Podcasting and Money: Round Two

Here is a guest blog piece that follows the post the other day about new media serving either the audience or the sponsors but not both simultaneously. J Wynia wrote me a very thoughtful email on the subject and with his permission I’m blogging it here. Everything from here out is him talking.

I started two or three times to write something quick on Twitter and failed, so on to the email. Forgive any tendency to ramble. I, too, have been trying to articulate thoughts on this whole topic.

I see two basic choices for deriving income from podcasting activities:

  1. Gate off the primary content/value itself and charge for membership or direct download.
  2. Provide secondary value in some way and charge for that.

All discussions of “new media” business models eventually boil down to what all discussions of business models need to at some point: value and the controlled access to that value.

In the sell-the-audience-to-the-sponsor model, the value is in having a product/service mentioned to a given group of listeners/viewers. As the podcaster controls the bits and bytes that comprise the show, the sponsor can’t get that mention without the consent of the podcaster. So, by charging for the ability to bypass that controlled access to the value, the money equation works.

When you move to reverse the equation and your goal is to make money by making the listeners happy, you will have to have the money come from them. To do that, value has to be provided and some method of collection as well.

Donations let the listener figure out their own value on the podcast and do their own collection. This tends not to work very efficiently. In places where it does work, it’s often because the dismal 0.X% response rate is being applied to a number of listeners/viewers is large enough to make the decimal shift into profitibility. In other cases, like public radio, they actually:

  1. Block convenient access to the content by doing membership drives regularly.
  2. Provide substitute value in the form of magazine subscriptions, coffee mugs and CD’s and discount cards and appeal to your desire to pay for that value instead of the news/classical music content delivery’s value.
  3. Appeal to the listener’s altruism, desire to be thought well of or tax situation and try to collect on those values: i.e. donate and get a bumper sticker that tells people you donated and the kind of people you think highly of will think highly of you.

In other words, to me, the donation model isn’t really much of an option.

Like you said, you can sell stuff: T-Shirts, posters, buttons, stickers, etc. all of which appeal to someone’s sense of tribe and as social markers. However, again, that’s really shifting to gathering value from a secondary place (assuming that you view the podcast as the primary value) and you lose efficiency.

To me, unless the secondary value is very close to the primary, you’re going to lose quite a bit of potency. The reason DVD box sets sell well is that they ARE the primary value with some additional value tacked on:

  1. Commercials removed.
  2. Extras
  3. Asynchrononicity. Can watch a show that aired once a week at 8:00pm on Tuesdays in 2002 in sequence over the course of a single weekend.
  4. High quality video.
  5. For some shows, repeatability
  6. For quite a few, the sense of ownership in something they enjoy.

Because access to all of those things is really difficult to obtain without paying the $20-$100 season, people pony up for the value.

I think where to add value and to limit access to it to only paying customers is tricky and can vary for each podcast. For those that are timely, selling archives doesn’t hold much value. However, those that have timeless content might be able to get some value out of their archives.

For some, they may be able to put out a short version of the content for free and charge for the “rest”. That’s pretty much the free porn model. Air a 10 minute interview with someone and say that the full interview is in the “members” area. That only works if the content in the “members” area has enough value (just like porn).

Of course, the “because of” model, where you get consulting gigs, speaking gigs, “old” media appearances, etc. because of your podcast fits in as a secondary value as well.

Unfortunately, what this whole thing exposes is the difficulty in providing the kind of value that the market is willing to pay for. If your podcast is just another two-geeks-talking-tech show, making it members-only isn’t going to work because the market is flooded with competition who is offering the same value for free.

That’s also why the idea of “I’m going to quit my job and make a living writing novels” isn’t a terribly good business plan either, unless you’re providing serious value to the market in the form of really remarkable fiction. That’s because the market is flooded with, for example, thousands of really bad fantasy novels written by people who just want their book published and are OK with the $3000 the average published novel makes the author.

That’s why the average acting “gig” doesn’t put food on the table, etc. If you’re looking to do something that thousands of people are willing to do for free, you’re really going to have to provide some extraordinary value in order to make money from it.

That’s why building data-driven business software applications pays me six figures and my writing four. I can relatively easily provide four figures worth of value to the business community in Minneapolis in a year and can’t do the same with my writing or podcasting (really need to re-launch my show).

At any rate, I should probably get back to doing exactly that. Hope I didn’t just muddy the waters even more. I just had to write something because the whole “new media” circus strikes me as strange. In some cases, these discussions end up sounding like two high school students dreaming about how great it would be to get paid to play XBox all day. It all focuses on “me” and how I can make money doing what I like.

Unfortunately, that almost never results in the desired outcome. If, instead, you try to find something that the market will value that you also value/enjoy/are good at, you get a great alignment that can make you a decent living. But, if you don’t put both columns on the paper when trying to figure this stuff out, you’re setting yourself up for failure.

Thanks to J Wynia for these great insights and for letting me post these. Let’s keep this conversation going!