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Signup on PodzayThe podcast industry boom has turned podcasting into a multi-billion-dollar business, but the reality for most shows is more complicated. Audiences, ad budgets and the number of podcasts have all grown, yet the money is concentrated at the top and discovery is controlled by a few big platforms. This article looks at how the boom happened, who benefits and what it means for independent podcasters.
Note: the figures below describe the pandemic-era boom (2019–2021), when much of today’s industry structure took shape. For the latest data, see the annual research from the IAB and Edison Research’s Infinite Dial reports.
U.S. podcast advertising revenue reached about $1.5 billion in 2021. That makes podcasting sound like a bonanza.
The lockdowns were good for the industry. In 2019, 275 million people worldwide listened to a podcast at least once a month. By 2020 that number had grown to 384 million, and it was expected to reach 424 million in 2021.
The problem is that the number of podcasts grew far faster. Before the pandemic, Spotify hosted about 450,000 podcasts. By 2021 it hosted about 2.9 million. In other words, the number of podcasts rose by around 540%, while the audience grew by roughly 40%.
The result is a crowded market where getting noticed is harder every year, even though more people are listening than ever.
Part of the explanation is Spotify’s business model. In music streaming, Spotify pays roughly 70% of its revenue to rights holders such as record labels. That’s fair, since labels and musicians make the music, but it also explains why Spotify struggled for years to turn a profit.
Spotify’s answer was to move into podcasts. A podcast has a mostly fixed cost that doesn’t rise with the number of listeners. That’s why Spotify signed deals with big names such as Joe Rogan, Prince Harry and Meghan Markle. The goal was a model closer to Netflix’s: with exclusive podcasts, Spotify can earn twice, through subscriptions and advertising.
If it’s a good deal for Spotify, is it also a good deal for millions of podcasters? The market is tough. Advertising revenue keeps rising, but not as fast as the number of new shows. In 2019, U.S. podcast advertising revenue was $708 million. Two years later, total revenue had more than doubled, yet with so many more podcasts, the average revenue per show fell sharply.
In practice, very few podcasters earn anything close to the average. Most of the money goes to the top shows, while the long tail of small podcasts makes little or no income. That’s why many independent creators combine several income streams. Our guide to how to monetize your podcast covers the options.
A crowded market puts a premium on discoverability: how easily people can find a show. It has also made Apple and Spotify powerful gatekeepers.
There’s a potential conflict of interest. Both Apple and Spotify produce their own content, so they have the opportunity and the incentive to favour their own shows. Matt Deegan, creative director of the podcast producer Folder Media, put it this way:
“Will the curatorial places on Spotify become more about Spotify originals than third-party content? I don’t think it’ll ever go 100%, but already about 20% of curatorial spots go to Spotify’s own content, even though Spotify doesn’t produce nearly 20% of the big podcasts out there.”
There’s also little stopping platforms from following the social media playbook. A decade ago, brands and public figures were encouraged to build large followings with the promise of reaching huge audiences. Over time the algorithms changed, and even accounts with a million followers might reach only a small share of them unless they paid for promotion.
That’s the risk for podcasters: success becoming pay-to-play. Spotify already lets music artists pay for extra promotion of new releases. This is also why audio publishers such as the BBC and Luminary built their own apps. They don’t want to depend entirely on Apple and Spotify.
Competition is intense, but smaller shows have real advantages: a focused niche, a closer relationship with listeners and the freedom to move quickly. Practical ways to stand out include:
Podcasting is a multi-billion-dollar industry, and U.S. podcast advertising alone passed $1.5 billion in 2021 and has kept growing since. The IAB publishes updated revenue research every year.
Lockdowns gave people more time at home, recording tools became cheaper and easier to use, and brands, celebrities and businesses saw podcasts as a direct way to reach audiences.
Yes, if you have a clear niche and audience in mind. The market is crowded, but listening keeps growing, and focused shows can build loyal audiences, attract sponsors and create business opportunities.
The podcast industry boom created huge opportunities and real challenges. Revenue and listening are up, but so are competition and platform power. For independent podcasters, the winning strategy is to serve a clear audience, publish everywhere and build direct relationships with listeners. There’s a real contest for your ears, and the industry keeps turning up the volume.
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