Why paid podcast subscriptions are so hard to scale

Welcome! I'm Simon Owens and this is my tech and media newsletter. If you've received it then you either subscribed or someone forwarded it to you. If you fit into the latter camp, then you can subscribe over here. Or just click on this handy little button:

Let’s jump right into it…

Why it’s so hard to scale paid podcast subscriptions

More and more publishers are investing in podcasting, but, for the most part, they’re monetizing their podcasts with ads and live events. There’s a lot of experimentation occurring within the podcast space for offering paid subscriptions, but thus far the model has struggled to scale. [link]

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I have a secret Facebook group that’s only promoted to subscribers of this newsletter. I try to post exclusive commentary to it sometimes and have regular discussions with its members about the tech/media space. Go here to join. [link]

Other news:

A really interesting case study of a publication that decided to make audio versions of every single one of its articles, getting the journalists to read and record their own stories. The publication's audience loved it. [link]

800,000 people have opted into The Dallas Morning News's push notifications, and these notifications drive 4% of the site's traffic and 11% of returning visitors. [link]

An interesting approach to driving paid subscriptions. If you become a TechCrunch member, you get access to "$1,000 worth of Amazon Web Services credits, 100,000 Brex credit card reward points and six free months of customer support software Zendesk." [link]

Spotify continues to take pages out of Netflix's playbook. It recognizes that, in order to achieve worldwide dominance, it needs to launch original content native to each country, focusing heavily on emerging markets. [link]

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Why Patreon’s $1 billion milestone is so significant

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Welcome! I'm Simon Owens and this is my tech and media newsletter. You can subscribe over here or just click on this handy little button:

Why Patreon’s $1 billion milestone is so significant

I’ve always had a special place in my heart for Patreon. Born out of a creator’s frustration with YouTube’s paltry ad payments, the platform proved to be a gamechanger for allowing YouTubers, podcasters, musicians, and other content creators access to subscription tools that had once only been available to large media companies. It essentially took the subscription tools of a New York Times or Netflix and gave them to everybody.

This week, Patreon announced that it’s reached $1 billion in money paid out to creators over its six-year history. While I understand why the company focused on such a large, round number, there was actually a second number that bears even more significance: $500 million. That’s the amount that it’s paid out to creators just this year alone. 

Why is this so significant? It’s because Patreon has now surpassed The New York Times in the amount of money generated each year from digital subscriptions. Though it hasn’t released its fourth-quarter earnings yet, the Times in on track to generate somewhere on the level of $450 million this year from digital-only subscriptions. 

That Patreon has surpassed what is generally considered to be one of the most successful digital subscription operations in the world is a real milestone, one that signals the extent to which the web has allowed individual content creators to monetize their content outside of the confines of traditional media companies. It’s further evidence of the great unbundling that the internet has shepherded forward.

When Patreon launched in 2013, the internet was a much harsher climate for indie creators, but today there are a bevvy of platforms geared toward helping them thrive. From Substack to Medium to Glow to Famebit, the playing field becomes more level by the day.  

Do podcasts sell books? Yes

More than a decade ago, before most people even knew what a podcast was, Macmillan, one of the largest book publishers in the world, launched a podcast network. Called Quick and Dirty Tips, the network consisted of short, scripted podcasts that delivered evergreen, practical advice on a range of topics from grammar to money management.

In the years since, Macmillan has continued to invest in its podcast division, expanding into narrative shows and even teleplays. For this episode of my podcast The Business of Content, I interviewed Kathy Doyle, vice president of podcasting, about where the company has seen the most success and how podcasting allowed it to diversify its revenue. [link]

Want to interact with me directly?

I have a secret Facebook group that’s only promoted to subscribers of this newsletter. I try to post exclusive commentary to it sometimes and have regular discussions with its members about the tech/media space. Go here to join. [link]

How to double your paying subscribers

I think it’s safe to say at this point that, when it comes to asking readers to pay for content, much of the low-hanging fruit has been snatched up. In other words, you can’t just throw up a “donate” or “subscribe” button anymore and expect readers, out of some sort of civic duty, to just whip out their credit cards.

So much of your success in this realm will depend on how effective you are at communicating your value proposition to readers and explaining why exactly they should pay up.

A new experiment from Politifact hammers this point home. Joy Mayer, the founder of Trusting News, teamed up with Politifact to test out different “donate” messages within its newsletter. The original call-to-action was relatively straightforward: “These newsletters don’t write themselves. This content is free to consume, but not to create. Donate today.”

Trusting News kept this phrasing as a control group and then a/b tested it with several different messages that more clearly drove home the value that Politifact is providing. Here’s a sample message: “Our fact-checks disrupt the agendas of politicians across the ideological spectrum. Support the truth today.”

At the end of the campaign, Trusting News compared the engagement for the control group to the experimental messages. The latter group had more than twice the number of click-throughs (411 vs 183) and generated double the amount in donations ($1,790 vs $805).

One of the best examples of a media organization communicating its value proposition is NPR. As anyone who’s been subjected to a public radio pledge drive can attest, the hosts spend an entire week heaping on every form of emotional manipulation and guilt they can come up with. They read off fundraising totals, promise to go away if they meet their hourly goals, and broadcast testimonials from previous donors. The underlying message during the entire pledge drive is that if you don’t pay up, you’re essentially a freeloader.

Which brings me to a favorite anecdote: during the early days of This American Life, local radio stations discovered that Ira Glass was particularly talented at guilting listeners into donating. They found that his fundraising segments outperformed all other segments by several multiples. So naturally, local public radio segments started asking Glass to record segments for them.

Which led to an ingenious revelation: Glass told these desperate radio stations that if they wanted him to record a fundraising segment for them, they needed to syndicate his show. Within a year, This American Life went from only being carried on a few stations to national distribution. And now it’s one of the most popular and well-known shows in existence.

Which is all a long-winded way of saying that the “if you build it, they will come” mentality really doesn’t work. You can’t just create amazing content. You have to explain its impact and the role your audience plays in amplifying that impact. 

The reality TV-to-YouTube pipeline

It’s interesting that YouTube vlogs are starting to exist on a continuum with reality TV; someone gets a gig on a reality TV show and then uses that as a segue to launch their YouTube career. [link]

Why content creators should diversify their revenue

Imagine going from generating $3 million in ads per year to making $24k. A stark reminder that you should always diversify your revenue and traffic as much as possible. [link]

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

3 ways to create a bad user experience for your podcast listeners

Welcome! I'm Simon Owens and this is my tech and media newsletter. If you've received it then you either subscribed or someone forwarded it to you. If you fit into the latter camp, then you can subscribe over here. Or just click on this handy little button:

I’m back from running a half-marathon and I’ve got two great pieces lined up for you. Let’s jump right into it…

The next frontier in self-publishing: audiobooks

Jane Friedman has spent almost the entirety of her professional career working in book publishing. In the mid-aughts, she began writing about the industry, both for professional outlets and her own blog. A few years ago, she launched a paid newsletter that now generates the majority of her income.

I recently interviewed Friedman about her work. We discussed how she grew her newsletter into a sustainable business, and then we talked about the current state of book publishing. One aspect of this world that’s long fascinated me is self-publishing, so I asked Friedman to fill me in on how this market is maturing and where self-published writers are seeing success. [link]

3 ways to create a bad user experience for your podcast listeners

Building a listenership for a new podcast is hard work that rewards consistency and is likely to be devoid of hockey stick growth. The most successful shows will be the ones that treat that listenership with respect. [link]

Want to interact with me directly?

I have a secret Facebook group that’s only promoted to subscribers of this newsletter. I try to post exclusive commentary to it sometimes and have regular discussions with its members about the tech/media space. Go here to join. [link]

Other news:

A great profile of FaZe Clan, described as "the Dallas Cowboys meets Supreme meets MTV." [link]

Here's some data showing that Spotify has made significant headway cutting into Apple's market share of podcast listening. [link]

A great profile of T-Series, the Indian YouTube channel that unseated PewDiePie as the most-subscribed channel in the world. [link]

“The internet was never made for distributing video. It’s like inhabiting Mars. It’s a hostile environment. It’s constantly trying to kill these streams.” [link]

Most people think of AARP as a special interest group, but it's also a massively successful media company. [link]

***

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I've really been enjoying @simonowens' tech and media newsletter https://simonowens.substack.com

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Substack built a framework for how platforms can support creators

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Welcome! I'm Simon Owens and this is my tech and media newsletter. You can subscribe over here or just click on this handy little button:

Substack built a framework for how platforms can support creators

The paid newsletter startup Substack made a recent announcement that it’s launching a fellowship program for independent writers. Those who get chosen for the program will receive a monthly stipend, as well as “coaching and support in areas that will set them up for long-term success with the subscription publishing model.”

I actually think this has the potential to be an important move for Substack and could possibly be emulated by other platforms. One of the biggest challenges for aspiring professional newsletter writers is that they need, at the very least, several months of runway to build up a strong base of non-paying email subscribers before they can attempt to monetize their audience. This runway will differ depending on the individual writer and niche, but I would suggest that you shouldn’t even debut a paid subscription until you have at least 10,000 free newsletter signups.

But here’s the problem: the average middle class creative simply doesn’t have the capital to spend 40 hours a week for six months building up their audience. Instead, they’re forced to operate their newsletters on the side, hoping that they have enough energy left over after they come home from their day jobs to spend time on their writing.

So you can think of this fellowship program as a miniature form of venture capital investing. Substack sees lots of potential for writers on its platform, and by providing an initial revenue base to get them going, these writers have the runway to truly scale their operations. They benefit from the stipend and support, and Substack benefits because it’ll take its cut of all future subscription revenue the writer generates.

It’s a model that I wish more platforms would copy. Imagine if the folks at YouTube spotted a creator who makes really original content but has only grown their channel to 10,000 subscribers, and then consider how a monthly stipend could go a long way toward helping that filmmaker grow their audience into the millions. The same could be said for most platforms that support independent creators, from Medium to Patreon to even Facebook Watch. Given how much money and support the platforms throw at mainstream media companies, it’d be nice to see them support their own homegrown creators for once.

Want to interact with me directly?

I have a secret Facebook group that’s only promoted to subscribers of this newsletter. I try to post exclusive commentary to it sometimes and have regular discussions with its members about the tech/media space. Go here to join. [link]

What it takes to build a bootstrapped podcast network

If you listen to the podcast Startup, then you’ve heard host Alex Blumberg go into exquisite detail about the trials and tribulations of launching a VC-funded podcast network. In earlier seasons, we got a firsthand look at what it was like to pitch venture capitalists, hire talent, and grow the business. In the final season of Startup, Blumberg walked us through Spotify’s $230 million acquisition of Gimlet.

But what about bootstrapped podcast networks that don’t have access to millions of dollars of venture capital money? How do they get off the ground and scale? To answer these questions, I spoke to Jeff Umbro, the founder of the Podglomerate. We talked about his early mistakes in trying to partner with shows for his network and why it can be incredibly difficult to monetize a show with a small audience. Check it out

Another Twitter feature that its power users will hate

Twitter is rolling out a feature called Topics. Instead of just following individual users, people will now have the ability to follow, well, topics like Entertainment, Sports, and Fashion.

Why is it doing this? One of the constant struggles Twitter’s faced in growing its user base is developing features that will attract non-power users. As a self-described power user myself, I’ve spent years tweaking my Twitter timeline just so. For instance, when a user I’m following is too trigger happy about retweeting praise of their own work, I’ll go to their profile and switch off my ability to see their retweets. I’ve followed all my favorite journalists, podcasters, and YouTubers. I’ve followed the elements of Weird Twitter that make me laugh and a fair number of meme accounts. I have my Twitter timeline just the way I like it.

But casual users don’t have the time or inclination to hunt down all the best accounts that fit within their interests. They come to the platform, test it out, and are chased away by the cacophony of mediocre content you see if you just follow well known celebrities and brand accounts. Twitter’s new Topics algorithm, supposedly, will cut through this cacophony, surfacing the very best tweets in a category from both mainstream and niche users. You only see a Lebron James tweet if it’s actually interesting, and you also get to see tweets from the funny NBA meme account that only has, like, 10,000 followers.

It's worth noting that Medium switched to a topics-based following system years ago and I didn't really like the results. The topics were too broad and filled my feed with a lot of bland content I had absolutely no interest in reading.

For instance, I'm interested in tech news, but only a narrow sliver of tech news, but that didn’t stop Medium from bombarding me with stories about the iPhone and every flavor of tech startup I cared absolutely nothing about. Or when I chose to follow "social media," it started surfacing social media marketing 101 stuff that had no bearing on my life. There’s not a day that goes by when I don’t miss the old Medium, the one that actually surfaced content from the people I followed.

The good news is that, unlike Medium’s foray into topics, Twitter’s version will be completely opt in. The power users get to keep what they hold dear, and maybe, just maybe, Twitter can finally start growing its user base again.

Slate’s podcasts now generate over 50% of its revenue

Slate is doing a lot of interesting experimentation with trying to create synergies between its podcast operations and its text-based reporting. [link]

A new traffic firehose for publishers

It's amazing how easy it is for large platforms like Google to casually toss publishers gargantuan loads of free web traffic. [link]

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

Why the tech platforms lost interest in streaming live sports

Welcome! I'm Simon Owens and this is my tech and media newsletter. You can subscribe over here or just click on this handy little button:

For a brief moment in time, it seemed that the tech platforms were set to become major players in sports broadcasting. In 2016, Twitter won the rights to stream Thursday Night Football. A year later, Facebook bid $600 million for the online streaming rights for Indian Premier League. Not to be outdone, Amazon later bought the rights to stream both Thursday Night Football and the U.S. Open tennis tournament in the UK. Even Twitch got in on the action, securing the rights to the NBA’s minor league in 2017.

At the time, some wondered if the tech behemoths would eventually leverage their large audiences and even larger checkbooks to elbow their way into an industry dominated by traditional TV networks like ESPN, and in the process deal a final death blow to a cable industry that was already staring down the barrel of a cord-cutting apocalypse. 

Flash forward a few years, and it now seems that tech’s move into sports broadcasting was little more than hype. A recent article from Digiday reported that, over the past several months, the platforms have taken a step back from the broadcast bidding wars, and instead are focusing on much smaller deals that don’t involve the actual live-streaming of games. 

In fact, tech companies are now much more likely to launch shows in partnership with current broadcast rights holders. Facebook is paying Fox Sports to post to Facebook Watch, while Twitter has signed “deals to show sports footage from Univision, ESPN, CBC Sports, and Eurosport.” It’d be hard to argue at this point that Big Tech is playing a disruptive role in the broadcasting of live sports.

So why did the tech companies blink? A few reasons, the first being the inflated prices they were expected to pay. ESPN has spent years bidding up the cost of broadcasting rights, raising them to what many would consider unsustainable levels. It was able to do this because of a quirk in how it derives revenue from cable subscribers. When you pay your Comcast bill every month, up to $9 of it goes directly into ESPN’s coffers regardless of whether you watch ESPN. The same goes for virtually every other sports network. 

What this means is that people who don’t watch sports, a demographic that makes up a larger portion of the population than sports watchers, have been subsidizing sports broadcasting to the tune of billions of dollars every year. This dynamic has propped up ESPN’s bottom line and allowed it to place ever more elastic bets on sports rights, doling out $6 billion a year to the NFL, NBA, and other leagues. So it shouldn’t be surprising that tech platforms aren’t excited about shelling out billions of dollars at price points that the market can’t sustain.

What’s more, the tech platforms are much more limited in how they can monetize sports broadcasts. Only 25% of ESPN’s revenue comes from advertising, yet most of the platforms would need to rely entirely on ads for their monetization. To which you might say, “But these platforms are amazing at generating ad revenue. That’s why they’re among the most profitable companies on the planet!”

Well sure, but the thing to remember is that most of the content that the platforms monetize is user generated and free. In cases in which they do pay content creators, it’s usually through a revenue share agreement, guaranteeing that their payouts never exceed their costs. Also, much of the content found on platforms like YouTube and Facebook Watch is evergreen in nature, meaning the platforms can run ads against it in perpetuity.

Live sports, on the other hand, are not only prohibitively expensive, with high fixed costs, but the vast majority of viewership will take place as the game is happening. So there’s a very small window of time in which the content can be monetized before it becomes virtually worthless. The hyper-targeted, niche ads that the tech platforms specialize in probably isn’t a good fit for this type of content delivery.

Hence why Big Tech has pared down its ambitions for live sports. By developing partnerships with TV broadcasters, tech companies don’t need to engage in expensive bidding wars, just pay a modest amount to get the TV networks to produce some tangential programming. This gives the networks additional marketing reach and some extra revenue for their troubles.

And while the tech platforms have backed away from traditional sports, they’re still all-in on esports, going to great lengths to secure broadcasting rights to esports competitions and sign exclusive streaming deals with gaming stars like Ninja and Shroud.

That’s because esports is a still-nascent market, one that hasn’t been distorted by ESPN’s unsustainable carriage fees. For instance, Twitch only had to pay $90 million to grab the rights of Season 1 and 2 of the Overwatch League, a far cry from the $2 billion that ESPN pays just to air Monday Night Football. And YouTube has shown by this point that gaming content is fairly evergreen, meaning it can be monetized long after the initial stream.

Does this mean that Big Tech will never play a role in broadcasting traditional live sports? My bet is that it’ll wade in eventually, but first it must wait for the current sports bubble to pop. For as long as non-sports fans are subsidizing Monday Night Football, its broadcasting rights will be overvalued. The tech platforms might have a lot of money to spend, but that doesn’t mean they’re willing to set it on fire.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

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