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April 20, 2022

7

min read

How do podcasts make money?

The realm of podcasting has taken the world by storm. According to statistics, over one-third of Americans listen to podcasts regularly. That’s over 104 million individuals! You’re probably thinking - chatting to a microphone sounds great, but how much do podcasters really make? In short, if you have 1,000 listens per episode, you can make around $745 a month. When you reach 10,000 listens per episode, you can find yourself make approximately $13,000 a month. For example, True Crime Obsessed rakes in $1.2 million per year while The Dave Ramsey Show has about 13 million weekly listeners and earns close to $10 million a year. Not to mention The Joe Rogan Experience - 190 million downloads a month bringing his earnings to $30 million a year. 

But, how are these podcasters making so much money? Let’s break it down: 

Streams of Income Available to Podcasters 

There are many streams of income that a podcaster may choose in order to profit off of their podcast, some more consistent streams of income than others. The top five methods include:

  1. Sponsorships - A brand will pay the podcaster to talk about the brand and its service.   
  2. Affiliate links - A company provides the podcaster with a special link to their site so that the company knows exactly where potential visitors have arrived from, and the podcaster will receive a percentage of the purchase price if that visitor ends up buying the product.
  3. Subscription services -  Most podcasts are broadcasted on Apple Podcasts and Spotify, but there are some platforms, like Stitcher Premium and Luminary - that offer exclusive podcasts included with a monthly subscription. 
  4. Premium content - Content creators can offer premium content to their most avid listeners through platforms like Patreon, Glow, and Supporting Cast. Patreon, specifically, is built off of membership tiers. The number of tiers and the subscription rate are determined by the creator and can start from as little as $1 a month. Higher tiers, and by default - higher prices, offer more premium and exclusive content. Just like the membership tiers, Pateron then offers different tiers to the creator, with different levels of support in exchange for an increasing percentage of the creator’s monthly income. Patreon takes between 5% to 12% of the content creator’s revenue, depending on the tier they have chosen. 
  5. Complementary products - a podcaster may choose to sell products associated with their podcast, such as merchandise, books, courses, or access to live events. 

It’s important to mention that a lot of podcasters also upload their episodes to YouTube, giving them the ability to earn an income from ad revenue. If an account enables the option to receive monetization from videos, creators can start receiving a portion of the ad revenue from AdSense The top YouTubers can earn $29 million a year through AdSense, but of course, the income differs based on the traffic you bring to your channel and videos.  

Podcast Sponsorships

As you can probably guess, advertisers see podcasts as a very strong way to get their products out to a large audience. The feeling of trust and intimacy that is quickly formed between the listener and the host makes sponsorships highly successful. Podcasting ad revenue rose by 19% over the last year and is set to exceed $2B by 2023, which is pretty insane. Reports consistently show that 80% of podcast listeners can recall a brand advertised in a podcast and 62% of listeners are more likely to buy from brands that are advertised via podcasts. It is also important to point out that 78% of listeners don’t mind podcast advertising, so you can feel confident using podcasts to reach new audiences without annoying potential customers.

Additionally, the fact that there’s a podcast for every niche appeals to advertisers, since they know they will have no problem finding a podcast that lines up with their brand’s intention. Whether the podcast focuses on news stories from around the world or electronic gaming strategies, there’s no doubt that there’s a product that can be seamlessly mentioned throughout the podcast.

 

So how do podcast sponsorships work? Well, the amount a podcaster earns from a sponsor depends on the number of downloads each episode earns. Sponsors pay on a CPM (cost per million) basis. The creator’s rate usually ranges from $18 to $50 CPM, though the more popular a podcast is, the more they are able to demand. 

The type of advertisement can also affect the price that a creator asks for. Here are the different types of advertisements: 

  1. Host-read ads: When the host reads the sponsorship message while recording the podcast. 
  2. Dynamic ad insertion: Pre-recorded ads that allow for flexibility and easy updating. In many cases, the host does not read the ad.
  3. Pre-roll: When the ad plays at the very beginning of the podcast episode. Many advertisers prefer this ad placement as they believe that it will most likely be heard by listeners. 
  4. Mid-roll: When the ad plays in the middle of the podcast episode. This ad placement tends to have a higher CPM rate because listeners who reach these ads are usually more engaged. Mid-roll ads also tend to be longer than pre- or post-roll ads. 
  5. Post-roll: When an ad is placed at the end of the episode. These are usually cheaper than mid or pre-roll but usually deliver lower conversion rates (let’s be honest, most people do not reach the very end of the podcast episode, and may click away as they know the episode is coming to an end).

There are pros and cons to each type of advertisement in podcasts, and it’s important to do your research before making a decision. If you want to understand how to price a sponsorship placement on any podcast, make sure to check out our podcast ad rate calculator.

Highest Earning Podcasts

The Joe Rogan Experience

This podcast has been around for over 10 years and has only grown in popularity over that time. Rogan regularly achieves 190 million downloads per month and has had guest appearances ranging from Bernie Sanders to Elon Musk. A few months ago, it was revealed that Rogan received a $200 million exclusive deal with Spotify in 2020. Even amidst all the controversy Rogan and the podcast have faced, the podcast still stands as one of the most popular podcasts in the world. 

My Favorite Murder

My Favorite Murder has created a devoted and dedicated community of true crime junkies that are looking for a sprinkle of humor with their murderous tales. The podcast regularly sold-out live events, and the two hosts even co-published a novel titled, Stay Sexy and Don’t Get Murdered, which was a New York Times bestseller. The average revenue for the podcast is estimated at about $15 million. 

The Ramsey Show

Everyone wants to know how to balance their finances, and Dave Ramsey has been helping listeners with just that for over 20 years. Each episode is split up into 3 parts, with each part an hour long! It’s estimated that the podcast receives around $10 million in revenue, and the podcast is also heard on more than 600 stations in the United States. 

Podcasts are going to continue taking the world by storm, and whether you’re a brand or a content creator, you’re going to want to jump on this bandwagon! If you have any questions on the world of podcasting or even want new podcast recommendations, get in touch! Also, if you want to understand a little bit more about the podcast sponsorships, check out our FREE guide (which includes a podcast advertising planner).

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