The principle noun behind the ‘podcast’ portmanteau may be obsolete, but the growth of the format itself is far from over. 

The popularity of podcasts has survived a rotating cast of distribution platforms, devices, competition and (now) revenue models. In 2006, just 22% of adults in the U.S. knew about podcasting. By 2022, that number approached 80%.

The growth has understandably caught the attention of advertisers.

In 2021, podcast advertising revenue increased by 72% YoY to $1.4b and is expected to surpass $4b by 2024. To put this growth rate into perspective, the total internet advertising revenue market increased by 35% in 2021.

We can attribute much of that growth to podcasts’ popularity in society, but we must also credit the ad types that continue to prove their worth, namely, those of the host-read variety.

The recent growth is great, but where do we go from here, and will premium podcasts play a central role?

Slate and Luminary Shake-up the Podcast Revenue Model

From the early days, when you had to make your episode selection with a click wheel, podcasts have primarily been supported in two ways: Advertising within each podcast episode and fan support through platforms like Patreon. 

That’s still a thing. Today, brands love the direct-response nature of podcast ads and their ability to hyper-target niche audiences authentically.

A study from Nielsen found that host-read podcast ads were “significantly more likely to be described by respondents as authentic and believable, and less likely to be felt as forced.” 

But as podcasting truly gained steam, two media companies set their sights on challenging the underlying model—one with a platform for podcasters and the other with premium content for consumers. 

Slate: Slate is a magazine on the web and podcast network. The company’s been producing podcasts for years, but in 2019, it launched Supporting Cast, which promises to let podcast brands “shine” while “handling payments, private feed delivery, analytics, and customer support so you don’t have to.” This is in addition to Slate Plus, which offers ad-free Slate content (including podcasts) to readers and listeners for a fee.

In 2020, Slate began asking engaged readers to join Slate Plus to “keep reading articles on the site.” The move came as Slate looked to continue to diversify its revenue.

More recently, Slate’s Charlie Krammerer said he was prioritizing frequency to boost podcast revenue.

Krammerer said, “One of the things that is driving our strategy [in 2022] is frequency. Our shows are bifurcated between narrative and then everything else. When we look at our narrative stuff, our biggest [show] “Slowburn,” we just launched [our seventh season on Roe v. Wade] when SCOTUS came out with their decisions. This was a little bit of a mini-season — it was only four episodes — but might there be another shorter season later in the year? Maybe. Might there be two seasons next year that are a little shorter? Probably.

He continued, “We’re doing the same thing with our other two narrative shows: “Decoder Ring” and “One Year.” We’re coming in with basically three seasons of six or seven episodes.”

Why? It allows the company to create a deeper connection with listeners and offer more advertising opportunities to brands. Krammerer said, “So a frequency thing also allows us to have a lot more downloads and impressions available for when the money’s available.”

Luminary is a podcast app that offers access to the “thousands of shows you already love” and “access to 40+ new podcasts” billed as premium content. The new content features big names like Conan O’Brien and Trevor Noah and was sure to make a splash. 

“We want to become synonymous with podcasting in the same way Netflix has become synonymous with streaming,” Matt Sacks, Luminary’s co-founder, told The New York Times. “I know how ambitious that sounds. We think it can be done.”

Lofty ambitions aside, the question for both podcasters and advertisers alike is less about whether it can be done and more about whether the subscription model will prove viable for the industry. 

So, has it worked?

Luminary’s CEO Rishi Malhotra thinks so: “The model is working from a revenue basis.” The service’s subscriber numbers continue growing; Luminary was Apple’s #2 podcast channel in 2021.

That said, the company isn’t resting on its laurels. Last year, Luminary announced it would be the exclusive home to No Fear of Time, the first album from Yasiin Bey and Talib Kweli’s Black Star in 24 years.

Is There Still Promise with Premium Podcasting?

What’s New in Publishing wrote that in 2019 we would see more publishers “pivot to paid” by “prioritizing direct reader revenues over advertising or other revenue streams.” 

Around the time Supporting Cast went live, and months before Luminary launched, Mary-Katharine Phillips at WNIP expanded on this potential: “The pivot to paid is more than just direct reader revenues, it also includes listener revenues. We know how important habit formation is in any retention strategy, and this holds true for audio as well. Until recently, it has been very difficult for publishers to offer premium audio while still allowing listeners to keep the habits they had already formed around audio.” 

But then Slate introduced Supporting Cast, which made the shift to premium audio more realistic for publishers hoping to retain habit-forming listeners. Instead of switching apps or limiting their listening hours, the platform allows consumers to simply pay for what they see as valuable. 

But what about pure-play premium podcasts? Are they still in play?

Amazon sure seems to think so.

In 2020, Amazon acquired Wondery, which was, at the time, one of the last major independent podcast networks.

YouTube does, too.

In 2023, the company announced it’d be testing “the capacity to upload and manage podcasts in the YouTube Studio app.”

According to YouTube, the test aims to “make it easier for creators to distribute their podcasts on YouTube, we’re running an experiment that allows you to create a podcast or set an existing playlist as a podcast within Studio.”

So, what’s the verdict?

The subscription model is unlikely to completely replace ad-supported podcasts, just as broadcast television remains highly relevant as the streaming wars rage on. But the model could be poised for massive growth. 

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