Are we any closer to having a “Netflix for podcasts”?

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Last year, I wrote a column about “why it’s so hard to scale paid podcast subscriptions.” In that particular piece, I was referring to individual podcasts that utilized platforms like Patreon and Substack to place podcast episodes behind a paywall.

My argument was that, because these platforms require clunky, technical workarounds that aren’t compatible with large streaming services like Spotify and Pandora, I didn’t think they’d drive significant revenue numbers for the podcast industry anytime soon.

But what about a very large bundle of premium, high quality podcasts that’s contained within a single paywalled app? Could someone create a “Netflix for podcasts” and convince millions of listeners to pay a monthly subscription to access it?

Over the past few years, some companies have tried to do just that, with very mixed results. Given some recent major developments in the space, I thought it might be a good time to take a look at the podcast subscription landscape to determine whether media consumers are coming around to the idea that a huge bundle of podcasts is worth paying for.

Let’s take a look at the current product offerings:

Luminary

Of all the apps that offer some kind of paid subscription tier, Luminary is the one that is most comparable to Netflix, in that all of its premium podcasts are locked behind a paywall, and those paywalled shows contain no ads. 

On paper, it seemed like the company had a great approach. It amassed $100 million in VC funding, which gave it the kind of runway to attract some of the top talent — both inside and outside the podcast industry — including Guy Raz, Adam Davidson, Trevor Noah, and Lena Dunham. 

What I found to be particularly clever was that it doubled as a normal podcast app, in that it pulled in the hundreds of thousands of free shows that can be found on every player from Apple Podcasts to Overcast. Why was this so important? This way, a user wouldn’t have to switch back and forth between multiple apps for their podcast listening. I could listen to the latest episode of Planet Money and then immediately follow that up with a Luminary show. 

But though its strategy seemed sound, its launch was mired with setbacks, some the result of unforced errors. Podcasters complained when they found out Luminary was storing their podcasts in such a way that it made it hard for them to collect accurate download data. It removed all the hyperlinks from their show notes. Some bristled at the idea that their free podcasts were being used to lure listeners onto an app with a paid offering (an argument I found kind of absurd since Luminary was simply pulling from their public RSS feeds).

Within weeks of its launch, several major shows including the Joe Rogan Experience, Reply All, and The New York Times’s The Daily were pulled from the app. This didn’t exactly make for seamless listening for would-be users. What’s more, Luminary had left a bad taste in the mouths of the podcast community — the very group with which it needed to keep in good terms.

Flash forward a year, and Luminary’s had several shakeups. Its 29-year-old founder stepped down from the CEO role and was replaced by an HBO executive. It expanded into additional English-speaking countries and lowered its price from $8 to $5 a month. Bloomberg reported that it’s moving away from expensive scripted shows in favor of talk show formats and is “reducing the money it offers creators.”

That same Bloomberg article indicated that the app hasn’t exactly been a huge hit. It’s gotten somewhere between 200,000 and 800,000 total downloads. Some creators told the journalists, anonymously, that their shows haven’t found huge audiences. I’ve also seen anecdotal reports on Twitter from podcasters who say that Luminary makes up a tiny percentage of their overall downloads. The company said it’s grown its paid subscriber base 14% over the last six weeks, but didn’t give any specific numbers.

We should definitely give Luminary more time before declaring it a failure, but it’s clear that it hasn’t been a breakout hit. But here’s the question: has it failed to gain traction because of its early stumbles, or is its lackluster reception proof that a market doesn’t exist for this type of product? Let’s take a look at some of the other apps in this space…

Audible channels

You’ll be forgiven if you weren’t aware that Audible had made a subscription podcast play, but in 2016 it launched a service within its app called Channels. It didn’t refer to the shows in this section as “podcasts,” but that’s basically what they were.

One of the shows in channels, “Ponzi Supernova,” managed to land the only post-arrest audio interview with Bernie Madoff, and it was extremely good. Another show, hosted by therapist Esther Perel, went on to become a huge hit, though I don’t know if its popularity stemmed from its Audible run or when it branched off later as a free podcast.

The pricing for the service was a little confusing. You got access if you had a standard $14,95 Audible subscription, but you could also subscribe just to the Channels section for a mere $4.95 per month. I also seem to remember that you could access the podcast section with an Amazon Prime subscription.

It’s hard to say how successful Channels ever was, but by 2018 Audible eliminated most of the roles within this division, and I don’t think it’s producing any new podcasts. I just checked the app for the first time in a while, and though I could find individual podcasts by conducting searches, there doesn’t appear to be a place in the app where they’re housed in one place.

I’m not sure you could really argue that Audible was all that invested in the podcast genre, and I remember reading somewhere at the time that its executives decided to place more investment in its audiobook originals, which already resemble narrative podcasts anyway.

Stitcher

I’m always a little surprised that Stitcher doesn’t get more coverage for its efforts to bundle podcasts behind a paywall. The product is actually very similar in design to Luminary; there’s the main app where you can listen to most available free podcasts, and then there’s also a section where, for the price of $4.99 per month, you can access Stitcher Premium. 

What’s on Stitcher Premium? According to its website, it includes “ad-free bonus episodes and archives from your favorite podcasts including Office Ladies, WTF with Marc Maron, How Did This Get Made, and many more.” Stitcher also produces original, exclusive shows, and subscribers get access to “300+ comedy albums.” Most notable is that the company has entered a high profile partnership with Marvel, producing several seasons of shows set within the X-Men universe. 

I couldn’t find much in the way of reporting on the health of the company. It’s exchanged hands a few times and is now owned by E.W. Scripps. The newspaper chain merged it with a few other products — the podcast advertising network Midroll and the Howl comedy network — and as far as I can tell, it’s been humming along for the last few years. The fact that Marvel has returned for multiple seasons is at least some indication that it’s seeing some commercial success. A 2016 Verge article put Stitcher at 8 million users, though I’m assuming the vast majority of those just use the free app. A 2018 analysis of Anchor data found that Stitcher has 4.6% market share of all podcast listening, which is impressive.

Spotify

It’s incredibly difficult to assess Spotify as a paid podcast bundle because it’s so many other things besides that. It has a complete music library of virtually every song ever created, which is certainly an advantage that a standalone podcast app doesn’t have. Also, not only are its podcasts available to its non-paying users, but a lot of Spotify’s original podcasts are also distributed on all the free apps.

Still, it’s hard to deny that podcasts have become part of Spotify’s core value proposition and play a role in driving new paid subscriptions. The company has dropped over half a billion dollars to acquire several podcast companies, including Gimlet, Parcast, and The Ringer. It’s also doled out several million more to get Amy Schumer, Joe Budden, and the Obamas to produce original shows for the platform. 

It’s pretty clear that these investments have started to pay off. During its most recent earnings call, it reported that “19% of our Total MAUs engage with podcast content, up from 16% in Q4 2019, and consumption continues to grow at triple digit rates Y/Y.” Back in February it reported that podcast listening on its app both boosted conversion from free listening to paid subscription and increased retention for already-existing subscribers. “We have seen benefits to retention on the order of several hundred basis points, which is a material change on a retention curve, for users that engage with spoken word content relative to those that haven’t,” its executives wrote, “and early data indicates that these users are more likely to convert to Premium over time.”

So is there a real market for a paid podcast bundle?

Yes, I think so. Choose just about any major medium — whether it’s music, video, journalism, video games, or books — and you’ll find an industry for which consumers are collectively spending billions of dollars a year out of their own pockets. There’s no reason to think podcasting is any different. In fact, there are already companies that generate billions in subscription revenue for non-music audio: Audible and SiriusXM.

I don’t think we’re quite there yet for a paid podcast app — and there may never be a subscription podcast company that throws off the same level of revenue as a Spotify or a Netflix — but I think the early results are promising, and we only have a few more years before the podcast industry at large no longer needs to rely entirely on ads as its primary source of revenue.

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

Creative Commons image via flickr