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I am not alone. Indeed, podcasts are making a comeback. The number of monthly podcast listeners has grown to 75 million from 25 million [article here]. Shows range in length, but are usually 30 minute to an hour long. The most common podcast format is the interview. The other dominant format is the season long story. This includes shows like Serial or Start Up, telling a story across multiple episodes. There is no shortage of good material for both formats (see end of the article for my favorites).

Podcasts have the same target audience as radio. People spend a lot of time on the road. Since visual content cannot be consumed while driving, most listen to the radio. A number that is repeatedly quoted is that traditional radio reaches around 240 million people a year. That said, radio has obvious shortcomings, such as not being to provide on-demand content, limited geographical reach etc. Podcasts are especially well placed to solve the on-demand aspect of the equation. I, for one, would never adjust my sleep schedule for a show. By taking advantage of the proliferation of cell phones and new platforms such as the podcast app on iPhones, podcasts are on the verge of becoming major competition of mainstream radio.

There are a few shows that have huge followings, but also a long tail of podcasts that only have a small following. According to this article here, having 9000 listeners downloads per episode puts a podcast in the top 5% of all podcasts, while having 50,000 listeners will put it in the 1%. These numbers pale in comparison to those of TV and radio, but are growing rapidly.

Most podcasts are ad-supported, and could be a profitable, though not life-changingly lucrative venture. One thing that advertisers and podcast producers keep talking about is native advertising. The hypothesis is that because the podcast host, whom listeners are familiar with, is reading the ad, listeners are more likely to respond. In terms of numbers, podcasts seem to be able to command ~$20 per CPM (revenue per thousand impressions / listens, source here). Given that each podcast usually average 3 ads, we can estimate the total revenue of a reasonably popular podcast as follows:

top 5 percentile: 3 x 10,000 listeners / 1000 x 20 = 600 per episode

top 1 percentile: 3 x 50,000 listeners / 1000 x 20 = 3,000 per episode

Some shows, like WTF with Marc Maron, are a little more liberal with their ads and could run five to six ads per episode, which further improves the economics. Most of the popular shows average a show a week or every two weeks. For someone running around with a mic interviewing people, probably for free, with little overhead, the numbers are actually not bad. That said, a significant portion of podcasts currently do not have advertising. However, if podcasts continue their meteoric rise, the ones with listeners should have no problem finding advertising dollars.

Estimated annual pay (1 show per week)

top 5 percentile: 600 * 52 = 31,200

top 1 percentile: 3000*52 = 156,000

Even as a disruptor of radio, the podcast industry is not a static medium. There will likely be significant changes to the technology, revenue sources and business model as podcasts moves from being made in garages to the professional media world.

The headline CPM rate will likely go down. Currently CPMs are measured based on download, rather than true statistics on number of listeners. Given that most podcast software download new podcasts automatically, the audience figures for many shows are inflated for sure. In the medium run, advertisers will want to switch to paying for real listeners, rather than downloads. As players like spotify step into the game, moving podcasts away from MP3 based technology, advertisers will become more selective in what statistic they pay for.

The discovery process will become easier, with a few apps serving as cross podcast platforms and providing curation services. Currently, since podcast producers are usually independent of each other, it is often difficult to discover good podcasts. There is room for a “Goodreads of podcasts” that takes care of curation. In my opinion, services like spotify are well placed to provide recommendations and a “TV channel” like platform for podcasts in a centralized application. Apple, with its podcast app, addresses the platform part of the question, but should do much more on the curation / recommendation front. Once there is enough traffic on the platform, there are all sorts of opportunities to monetize the user base.

One way for platforms to monetize their position would be to provide gated, listener paid-for content. Gimlet Media, founded by the former producer of This American Life Alex Blumberg, appears to be heading this way. Gimlet produces multiple podcasts (notably Start Up, which is a podcast about starting Gimlet). Based on the few episodes that I have heard, Gimlet’s end game appears to be a “freemium” type model for podcasts, whereby some content will be free, serving as teasers for gated premium episodes. However, my hypothesis is that a platform is in a better position to offer a freemium because it can offer a more seamless user experience, control how much users listen to a given podcast, take care of ad placement and have access to more detailed user data.

Lastly, there is a lot of scope for podcast hosts to put on offline events. Live, recorded shows offer extra ticket income and reinforces the hosts’ relationship with listeners in addition to regular advertising income from downloaded podcasts. For example, Death, Sex and Money had a sold out anniversary event at the Brooklyn Academy of Music. Marc Maron from WTF regularly hosts live shows. Going forward, I expect more podcast hosts to branch out to other distribution channels outside of audio, and vice versa.

The future of podcasts is bright.

Here are some that I enjoy:

Longform: Wonderful podcast interviewing different journalists, with a bias towards magazine editors and feature writers. Some of my favorite interviewees include Michael Lewis, Adam Higginbotham, and Jake Halpern. This show really opened my eyes to the journalism world. My favorite show.

Death, sex and money with Anna Sale: Covers exactly what the title suggests. Every episode, Anna Sale interviews characters about one of the topics. For me, this show reinforces my view that Americans are really open to sharing their lives with strangers, even on the airwaves. Some good episodes include Ken Jeong’s relationship with his wife, an interview with an ex NFL player who’s now in business school. Really honest discussions about things that we don’t usually talk about out loud, but are all thinking about in our heads. Only danger to listening to this show is that you might start asking questions in Anna Sale’s voice (“so how do you deal with fear?”) too often and lose all your friends.

Londongigguide: London is fabulous for live indie gigs for cheap. I get all my gig information here, and the music is simply incredible.

Strangers with Lea Thau: You might have heard of the story telling organisation called “The Moth”. Lea Thau ran that for a while, but is now doing this podcast instead. One of the episodes was about this man who wants to put Lea’s baby’s poop into his intestines. Worry not, however, the other shows are safe for work and are very fun

Serial by Sarah Koenig: The closest thing there is to a TV show on audio. The show investigated the murder of Have Min Lee in 1999. Massively successful, Koenig interviews friends, lawyers, police investigators and the alleged murderer who is now in jail. Serial is so successful that producers decided to go ahead with Series 2 and 3, to be released later this year