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April 26, 2021

Podcasting to become an Apple revenue stream

By GlobalData Technology

As it has done before with other services, Apple waited for podcasting to gain some maturity before putting its own revenue-generating twist on it.

Yet Apple knows the business; it is a podcasting veteran, having helped enable audio blogging 15 years ago via its iTunes music software and launching the standalone Apple Podcasts app in 2012. Apple is now upgrading this component of its hardware-services proposition as it continues evolving from its origins as primarily a device OEM.

Podcasting with additional monetization options

Premium podcasters will not be required to create Apple-exclusive shows, but they will be encouraged to offer extra benefits to Apple Podcasts Subscriptions customers. Individual podcast creators will charge for their service starting at $0.49 per month. However, major brands are expected to charge considerably more for monthly subscriptions, and those costs could add up quickly with multiple subscriptions.

Apple’s podcast subscriptions will come in three versions: free, freemium (fans listen for free and subscribe for extra perks, such as early access or swag) and fully paid. Providing these additional monetization options to podcasters will help drive innovation, leading to new programming and marketing approaches.

Apple will make money from subscription revenue shares (30% during a creator’s first year on the platform, 15% thereafter) and is also charging podcast creators $19.99 per year to access its Apple Podcaster Program. Apple has lined up huge entertainment brands like NPR, the Los Angeles Times, The Athletic and Sony Music Entertainment to jump start Apple Podcasts Subscriptions. However, unlike rival Spotify, Apple has not announced its own move into original podcast programming, which could be a drawback in building the subscription business.

Will enough listeners open their wallets?

Podcasting has expanded from the hobbyist category to a major communications medium.  Covid-19 lockdowns and the ensuing boredom helped boost the podcasting industry in 2020, which is expected to continue growing worldwide. Survey results released last month by Edison Research and Triton Digital revealed that roughly 80 million people in the US, or 28% of the 12+ population – are weekly podcast listeners – a year-over-year increase of 17%.

There is considerable room for growth, but even current podcast fans may not be willing to pay to listen. A recent YouGov consumer survey revealed that 84% of people in the US say they would not pay for a podcast, which makes sense given how much free content is available.

The existing Apple Podcasts service features more than 2 million free shows, and that will compete with the premium subscription podcast service.

Apple is poised to dominate the subscription podcasting business, derive new revenue streams from it, and further lock in users to its burgeoning hardware/services ecosystem. Nonetheless, even if people are convinced to pay for Apple Podcasts Subscriptions, the service will remain a relatively small part of Apple’s overall revenue stream.