Since the early days of podcasting, many have wished for and aspired to make a good living from producing and distributing podcasts. Many a podcaster has failed to achieve that goal and has hung up the towel on trying to earn a good living or build a small company around the fun and exciting podcasting space. I have seen many people and companies come and go since before podcasting really even started. Expectations for the scale and advertiser support just did not match reality. Podcasting certainly did not “Kill the Radio Star” like Wired Magazine proclaimed on its cover back in 2005.

The podcasting/on-demand audio industry will make hundreds of millions or even one day billions in revenue once advertisers and distribution platforms have a consistent third-party standard for understanding and reporting download’s, play duration, specific playback devices and geo-targeting abilities to do what is called in radio “copy splitting”. These are the elements that drove broadcast radio to the 16 billion dollar industry it still is today. This usage and audience measurement metric data needs to be verified by detailed user studies by trusted research firms like Arbitron and Nielsen Research, as the large media buying agencies still operate on those principles.

The specific parts of the industry positioned to generate the most revenue and profit the most are generally the same as now: content providers and networks providing high quality content with top talent with a strong existing audience following offline and online. We are also seeing a few top publishing, hosting and metrics tools providers that are trusted by content providers and advertisers getting solid and growing revenue streams. I think that those that can create a content network with talented hosts, who can build authentic audience trust, deep “friendship level” engagement and entertain, will make hundreds of millions of dollars from major Fortune 500 brand advertisers and sponsors. Many major brand advertisers are beginning to give on-demand audio podcasting a shot, as a radio advertising replacement strategy.

Monetization will happen from a variety of revenue streams, as outlined above, but mostly it will be the larger major content provider networks and shows will make the most revenue. The aggregator distribution (iTunes, Stitcher and others) will continue to struggle, but will grow revenue from getting into partnerships with content providers at a deeper level to get connected to advertiser revenue. The other ways these aggregator platforms can grow revenue is via offering in-app purchases, audience donation/fan loyalty shares and selling merchandise and/or offering live event ticket transactions. This part is the real weakness in the industry today and will be the key to creating the most user-friendly software experiences on mobile devices and in-cars. This is going to be the last place that is able to monetize in a way that will be healthy and really propel the industry to higher levels of revenue in the future.

I believe that Apple has been the company to profit most from Podcasting. Apple did not invent podcasting, but did make it what it is today with millions of daily users accessing podcasts through very expensive and highly profitable devices. Apple can make or break this industry right now and for the foreseeable future. It is rumored that Apple Podcasting could be moving to Android and, with a move like that; it could give the podcasting industry a big audience boost. It is true that Google has not put any effort into the podcasting market, because Google considers YouTube their podcast play. Android is clearly the biggest potential growth opportunity. It has lagged without a first-party podcast experience. Although Stitcher and others have made some in-roads into Android, it has remained a missed opportunity.

I believe that in the next 12 months, the on-demand and podcasting market will be quite different than today. The shift around consumption of audio content to mobile devices and beyond the desktop computer is a significant development. The entry of players that have big budgets will create a big impact and other dominant streaming internet audio players will jump into the on-demand talk audio market soon to drive the audience and revenue even higher.

We all need to start getting used to the phrases “on-demand audio” and “on-demand talk”, and the term “Podcasts” as important industry terms, as I am hearing them more and more. The term “Podcast” and “Podcasting” are not going away and never will, but these other terms will help this industry become the financial success we all want it to become.

Since the earliest days of podcasting in 2004, the key points of change over the years have been around monetization, content quality, devices used for listening or watching and software distribution platforms.

Podcasting has seen a heavy amount of churn on the content and distribution platform sides for many years.  Tools platforms have enabled content providers and apps to be more usable and stable in recent years.  Most of the current companies have proven to be steadily improving and economically viable.

Although many of the podcasting tools providers have been successful, many of the early providers struggled to stay viable.  Companies that endured and found acceptance among content providers were those that worked hard to adapt their tools and platforms into what content providers needed. The common thread is they all had and continue to have a single point of contact that was reachable and respectful of podcaster community.

The podcast content community is very sensitive to platforms that are looking to take advantage of the community. In the past, podcasters have been burned by many early companies.  For this reason, it is very important for new companies coming into the podcasting space to build trust with the podcast content community and engage with them as deeply as one can to learn the pitfalls to avoid and opportunities to move towards.

Key Trends and Challenges:

The podcasting market growth continues to center on mobile device adoption that includes smartphones, phablets and tablets.  The market is dominated by audio content, with the vast majority of revenue for all major players in the market coming from host-read sponsor and inserted advertising in downloaded or progressively download play streams.  Pre-roll advertising in podcast content can be effective, if kept in the 30 to 60 second range or less.  Much longer host read sponsor messages can also have a significant value as well.

CPM revenue for podcasts and on-demand audio can vary wildly and range from just a few dollars to as high as forty to fifty dollars per thousand of reported downloads.  The reason for this wide range is because the advertising market for podcasting and on-demand audio shows is immature and advertising buyers are mainly funding direct response campaigns today. The ROI results of properly matched advertisers and shows can be very high.

The podcasting space is still in the process of establishing audience reporting standards around the exact method for how to count downloads; play duration and advertising message impressions are tracked and reported.   The other big issue is around having a credible third-party advertising agency recognize an audience research entity to verify reported metrics.

We are seeing advertisers tending to work with podcast brands and networks that have a strong awareness and reputation for delivering compelling content and advertiser ROI results.

Radio listeners are steadily increasing ownership of smartphones and tablets, thus will have the mobile data connection and device to get access to podcast and on-demand spoken-word audio content.  The podcast hosting platforms are showing strong growth in podcast usage across smartphones, but tablets are growing in usage as well.  Most of these devices have access to mobile wireless and Wi-Fi, thus making many tablets mobile devices as well.  All tablets and smartphones have integrated Bluetooth radios that can connect to car head units.

Over the next few years, this same tablet/smartphone technology and mobile wireless data connections are going to be integrated into the dashboards of higher end new cars that are purchased by the same age group and education level as current and future on-demand audio/ podcast users.  The other major impact on the podcast market is wearable mobile devices.  The next generation of mobile device processors will be able to predict our needs and desires, based on sensed usage and activities.

Mobile devices and software are headed towards more hands-free usage and thus access to wireless on-demand radio-like experiences via the wireless carrier data networks.  Every mobile device will be a radio replacement device that is with the user all day long versus just when in the car.  This has the potential to grow the consumption of audio and video content.  Smartphones are evolving to become PC replacements and, with phones getting larger screens, they also become tablet replacements or phablet devices.  These larger screen smartphones and phablets will help grow media consumption for both audio and video.

The other major enhancement to the on-demand radio and podcast market will be more content coming from the broadcast radio side.  I believe that more local radio stations will begin to utilize digital on-demand distribution of online only and some broadcasted content targeted at local, regional, national and global markets.  The radio stations and broadcast radio groups will need to do a much better job of selling a combination of local, regional, national and global sponsorship packages to advertisers or better utilize savvy digitally focused advertising agencies that truly understand the on-demand radio and podcast advertising market.

The advertising messages in podcasts will need to be uniquely targeted to the specific podcast listener.  Actual Ad placements will need to be heavy on the mid-roll side, but well integrated pre-rolls, mid-rolls and post-rolls can be 30 or 60 second spots or shorter.  Like always host story telling about his or her experiences with the product or service is always good to have after or before the spots.

The other opportunity is that show donations will require a different approach than has been done in the past. Individual show donations will need to be a very easy and convenient donation process that would be visible with every episode of an on-demand radio/podcast series.

Looking to the future, we will see more premium paid ad-free on-demand radio and podcast content enabled via in-app purchase wrapped by free content in a freemium model.  Podcasts or on-demand radio shows are a very personal medium and success is often measured on engagement that often leads to revenue coming from live events and selling related products like books, t-shirts, tickets, wine, hard alcohol and consulting services.

All mobile app distribution and ad sales platforms for podcasts will need to focus on generating revenue from offering services that meet the market needs to help generate revenue for the content providers.  The opportunity for technology tools, client app development, ad sales and metrics providers is to tap into the $17 billion radio advertising market to fuel the on-demand radio and podcasting market.

This all means that revenue in the future of on-demand radio and podcasts will come from a variety of cash flow streams and each show will need to be able to custom tailor their show or network platform to a combination of all or some of the outlined revenue strategies.