How podcasts make money

How do you make money with podcasts?

Do you get a tiny cut every time someone hits the play button? Do you have any type of agreement with Apple to share revenues? And the list goes on.

They’re all good questions, and they’re usually coming from a place of genuine curiosity. I mean, ten years ago, this business model didn’t exist. Before circa 2008-12, you had big media companies producing million-dollar budget shows on network or cable TV, or on the big radio stations, and then contracting with other big corporations to pitch their products during ad breaks.

But a complete nobody starting a show in their spare bedroom, then building up an audience to the point that they can make some dough independent of the huge corporations? It was unheard of.

Today it’s slightly more common, to the point that you can name a handful of personalities who make a good living off their podcast – but exactly how they do it is still a bit of a mystery.

The most obvious way is sponsors. You hear Joe Rogan, Tim Ferriss, Ben Greenfield, John Lee Dumas, etc. pitching products they use and getting paid to do so.

So when people ask about the process of starting a podcast, it’s quite common for newbies to think they need sponsors for their show.

And this is where such people err in their thinking. They are putting the cart before the horse in their mind.

Little League baseball teams have local businesses sponsor them, pay for their gear, maybe some travel if need be. It’s a tax write-off for the pizza joint, it makes them look good in the community, and some kids get to play baseball in some nice uniforms.

It’s a win-win.

The mentality of thinking you need a sponsor pay for operating expenses of a podcast, however, kind of misses the boat.

A podcast is not an expense, it’s an investment. If you don’t have a business to sponsor your podcast, or a product/service to sell, what you have is an expensive hobby.

We’re not in the little leagues, we’re in the big leagues.

Shows who have other businesses advertise their products on their show have tens of thousands of regular listeners. And in this era of hyper-competition for people’s attention, I’ll bet legitimate fiat money the host of that show didn’t put his or her focus on getting sponsors.

Their focus was building an audience, and engaging with that audience. Becoming a person of authority, knowledge, respect, likability. Then when they had built an audience large enough that pitching another product makes sense, who do you think approached who? The host or the advertisers?

Most likely the advertisers.

And who is in the position of power in that scenario?

Would you respect a host that pitched a product they didn’t know and didn’t believe in just so they can cover their operating costs?

Perhaps you can respect the hustle and “can do” attitude of someone who’s doing whatever it takes to build their show. But even in that scenario, that hustle is part of the narrative this person is building, that makes them likable and trustworthy to their audience.

The focus must always be on the audience. Building rapport, engagement.

Here’s a little-known fact: Smart phones are able to place and receive phone calls.

All of the podcast production clients I currently have called me personally after hearing Ben Greenfield share my phone number when he promoted my services on his show last summer.

They didn’t get some canned, impersonal voice message either. It was my own voice, saying, “Hello?”

The ones who simply filled out the form on my website never hired me.

Personal connection. It seems so simple, yet so rare today. People are desperate for face-to-face communication, or anything more personal than a website or a free ebook.

So the answer to the question, “How do you make money with a podcast?” is this: You build an audience, then you sell stuff to them.

And neither of those will happen if you don’t put your singular focus on engaging with the 2 people who are listening to you when you’re first starting.

The days of Johnny Carson showing off a box of band-aids or a bucket of chicken legs for the cameras are over. It’s a new era of media, and it’s very powerful if one is able to view it with a slightly different lens than whatever passes for conventional wisdom.

Be well,

James Newcomb