The podcast ecosystem follows a power law distribution. Per data from Libsyn and Axios:
This observation is significant because the industry is built on an advertising model. Advertising relies on mass market economics meaning that large audiences are required to be able to effectively monetize. Functionally, this means that 95% of the 850,000 active podcasts (about 807,500 podcasts) are unable to effectively monetize. Furthermore, those podcasts that are able to monetize seem to be doing so ineffectively as podcasts are 10x less effective at monetizing than radio shows.
Imagine the economic potential of podcasting if we could effectively monetize podcasts all the way down to shows at the median level of 124 downloads per podcast.
Li Jin’s essay “1,000 True Fans? Try 100” shows how Intercast.fm can make this a reality.
An Explanation of the Model
Referencing Kevin Kelly’s 2008 essay “1,000 True Fans,” Jin argues that the tools of the emerging “passion economy” have changed the math around monetizing micro-audiences. Says Jin, “I believe that creators need to amass only 100 True Fans—not 1,000—paying them $1,000 a year, not $100. Today, creators can effectively make more money off fewer fans.”
She continues, “Sound unlikely? We’re already seeing this shift, according to creator platforms. On Patreon, the average initial pledge amount has increased 22 percent over the past two years. Since 2017, the share of new patrons paying more than $100 per month—or $1,200 per year—has grown 21 percent. On the online course platform Podia, the number of creators earning more than $1,000 in a month is growing 20 percent each month, while the average number of customers per creator is growing at a rate of 10 percent. Likewise, on Teachable, the average price point per class offering has risen roughly 20 percent, year over year. In 2019, nearly 500 Teachable course creators made more than $100,000; of those, 25 averaged more than $1,000 per sale.”
Here’s how that model works according to Jin:
“A creator can cultivate a large, free audience on horizontal social platforms or through an email list. He or she can then convert some of those users to patrons and subscribers. The creator can then leverage some of those buyers to higher-value purchases, such as extra content, exclusive access, or direct interaction with the creator.”
Image Credit: 1000 True Fans vs. 100 | Future - See link to Jin’s article above.
The Platform Matters
As fans pay more, their mindset and expectations change. As Jin explains, “There is a substantive difference between monetizing through 1,000 True Fans (at $100 a year) and 100 True Fans (at $1,000 a year). Whereas a creator can earn $100 a year from a fan via patronage or donations, collecting $1,000 a year per fan requires a wholly different product. These fans expect to derive meaningful value and purpose from the product.”
Image credit: 1000 True Fans vs. 100 | Future - see link to Jin’s article above.
Notice that as fan expectations change so also does the platform. Notice how the platforms conform to the expectations of “what the user is paying for.” In the case of 1,000 True Fans platforms, fans are fundamentally paying to “support the creator.” In the case of 100 True Fans platforms, consumers are there for “improvement, transformation, and/or exclusive access.”
There are two platforms listed above that have a foot in both camps: Twitch and Substack. Why? It’s because these platforms have successfully developed tools and curated spaces where the needs of both types of consumers are met. Twitch, for example, has a digital currency which they call “bits” that enables consumers to “support the creator” through tips. However, they also have premium subscription tiers which provide users with “exclusive access” to on-demand content, subscriber-only chat emojis, and more.
Monetizing 100 True Fans via Intercast.fm
Podcasters are the original influencers. As I’ve argued in another essay, had the podcast industry been built with the same toolset as, say, Instagram creators have, podcasters would likely have been the pioneers of the “passion economy.”
Our goal at Intercast.fm is to build the platform for the global podcast economy. Our first step on this quest is to re-imagine the playback experience by lifting hyperlinks from the obscurity of show notes, re-packing them in an engaging way, and relocating them to prime real estate at the center of the playback screen. As we progress on our journey, we’ll be expanding our offerings to provide podcasters with the tools they need to meet the needs of both “1,000 True Fans” and “100 True Fans.”
This brings us full circle back to the start of this essay and the median download of 124 downloads per episode. At present, unless a podcaster uses a service like Glow, it’s unlikely a podcast with that many downloads is able to monetize. But if you’re a podcaster like I am who is serving a defined niche (in my case, real estate sales and marketing), then the low download count is a poor indicator of the value of the show audience as well as the power of the podcast to generate economic activity.
For example, there have been multiple instances where I (or one of my co-hosts) have recommended a book on the show and then, within minutes, someone posts in our live YouTube feed that they purchased the book on Amazon. My podcast generated the sale of that book but we got no credit for it either by way of affiliate income or by way of recognition from the publisher that we drove that sale. More to the point, the person who bought that book didn’t buy it to support us, they bought it because they desired to improve or transform themselves or their business. We average fewer than 100 downloads per episode but we have audience members who exhibit 100 True Fans behavior.
My co-hosts and I should have the tools to monetize off of that. Every podcaster should have the tools to monetize off of that. Intercast.fm gives podcasters the ability to monetize off of that by simply embedding an Amazon Associate’s link to recommended products directly in their show notes.
As we build out Intercast.fm, we have in-mind a destination where fans of all types will be able to interact with podcasters at whatever level they desire. Interaction will range the spectrum from people who generally passively listen and occasionally click on a card in the Interactive Feed to visit a recommended website or social media profile, to people who click a card to join an email list, to superfans who purchase a show-exclusive NFT granting them access to exclusive features and content, an NFT that the fan could resell in the future, hopefully for a profit (the resale itself could generate a 10% commission for the podcaster).
This world of possibility starts with a platform and the toolset that platform offers to its creators. Once podcasters have the ability to interact with their audience, they’ll strengthen the bonds of trust they’ve formed with their audience and then they’ll be able to build upon that trust with enticing, even exciting, offerings. This will create a positive feedback loop where users get increasing value from the podcast which will further deepen their trust and increase the upper limit of potential economic activity on a per-user basis.
In the future Intercast.fm is building, a podcast downloaded by 124 highly-engaged superfans is all a podcaster needs to make a living.