcasts) that independently garner superior CPMs.”
I wouldn’t only look at iHeartMedia on this notion. The other probable major change agent in podcast advertising conduct is, well, Spotify, which is angling to drive a sizable chunk of podcast listening in the future — and is backed by some data that suggests it will probably do so. (See Infinite Dial 2019, slide 52.) Here’s the big question: If and when Spotify crosses a certain threshold in driving overall podcast listening, to what extent will it command the conventions, expectations, and conduct of all podcast advertising? Assuming, of course, that they flip on an in-platform advertising switch, which, I mean, come on.
Anyway, all of this is to say: The rest of the advertising-driven podcast ecosystem should probably get its ducks in order around metrics, standardization, and ad verification sometime soon if they’d like to collectively maintain control their own advertising narrative.
[We actually interviewed Jesse Thorn about that almost exactly 10 years ago today. —Ed.]
“[28,500] is a similar number to the last year’s drive, and I think it indicates that the accelerating growth we once went through is leveling out,” Bikram Chatterji, Maximum Fun’s managing director, told me. “I think we’re all fine with that leveling out…Intuitively, we understand that you can’t keep having accelerating growth year after year. You just have growth.”
Sure, it’s possible to perceive this year’s tally as a modest achievement, particularly when compared against the overperformance of the 2017 drive. That year, the organization implemented a significantly lower goal of 10,000 new and upgrading members, and ultimately more than doubled the target with a final tally of 24,181.
But perhaps another way to read the situation is to interpret a sense of consistency. Between 2017 and 2019, these MaxFunDrive campaigns routinely brought in more than 24,000 new and upgrading members. All this, it should be noted, despite a broader industry context that’s seen, on the one hand, an influx of more well-resourced, well-connected, and aggressively-spending podcast competitors, and on the other, a parallel rise in media companies newly hitting subscription and membership business models hard, which theoretically leads to a natural increase in competition for direct-support dollars. That there was no significant dip in this year’s membership drive conversion, then, feels like an achievement in and of itself.
Some of that support strength, Chatterji observed, might have to do with a rising overt awareness among its audience communities about the harsh realities of the modern creative economy. “There was definitely a slightly different flavor to the reception this year,” he said. “That’s possibly as a function of some high-profile cases, certainly in podcasting but also across the media industry, in which creators were treated as disposable.”
He added: “I think there’s a growing recognition among our audience — and maybe this applies to only 15 percent who are, like, really into podcast economics and the media business, who knows — that it is important to directly support the creators themselves because if creators don’t have that direct relationship they can become commoditized.”
It also helped, perhaps, that the team sought to be direct and transparent in as much of their messaging as possible. You can see examples of that here, here, and here.
How does the #MaxFunDrive work? Where does my money go? Do you just convert it to gold doubloons and bathe in it? A thread, by Jesse Thorn. pic.twitter.com/LBPeHbb1Nv
— Jessy! Jessi! Jessé! (@JesseThorn) March 18, 2019
Our friend @SethLind from @missiontozyxx did a really wonderful job explaining how much we rely on you (and you, specifically) to support the shows at Maximum Fun.
Please take a minute (and 6 seconds) to listen to what Seth has to say.https://t.co/NV8ixn8bhM #MaxFunDrive pic.twitter.com/IaM2wkSjXP— Maximum Fun HQ (@MaxFunHQ) March 27, 2019
Alright folks, here’s the deal: It’s 2019. I honestly believe directly supporting creators is the only way to keep them from getting swallowed by a media conglomerate and then diluted and, in some cases, exploited.
— Justin “Hoops” McElroy (@JustinMcElroy) March 29, 2019
With another effective MaxFunDrive behind them, the team is getting ready for an eventful year ahead. For one thing, there are plans to revamp Maximum Fun’s underlying technology and web presence. “In some ways, it’s a back-office operational thing, but there is a strategic aspect to this: How do we create a central online access point for Maximum Fun to help our various podcast communities find us, and find each other?” Chatterji said. The organization is also planning to move offices soon, shifting from a small loft-space near L.A.’s Koreatown to larger digs in Lincoln Heights.
On the programming side, Chatterji indicated there’s some desire to pause a beat following a particularly active launch run. Over the past few years, Maximum Fun has debuted more than a few new podcasts — like Bubble, Who Shot Ya?, Switchblade Sisters, and The Art of Process with Aimee Mann and Ted Leo — and brought in some key existing shows, like Mission to Zyxx (formerly with Audioboom) and Dr. Gameshow (formerly with Earwolf). “We’ve had an exciting two years, but I feel like now’s a good time for us to focus on making sure our shows are reaching a good audience and fully realizing their value in the marketplace,” he said.
That requires, in Chatterji’s mind, an approach substantially different from a lot of other podcast companies. He lays it out as follows:
I’d like to talk more about how the problem is structured in the industry. The approach that’s often adopted is something along the lines of, “Let’s launch a bunch of stuff and see what hits — either we have a runaway success, or we’ll roll up shop and try again.” It’s a top-down corporate way of thinking, with built-in failure rates and stuff like that.
You run things differently, and you think about things differently, when it’s a bottom-up, creator-driven organization. Because in that structure, you’re asking people to work on things that they really believe in and hope will succeed. You’re not thinking, “Let’s take these ten shots, and hopefully three of them will pay for the budget.” You’re thinking, “Let’s take three shots, make them the best we can, and push each of them to succeed in ways that are specific to them.”
