Podcasters put in long hours to research, write, and produce their shows. And, here at Sweetwater, many of us look forward to the weekly or biweekly releases from our favorite shows. But what makes podcasting worth it to the legion of podcasters out there, other than a love of the content? We have so many questions. Does hosting a podcast make sense financially? How much can a podcaster make? Above all, we wanted the answer to a single question: How do podcasts make money? Join us as we pull back the curtain and show you some of the ways that podcasts make money and how some podcasters have turned their shows into full-time careers.
Sponsorships
Like many forms of entertainment, podcasts are generally free content supported by ads and sponsors. You may be asking yourself, “What is a podcast sponsor?” Like the companies featured on the uniforms of professional teams or on a racecar’s body, any company can sponsor a podcast. And, obviously, the more sponsors you can collect, the easier it is to make money podcasting.
In exchange for a sponsor’s support, a podcaster will give them a shout-out over the airwaves in the form of an advertisement. If you’ve listened to a podcast before, then there’s a good chance you’ve heard someone read a sponsored ad. Depending upon the podcast itself, you may hear advertisements at three points in the episode — beginning, middle, and end. How much a podcast sponsor pays for their advertising slot is determined by factors that include where the ad appears in the episode, how long the ad is, and how many people hear it.
How much do podcasters make from sponsorships? Like your relationship status online — it’s complicated. Sponsors pay in CPM (cost per mille), which is the cost per thousand listeners that download the episode. You can expect a sponsor to pay about $20 CPM per ad, with more successful shows earning more. Ads in the middle of an episode are more valuable than ads at the beginning and end since users are likely to skip through those. If a podcast runs one 30-second advertisement per episode at the beginning of the show and is paid $20 CPM, one can estimate their earnings per episode.
- 1,000 downloads ≈ $20 per episode
- 5,000 downloads ≈ $100 per episode
- 10,000 downloads ≈ $200 per episode
Adding extra ads at different points in the episode can significantly expand the earning potential of a podcast.
Affiliate Marketing
Another popular way to make money is affiliate marketing. According to Oxford Languages, the organization that curates the Oxford English Dictionary and other language programs, affiliate marketing is defined as “a marketing arrangement by which an online retailer pays commission to an external website for traffic or sales generated from its referrals.” Companies offering affiliate marketing partnerships come from all parts of our economy. From energy drinks to vitamin supplements, eLearning courses to meal-kit services, cat litter to DNA analysis, plenty of companies rely on affiliate marketing to get the word out about their products.
Here’s how affiliate marketing works; say you host a popular music podcast. Sweetwater reaches out and offers to let you into an affiliate marketing partnership. Sweetwater provides you with a unique discount code to add to your show. Once listeners use the promo code on their purchase, Sweetwater would pay a certain sum to the podcast as a commission.
Estimations for how much money a podcast makes through affiliate marketing differ depending on the marketer’s rate and the total number of sales made. Generally speaking, 2% of a podcast’s subscribers will use a promo code each month.
There’s no hard-and-fast rule on commissions made by podcasts. But, for the sake of this article, let’s assume that each commission is about 5% of a sale. Assuming each sale is about $35 (one sale would earn $1.75 commission), we get the following estimations based upon total listeners each month:
- 1,000 monthly listeners ≈ 20 commissions/$35 each month
- 5,000 monthly listeners ≈ 100 commissions/$175 each month
- 10,000 monthly listeners ≈ 200 commissions/$350 each month
The amount of money a podcaster can make through affiliate marketing has to do with their commission rate, how many people use their code, and how much they spend. By increasing the number of partnerships, a podcast can make more money each month.
Direct Support
Podcasters, like other content creators, usually accept direct support from their subscribers. Direct support can take multiple forms, so we’ve broken it down into categories.
Donations and crowdfunding
To make money with a podcast, consider utilizing donations and crowdfunding. Listeners want to support the people who make their favorite shows. Platforms like Patreon and GoFundMe offer convenient and secure ways for people to make donations directly to content creators. Frequently, podcasters provide incentives such as decals, keychains, and pins in exchange for financial support.
Exclusive content
Another way that podcasts make money is through the use of exclusive content. This form of direct support encourages listeners to donate to the podcast to get early access to new and exclusive content. Generally, this content is hosted through a website like Patreon, which automatically unlocks the exclusive content on other streaming platforms.
Paywalls and monthly subscriptions
Most podcasts are free content supported by listeners and advertising. However, not all shows follow this model. Some podcasts, such as The Trevor Noah Podcast, Spooked, and The College Tapes, are only accessible through a monthly subscription on sites like Luminary and Stitcher Premium. While these shows offer an ad-free experience, listeners may balk at being forced to pay a monthly fee to listen to their favorite shows.
How is paying for a podcast different than donating to it monthly on Patreon? If you don’t pay for a subscription, then you don’t have access to the show. But if you forget to contribute to a free show, you can still listen as you please.
Merchandise
Like bands around the world, podcasts sell merchandise to help them pay the bills. Typically sold through a podcast’s website, merchandise offers listeners the opportunity to support a show financially and to advertise their love for the show at the same time. Podcast merch can be almost anything, but most podcasts offer stickers, decals, posters, and apparel. Here at Sweetwater, we’ve seen some pretty interesting merch, including branded face masks, koozies, wineglasses, and even oven mitts.
In-Person Events
Before 2020, podcasters commonly held in-person events. By doing so, a podcaster can easily connect with fans, raise money, and raise awareness for their show in one fell swoop. By taking a show from the digital realm and moving it into the physical world, any podcast can become quite lucrative.
Conferences/Festivals
Like NAMM in the music industry, there are podcast festivals and conferences that fans can attend. Podcast hosts will set up a booth and talk shop with fans and admirers. Podcast festivals also offer workshops on podcast creation and other panels to discuss the ins and outs of a podcast genre or subject. Of course, a podcast conference or festival is an excellent opportunity for a podcaster to sell merch and to raise awareness for their sponsors.
Live Shows
Some of the most successful podcasts have found an incredibly creative way to monetize their creation — recording shows live and in person. The top shows will even embark on tours across the country to perform live for fans, just like a band. When ticket prices, merchandise sales, and other charges are taken into account, a live show is one of the most efficient and lucrative ways for a podcast to make money. Some podcasters will even hold meetups at a local pub after the event for fans to gather and meet other fans of a show.
Podcasts Really Make Money
Podcasters have many avenues to explore when researching how to make money podcasting. When monetizing a podcast, creators very rarely rely on a single method as a source of income. Podcasters enjoy income from a wide variety of sources to make money podcasting. And, with a bit of clever promotion and persistence, the sky is the limit when it comes to earnings.