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(By Johnny Peterson) As I read the news that Luminary CEO and Co-founder Matt Sacks will be replaced, just weeks after Co-founder Jeff Purzycki stepped down as Chief Strategy Officer; it drove me to consider the burning question that leaders in the podcast industry have to be feeling: Why haven’t companies like Luminary exploded onto the scene like everyone predicted?
“The Netflix of podcasts” sounds like a great concept in theory, but why has no one been able to capitalize on it?
When we think about the journey of streaming services like Netflix, it’s tough to replicate the same formula with podcasts.
Let’s look at the journey of Netflix as it relates to television and film:
- Standard cable television makes its money from commercials, which have become longer in recent years, without any way to watch your favorite show unless you were plopped in front of the TV at 8pm on Wednesday nights. Households also needed to pay monthly cable bills. You also wouldn’t be able to watch your favorite films unless you traveled to a theatre to pay to see it once or wait until it’s available on DVD and pay up to $30 for each film you wanted to own
- Then the DVR revolution happened, but you would still need to manually pick the shows you want to record, fast forward through lengthy commercials, and manually delete old shows once your storage was full.
- Netflix came to the scene and addressed a market need: People want to watch the shows and movies they like, without commercials, at a time that fits their schedule. Netflix provided a plethora of content, ad-free, for a small monthly payment that has all but been the reason for cable-cutting across the globe.
Now let’s look at the journey of podcasts:
- Apple’s Itunes provides podcasts for free, all you needed was an internet connection. Even today, some of the most popular shows have pretty minimal commercial breaks when compared to cable television as well as the option to skip through them (this includes podcasts available on YouTube.)
- Individual Creators then had the opportunity to provide their own “exclusive content” as well as ad-free podcasts with platforms like Patreon.
- Now the pay-wall podcast providers have come, but what market-need are they fulfilling? You can already find great podcasts, many without ads (or simply use the ‘skip’ feature), for free on platforms like Apple Podcasts, Google Podcasts and iHeart. Creators don’t have to join podcast networks to accrue revenue from their content, and can directly collect donations and subscription money from Patreon.
So how do these companies move forward? They would need to be paying creators substantial amounts to keep their content exclusively with their app, or at least more than they could be making by utilizing advertisers and Patreon-type platforms.
With the availability of free podcasts and the growing truth that people would rather listen to ads than pay a subscription, I am not sure how much sense it would make to pay $8-$12 a month for a batch of podcasts (of which I only listen to 2) when there are so many free ones that I might enjoy more and have the ability to skip the ads easily.
I think that the solution is going to end up being somewhere in the middle of ads/no ads, free/subscription and exclusivity.
They could even take a route of only releasing every other episode or every three in the free version, compelling listeners who wait longer for their exclusive content with another incentive to subscribe. Subscribers could also gain access to other bonus content and early access to podcast episodes before anyone else.
Obviously I am not some genius who is the first to think of this. We will see whether this crown of “NOP” (Netflix of podcasting, not New Orleans Pelicans) ever truly sticks.
Johnny Peterson is the CEO and founder of Straight Up Podcasts, providing professional podcast services and consulting. He is also the host of the** Pod Logic **podcast. You can reach Johnny at johnny@straightuppodcasts.com
Comments:
Greetings, Thanks for compiling your thoughts above, it all makes sense to me. There is one thing that needs more consideration, which is also something Luminary doesn’t necessarily fix. Simply, the fact that producers have to be paid! The essential issue with the likes of Netflix is that they become a hegemonic force behind the production budgets and means of distribution. We’ve seen that before, and it’s what was supposed to be crumbling in the age of fibre optic connections and unparalleled access to audiences - globally. What needs to be solved is the means by which producers are compensated for their time spent, and value-added. Too many distributors deprive producers of the ability to set the price of their work - and Luminary doesn’t particularly help with that. That means the public can’t make a value call on that one show alone. Perhaps Patreon facilitates this better. As you point out, the Netflix analogy is troublesome. Presumably, one very attractive aspect of their proffer is their providing producers with budgets, in exchange for their work and exclusivity. How much do we know about this? I think the solution lies well beyond a Luminary, which is now a rehash of so many other types of sites. They take massive money to get off the ground and are not replete with content until they’ve collected masses of subs - classic chicken and egg stuff, which sees marketing budgets easily the biggest number on the balance sheet. I’ve got a few ideas as to how this is addressed properly. I’m kind of amazed we’ve not got better solutions in play up until now.