Podcasting and Crowdfunding: Model Diversification and Hybridization
After a decade in the making, podcasting has finally reached the mass market thanks to an audience that has been experiencing spectacular growth. Based on the projections of the Ovum research firm, globally and by 2023, more than one billion people will be listening to at least one podcast per month. Imagine if all of those people contributed to funding their favourite shows! The challenge of monetization would then take a completely different turn seeing as the podcasting universe is firmly based on ‘freeness,’ which is even promoted for the sake of accessibility and profitability. Here is the second part of our analysis of the different forms of crowdfunding that are at play in this young industry.
Netflix, Patreon or a little of both?
From subscriptions to gratuities to ads, all imaginable funding options are put to the test in the podcasting industry. Some do better than others, notably the subscription-based model. As confirmed to us by podcast designer and producer Xavier Kronström Richard in the first part of our analysis, if there’s a model that currently garners attention, it’s that one.
Moreover, it is also said that podcasting is living its ‘Netflix moment’ seeing as the platforms that inspire themselves from its strategic vision (acquire, create, become a streaming giant) are emerging and directly competing against each other these days.
Luminary, Brew, Himalaya and Wondery (in the United States), BoxSons and Sybel (in France), and not to forget Swedish giant Spotify… For less than 10 dollars per month, these providers offer an on-demand podcast service that is generally ad free and sometimes includes exclusive bonus content (interviews, behind-the-scene videos, etc.). Thereby, they hope to [better] remunerate the sound artists and improve the quality of the productions they propose. In certain cases, they go all the way to combining other monetization options, such as ‘passing the hat’ to collect tips from listeners.
That is what Himalaya does—and soon to be followed by Luminary, Brew and probably mainly others—by adding the micro-donation to the subscription form. A ‘Make a Donation’ type button is displayed on the page, and boom!, listeners are able to make a contribution as a token of their appreciation.
The strategy appears wise to us given creators rarely refuse voluntary contributions. On the flip side, they sometimes hesitate to deploy traditional reward-based crowdfunding strategies (such as the ones used by Kickstarter, Ulule, Patreon, etc.) because such strategies may prove to be quite difficult to handle by small production teams.
“We don’t have the time or the production strength to create exclusive content for Patreon subscribers. Our content is more valuable if it is made available free of charge: more AdSense revenue, more impressions and therefore increased visibility for our ads and increased sales of books, merchandise and so forth,” explains Sébastien Lévesque, co-creator of Distorsion, a popular podcast in Quebec.
Although freeness pays off for Distorsion, its creators believe that the pay-for-use concept, i.e., subscribing to a streaming service (like Spotify), rather than the solo creator (such as Patreon) represents the way of the future.
The hybridization of crowdfunding
Now, you may ask yourselves why subscribing to a platform is considered as a crowdfunding model? How is Netflix’s model different from Patreon’s? In fact, it is worth recalling at this stage the definition of crowdfunding, which consists of calling upon a large number of people to have them invest small amounts in the completion or support of a project. Note that the money is sent directly to the project owner (Patreon) rather than to the company from which it receives its remuneration (Netflix).
Crowdfunding fundamentally depends on the absence of a middleman because the platform is part of a movement that favours the reduction or elimination of intermediaries in how the traditional economy is organized, whereas Netflix’s model is characterized by the opposite.
The fact remains, however, that podcasting actors, in their quest for the perfect business model, are currently hybridizing various monetization strategies, including several that result from crowdfunding. That is why it is difficult for us to discuss the current place that crowdfunding occupies in the podcasting industry without discussing Netflix’s ‘middleman’ subscription model, because financing models that are based on the audience’s monetary commitment tend to be nested. “The listener-contributor is part of a revenue mix,” states Sébastien Lévesque, who upholds that revenue rarely originates from a single source.
It is therefore possible to design a Netflix-inspired financing strategy that is based on subscriptions and a cross between the donation-based and advertising-based strategies. It’s even desirable. To quote Jacob Weisberg, cofounder of the podcasting company Puskin, during a South by Southwest panel on the future of the podcasting industry, “I believe that, ultimately, a profitable and healthy podcasting industry will require both advertising revenue and audience revenue.” It’s an observation shared by most of the podcasters who were contacted for the purpose of this analysis.
Do tools exist to collect revenue directly from listeners?
The search for podcasting business models—which, may it be recalled, benefit little or not at all from pay-for-use walls—contributes to the deployment of tools designed to gain an advantage from the direct connection to the receiver. “We look at what sticks, [...] and we know that it won’t be a single model,” claims Erik Diehn, the CEO of Stitcher.
These many new tools include Substack, Supporting Cast (Slate), Anchor and Okpal. What they have in common is the particular trait of exploring ‘silent’ crowdfunding (contrary to campaigns that take on the form of long-term sprints), based on the sustainable and discrete collection of donations.
As is the case with a newsletter or a private subscription form, Substack and Supporting Cast both serve as pay-for-use gateways to private ad-free audio links sent to subscribers. Thus, listeners gain the advantage of being in direct contact with creators, the platform serving an invisible and neutral partner that is fully dedicated to its audio content producers. Moreover, Supporting Cast guarantees to its podcasters that they can bring their data with them if they decide to abandon the service.
For its part, Okpal is a complementary service offered by Ulule. It’s a micro-donation app without time limits or counterparts. As for Anchor, it’s a truly versatile podcasting tool that enables the recording, distribution and collection of monthly contributions similar to Patreon. Some go so far as to qualify it of the ‘YouTube of podcasts.’
The micro-donation formula is easy to use and can also serve as a means of engaging a community. By focusing on common interests, the creators of Distorsion suggest donations in the form of beer tours. “The idea [of a beer tour] suits us well because it is based on a voluntary contribution and the content is not used as a currency of exchange,” explains Sébastien Lévesque, claiming that it’s a way to keep the content free. And he adds that the listeners gain the upper hand: “This method also stems from our interest in having our listeners discover new craft beers with each episode. The beer tour also enables the opposite in that our listeners may also suggest beers from their region to us.”
These different funding options occupy a space left vacant by the counterpart crowdfunding platforms, that offer the possibility of launching campaigns—of a set duration—that are useful to ‘kickstart’ a project, or yet, in the case of Patreon, collect monthly contributions in the form of subscriptions. Unfortunately, Patreon works better for the podcasts of personalities or creators whose community is sufficiently engaged to be converted into ‘patrons’ (as is the case of Canadaland, for example). The ‘silent’ method thereby becomes an attractive option for podcast creators and all other cultural entrepreneurs who do not wish to publicly expose how many contributors support them. That could even give an advantage to a production that does not garner a significant level of quantitative support.
Long live promising tools! Yeah and…?
For most podcasting actors, the subscription, registration (newsletter) and gratuity models are still at the experimentation stage. “Very few podcasters manage to monetize their audiences by proposing exclusive content,” observes Xavier Kronström Richard.
“The idea is to ensure the democratization of the content to make the podcast available to everyone. The ‘Donation’ button option may allow that,” explains Julien Morissette, the cofounder of Transistor, a festival devoted to Quebec podcasting, and Transistor Médias, a podcast production and distribution company that has a few projects in the works, including La balado de Fred Savard. He has a few reservations about the subscription-based model, which goes against the concept of accessibility to the largest number—concept that is associated with free content.
Sophie Reis, brand and strategic alliance manager for La Ruche, concurs with him. “We used to depend heavily on the promise of exclusive counterparts, but that’s no longer the case. If you like a particular content, the first thing that you’ll think of doing is to share it! That’s impossible to do with content that is only accessible to subscribers.” Based on her observations, people increasingly understand that it is not because something is offered free of charge that it cost nothing to produce. “Donations to say ‘thank you’ are more and more common,” she adds.
It’s always fundamentally a question of community
According to Spanish researchers Fernandez Sande and Gallego, who authored the study titled Crowdfunding as a source of financing for radio and audio content in Spain (which we quoted in the first part of our analysis), the capacity to engage a community not only represents the main factor of success for campaigns aimed at funding radio or podcast productions, but also gives an advantage to applicants who already have an audience.
In other words, as attractive as are the tools presented up to now and the possibilities they offer, they in no way, however, guarantee success.
The fruitful Indiegogo campaign launched by Benoît Mercier, founder and host of Mystérieux étonnants, after a decade of distribution is testimony to that. That’s right, a decade. After his audience enthusiastically welcomed this type of funding, he decided to try out Patreon. Not only does the number of ‘patrons’ gradually increase month after month, but he also managed to obtain support in the form of services. “The studio’s electrical connections, a contract that would have normally cost hundreds of dollars, were done free of charge by one listener, another one created a custom-made table for the studio, the sound-deadening carpet was a donation, and so forth. Patreon is the next logical step in the relationship that we built with our community.” It’s proof that crowdsourcing should not be neglected in a financial set-up.
That being said, with respect to audio creations that are “movies for the ears,” to quote Zoé Gagnon-Paquin, Magnéto’s cofounder, crowdfunding cannot be “the bedrock on which our business model will be built,” she claims, adding that the process would be time-consuming, not to say useless, if the creation could not already count on a certain number of loyal listeners. “Magnéto began crowdfunding once it had created a certain number of projects. Otherwise, it would have never worked.” The Quebec-based organization—which aims to become the ‘NFB of podcasts’—launched its Indiegogo campaign in 2016, i.e., a full year after its inception.
The introduction of digital solutions leading to new possibilities in terms of crowdfunding, combined with the review of certain funding programs* and the addition of sponsorships and advertisements, simply confirms what podcasting actors have claimed from the start: there exists not one, but several business models that take on a form that is often dictated by the nature of the project. Now is clearly the time to experiment when it comes to funding, and crowdfunding will naturally be part of the equation seeing as donations—even minimal ones—can make a big difference when it comes to the production or survival of a podcast.
*The Canada Media Fund has just announced its new guidelines for its performance envelope programs. It has revised how it defines a digital media, and the definitions now extends to audio productions. That being said, it is now possible to fund a podcast which will serve as a discoverability lever for another audiovisual production. Although this new measure does not allow for the full-fledged (native) funding of podcast projects, it will nevertheless be possible to use it for the purpose of funding audio creations.