We are in a golden age of podcasting. A report recently showed that podcast listeners doubled between 2008 and 2015, and then increased by 23% between 2015 and 2016. In the U.S. alone, there are more than 57 million monthly listeners. With numbers like these, many entrepreneurs feel the urge to start one of their own.
After all, audience = money, right? This has led to some people encouraging others to “make money” by podcasting. But here’s my super-complicated advice to those of you thinking of starting a podcast to make money: Don’t.
I’ve been in the radio and podcasting space for more than a decade. I started hosting a podcast in 2006, spun that into a Sirius XM radio show in 2007, and since then my team has grown The Jordan Harbinger Show from a handful of early listeners in 2006 to around five million monthly listeners today. As a result of hosting The Jordan Harbinger Show, I’ve had a chance to speak at companies like Google. We’ve been recommended by outlets like The Guardian, the BBC, and the New York Times.
Despite all that, if I had to start all over again in 2019, I’m not sure I would. While some might say, “Easy for you to say, Jordan, you’re already making money at this,” my answer is, “Not exactly.” (We’ll get to this.)
But more importantly, even though I’ve been doing this for a long time and have one of the better pedigrees in the medium, it’s never been easy and it’s not easily profitable.
How podcasts make money
Most people who start a podcast think that the ad dollars come rolling in after the audience gets big enough. Get sponsors for your show, collect the cash and wash, rinse, repeat. But that equation doesn’t work the way you think it does.
A more realistic scenario:
- First, to land the big advertisers, you need to be part of a network. For example, The Jordan Harbinger Show is part of PodcastOne.
- Then, to be part of a network, you need to have at least 50,000 downloads per episode, and you won’t get there for a while. It took us six years to get to that level, and keep in mind that “back in the day,” part of each episode was explaining to people how to download a podcast, play it, etc. We know someone who is an internet marketing beast who got there in four, but we also know someone who also has a successful internet marketing business and in ten months of podcasting is at 12,000 downloads per episode and has plateaued. That’s respectable, but it’s still a long way away from ad revenue. (Advertisers can ask for server logs to verify this, but they usually don’t.)
- But before you even sign a deal with a network, you have to be okay with them taking a 40-50% cut of gross advertising revenues.
- Even then, you need to be okay with a wide range of income each month. Our ad revenue is in the range of $50k-$70k/month. The variance is due to several reasons:
- We can’t choose how much inventory is sold in a given period
- We also can’t control how many advertisers are in the market at any moment
- We can’t choose what advertisers are willing to pay
Once you pay your production costs, whatever is left over is your profit. Our production costs are $10k/month for 16 podcasts per month (more on that below). So, on the low end, the “podcast division” of The Jordan Harbinger Show could net $480,000 year [($50k monthly revenue – $10k production costs) * 12)], but that’s also because I take no salary from the podcast division as it’s part of our marketing outreach for the show itself (we reinvest a lot) and for our other programs.
480k sounds like a lot. It is a lot. But keep in mind that we only started pulling in ad revenue in recent years and for many years the podcast division was not cash flow positive, hence the training and programs division helped to carry us. In our first few years of existence we had little to no sponsor revenue, and were just spending $10k/month without the promise of immediate return. If you were to add up all of our lifetime expenses and revenues, I’d suspect we’d be just barely in the black after six years.
Our programs division features both residential and digital instruction, and for most people who find out about our company via the podcast, they quickly learn that we offer programs geared around the topics we cover on the show: self-improvement, social dynamics, and social capital, just to name a few. There’s a virtuous circle in which our content is informed by our programs and vice versa. So, yes the cash flow now looks good, but we needed help to get there, and we may very well have not gotten there if we didn’t have the infrastructure and support from the other side of the company.
Now that you know sponsorship isn’t the automatic easy revenue it seems from the outside, there are other reasons you shouldn’t start a podcast.
The uncomfortable truths about podcasts
It requires more personality than you likely have
The technical qualifications for starting a podcast are the ability to speak English, a microphone, and an internet connection. The qualifications for a successful podcast are…much more complicated.
To be even an average podcast host, you have to have the ability to guide a conversation, to pull out insights, to drill down when you need to. It’s not at all like a conversation between friends, and even those get off-track. You’ll often be interviewing complete strangers with whom you’ll need to build rapport shortly before going on air. And to be candid, you probably don’t possess those skills right now.
You can’t outsource or scale most of the work
You can hire help if you’d like, but that costs money. How much money? Depends on the level of help you need. So let’s understand the differences between a sound editor, an audio engineer, and a producer.
This person can get paid between $25-$50/hour and can work on your basic editing cuts: removing a cough here, cutting together pauses there. He/she may or may not be working on sound quality. The vast majority of people just starting out would use an audio editor and call it “good enough.” As a ballpark, a sound editor typically spends two hours engineering one hour of audio. At $37.50/hour, that’s $75.
This person can be paid between $50-$100/hour and is sophisticated enough to remove specific things from the actual recording. If there’s a bird singing in the background or a train running by, he/she will be able to isolate that frequency in the recording and manually remove it. Many of the very best podcasts utilize an audio engineer. Let’s say on average the engineer spends two hours engineering one hour of audio, at $75/hour. That’s $150.
This person can get paid at least $100/hour and is much more of a conductor. He/she may be live on all your recordings (as my producer Jason is) and will make sure guests (and hosts!) stay on topic, and will ask for themes or tropes to be developed more clearly if that is not being done.
After, he/she can take the sound that has been edited and/or engineered and bring together the best episode possible, sometimes by taking a part that was recorded later in the discussion and splicing it into an earlier point, etc. Jason has a client who is ranked in the iTunes top 50 in podcasts, and Jason spends nine hours producing for every one hour of audio from this client. Jason spends three hours per one hour of audio of my work, so let’s split the difference between nine for that client and three for me, and call it six hours for one hour of final audio.
So unless you plan to produce your own shows, there’s $600 per one-hour episode you’ll need to cough up. Taken together with the other sound editor/engineer costs, you’re getting close to $1,000/episode.
Let’s say you do outsource the audio editing, engineering, and production work. You can’t outsource your prep (I’ve tried, and it doesn’t work).
If you interview guests, you are going to need to read their books or articles or watch or listen to their interviews. Showing up with a list of 5 to 10 stock questions isn’t just going to be a poor experience for your guests — after a while you’ll hate it too. I’m 12 years in, and I do more of the prep work than ever before (usually up to 10-20 hours per episode). As I said above, I tried outsourcing this before and hired staff to read the books for me and put together relevant notes and interesting questions, but as I began to get into the craft, the deep work of being a host, I wanted to read those books and create those questions myself, and at four podcasts per week, I can tell you I’ve never read more in my life.
You’re competing against big money and big media
If you’ve listened to Gimlet Media’s excellent series StartUp, you’ll know that podcasting is so popular now that it’s getting VC-backing.
Think about that. You’re trying to enter a space on your own that venture capitalists are trying to claim. The easy niches are already taken (and are often boring). Do you want to be another “business podcast” that is the 41st person to interview that guest? Will you likely be able to ask them questions that they haven’t been asked somewhere else? Do you think that even the most avid fan of your guest will listen to your podcast if the guest has appeared on two or three of their favorite podcasts already? In all likelihood, you’re simply going to be a poorly produced version of a commodity. You’re not going to be Folgers to Blue Bottle. You’ll be Folgers with mold growing on it.
In the same amount of time, you would have made a fortune doing just about anything else
Here are some tasks you’ll be responsible for:
- Pre-interviews: Done either by email or phone, this helps determine whether your podcast and the potential guest are a good fit. It takes 10-plus hours for us to prep each show.
- Production: Guests do not always show up on time (or at all), and even if you have a problem-free interview, you’ll still need to do post-production work to level out noise and ensure that, as much as possible, the sound quality is excellent. You can’t fully control what is happening on your guest’s end, which is why I strive so often to do interviews in person (so go ahead and add the cost of those logistics into the mix).
- Editing: Not everything we record makes it onto a podcast. Sometimes fascinating (or dreadful) tangents that don’t fit within our normal show time parameters have to go. It takes time to carefully slice those segments out so your listening experience isn’t interrupted.
- Statistics: We need to find out which episodes are doing well and which ones aren’t. In your earliest days you may find that releasing on one day versus another makes a significant difference.
- Promotion: So you’ve recorded and posted your podcast. The world isn’t going to beat a path to your studio door. You’ll need to promote on all the relevant social media platforms and your email newsletter list (you do have a list, right?). You’ll need to pay to advertise it. You’ll need to have it featured in news and media. You’ll need to create and promote it consistently and professionally. Don’t have someone to do it for you? Good. Go ahead and add it to the “Stuff I’ll have to do on my own” list.
After all that, You’ll be filled with regret for the income you could have made had you done literally anything other than simply create a podcast. You could have written a book, created an info (or tangible) product, or built a service with recurring revenue. You will look back and realize you’ve built a job, not a business, for yourself. That speaks to the larger issue to which I alluded above.
The Jordan Harbinger Show has a products division. The symbiotic relationship between the podcast and products division was the result of a whole team of 6-13 people working full-time. Even if you wanted to do something similar to what we did, you’ll either need to find a partner or duplicate the work of at least 2 people as you build a world-class product/service to feed into your world-class podcast, and vice versa.
There are no real analytics available
While there are rumors of Apple upgrading the podcast analytics experience early in 2018, for the moment, those of us running podcasts do NOT get the following information from the largest syndicators of podcasts (this includes iTunes):
- Who is listening
- How many people are listening
- How much of the show they listened to
- Where the traffic is coming from
- The listener demographics
- How the ranking system works
Everything we tell advertisers is built off the back of downloads, but downloads don’t tell us any of that information above.
You can’t even “buy” your way to the top without having built another (easier) business first
Let’s look at three examples, all who went about building their podcasts differently:
- Charlamagne Tha God – Charlamagne is a top-rated and nationally-syndicated morning show host on FM radio. He’s also got multiple best-selling books under his belt as well. Being a good communicator is his job and radio was a natural shift to podcasting.
- Dave Asprey – Dave has one of the most recognizable brands in the biohacking and supplement industry. Bulletproof is no longer just coffee, but a conference, a product line, multiple best-selling books, a podcast and for many, a lifestyle. He drove visitors to his podcast using the multimillion dollar Bulletproof brand and website readers hopped on the podcast train with him. That dynamic and symbiotic action has allowed his podcast to grow and thrive.
- Reid Hoffman – Reid is trying the insta-podcast approach with Masters of Scale. His podcasts are extremely well produced, full of fun sound effects, etc., but his secret sauce is leveraging all the relationships he has built over decades of building companies in Silicon Valley. Examples include Brian Chesky, Mark Zuckerberg, and Sheryl Sandberg, all of whom very rarely, if ever, appear on mediums like podcasts, but agreed to be some of his earliest guests, despite the fact that Reid has never hosted anything like a podcast. (By the way, I don’t believe Reid will be hosting this podcast after 100 episodes. He’s simply got better things to do, like helping run a very successful VC firm, for example.)
This is Growthlab, after all. I’m not just going to say No, No, No without offering you Yes, Yes, Yes. Here’s what I would start with:
If you’re so dogged, interesting, and sharp, why are you so stuck on this medium? Could it be because you’re being influenced by your EGO? In the words of Todd Herman, “Stop trying to be famous.” Lead with value. The fame may or may not come, but that’s irrelevant if you’re adding value to the lives of others. There’s a trend now that everyone has to be a “thought leader” or some sort of up-and-coming personal brand. Yuck. No.
Lead. With. Value.
For example, you could create a book or a blog. Why?
- There are fewer moving parts.
- More income possibilities.
- More flexibility — people don’t expect books or blogs on as regular of a schedule as they expect podcasts.
- More likely path to success — more people read books and blogs than listen to podcasts, which means it’s a less crowded space and hence offers you more of an opportunity to carve up some percentage of True Fans for yourself.
While building these things of value, you can start to appear as a guest on other podcasts. You’ll get some experience, get some promotional value out of it, and get a good reminder (by seeing how you get treated in the process) of why you followed Cranky Uncle Jordan’s advice and did not start a podcast as a side hustle.
And maybe, just maybe, after you have a book, a successful blog, and a product division… you can start a podcast.