Improve Podcast School – episode 3
69% of all podcasters who are making more than $50,000 per year have been podcasting for over 24 months. Having experience podcasting for over 24 months significantly improves your chances of having financial success.
This cut-off point is so important that it is actually the 2nd Breakthrough Milestone on the road to podcasting success.
I find it to be an extremely important discovery. It allows us to expect stability and consistent growth that comes with publishing new episodes over time.
But, of course, there is no guarantee.
In the group of low-income podcasters, the ones, who make less than $50,000 per year, 20% of them have also been podcasting for over 24 months.
The 24 months threshold is also not an obstacle as many successful creators need less time to earn a full-time income from their shows.
Almost a quarter of higher-income podcasters achieved their financial success in less than a year.
So where is the truth? What realistically you can expect?
So how should you use this statistic to your advantage?
1. How old are podcasts that get monetized?
As data tells us, there is a significant correlation between the age of your show and financial success.
69% of higher-income podcasters have shows that are older than 24 months.
That shows us an important trend.
You can use that time to perfect your craft, fix issues with your show, find the right target audience, and build it up over the course of all those months.
Most people start with a low-cost audio setup which limits the audio quality of their shows. You now know that you have enough time to validate the concept of your show and then upgrade the equipment for your audience to enjoy better audio.
But it is not only the audience that you built and accumulated over that period.
There are other factors correlated with success. You also have enough time to add and develop relevant marketing channels and add more monetization channels.
And over 24 months, you have enough time to really build your marketing and monetization engines, test out different solutions and pick what works for you.
Many starting podcasters see forums, social media, audiograms, as the natural marketing channels. In my experience, others work better – like a website, videos, or appearance on other shows.
We will go deeper in understanding marketing and monetization in future episodes, so make sure you follow the show. But in general, you should start your marketing efforts with a website full of transcripts and articles combined with a mailing list.
And 24 months is enough time for most people to achieve this.
2. How do older (24 months+) podcasts get monetized?
Sponsorships and host read ads are the main revenue source for older shows – it is both the most popular monetization channel and the main monetization channel for the majority of older shows.
Older shows have gathered large enough audiences to make that audience easy to monetize in a significant way with ads.
What do I mean by “easy” and “significant”?
Podcasting has a very high CPM revenue, meaning how much you are getting paid for 1,000 times ads get played. In case of host read ads, this number is roughly equal to the number of downloads.
Let’s say you manage to reach the $50 CPM, which is only possible if you have a sponsor in high demand for your target market, or you have a longer show and can fill a few ad slots.
If you manage to generate this high CPM rate of $50 from 1,000 downloads, which is huge in the online advertising world, you still need 20,000 downloads per weekly episode to generate $50,000 per year.
This doesn’t include the approximate 30% revenue share you need to pay if you get advertisers from a podcasting network.
You need time to build a big audience to start making a significant income from podcasting ads. But once you have that audience, your revenue from ads can get really high.
With a big audience, you can even save on revenue sharing with your network as your show might be attractive enough and allow you to negotiate deals individually.
So when I said that: older shows have gathered large enough audiences to make that audience easy to monetize in a significant way with ads.
“Easy” was referring to access to advertisers which you only get with a big audience, and “significant” is about generating a substantial CPM.
3. What are the best podcast monetization alternatives to ads?
If you have a show at least 24 months old the next most popular monetization source for you is Patreon or other forms of direct contributions.
47% of podcasters who earn more than $50.000 per year earn part of their income through direct contributions.
The top-earning and most effective podcasters who earn their revenue on Patreon earn around $5 per patron or sponsor monthly.
But to get a high income from that source you need a huge audience.
In fact, only 14% of best earners show this as the main monetization source, and this is exactly the reason.
To earn $50,000 per year from Patreon, assuming you are getting $5 on average per person, you need 834 patrons monthly. And I’m not even counting transaction fees and discussing patron churn rate.
Assuming you would get a 1% conversion rate of your listeners into patrons, this means you need over 80,000 unique listeners over a course of a year.
Even if you could get a higher conversion rate, let’s say 2%, you would still need a massive audience.
And then you of course need to dedicate time to Patreon, and provide some value, so people will know what they are paying you for.
This brings us to the next great revenue stream for podcasters.
4. Which podcasts should focus on selling their own services?
Number 3 most popular source of income for successful podcasts older than 24 months is selling their own services.
If you have been podcasting for over 24 months, you should know your topic intimately. And among your listeners, there should also be a segment of listeners who would like to get a private consultation or any kind of service completed around that topic.
You only need to find out which service is in the highest demand and how much you can charge for that.
This is my favorite source of income for podcasters.
What is especially important about this monetization channel is that it is actually a number 1 source for higher-income podcasters with shows younger than 24 months.
And it is clear why. When you sell your own services, you can make a huge profit margin, which you usually don’t need to share with any third party.
Additionally, scaling sales for online services is not that expensive.
This is a crucial piece of information if you are a marketer, product owner, or small business owner who already has a product ready to sell.
By adding a podcast to your communication channels you can quickly create a monetization channel.
But if you don’t have a product or a service yet, but you know your topic really well, you can develop a simple service, even a consultation, that you can offer to your audience.
It can be a great high-margin revenue stream for new podcasters and buy you independence and creative freedom.
Podcasting can be an amazing marketing and communication channel for you.
And this leads us to our final point for today.
5. How to add multiple monetization channels for a podcast?
To answer this question, you need to analyze how old your show is, and who your listeners are. If your show is already established and you have a wide audience then including sponsors’ messages might be the right way for you.
If your show is very new, then the right answer in most cases is to start with your own services.
In most difficult situations are shows between the 12th and 24th months of age.
This is a period of growth, but usually, high income is not guaranteed yet.
My recommendation here would be to add simple services that you can easily develop and deliver and also focus on adding marketing channels to grow the right audience.
You need to find the right balance between adding new marketing channels and adding new products.
I recommend taking five easy steps:
- Build a small roadmap of monetization channels you can add between now and the next 12 months – let’s say a new channel every 3 or 4 months,
- Start by adding products you can easily launch, test, and most importantly change if they do not meet your expectations or expectations of your audience,
- Spend the time developing the right marketing message, and ways to introduce those monetization channels to your audience, to avoid fans pushback,
- Monitor how each monetization channel is performing, if it is bringing you enough money to justify using it, or would you be better, replacing it with something else,
- Reinvest the revenue you get in this period of growth to focus on developing core offer of products, so your entire audience won’t be constantly bombarded with different marketing messages.
All of this requires time, and this supports the finding, that majority of well-monetized podcasts are older than 24 months.
In summary, there is a significant correlation between the age of your show and financial success. When developing and growing your show, you need to think about the 2nd Breakthrough Milestone, which means that 69% of all high-income podcasters have been podcasting for over 24 months.
Wherever you are on your podcasting journey probably need to add a few marketing and monetization channels to move into the higher-income group of podcasters quickly.
Always think of what will be the best for you and your audience in the long run if you want your podcast to be a long-term and sustainable source of income for you.