Is podcasting the audio industry’s new Eldorado? That’s the $230 million question that Spotify seems to have answered by acquiring podcast production studio Gimlet Media, in one of the most important transactions ever completed in this industry, and most recently the Parcast studio. The strategy adopted by streaming music’s green giant suggests happy days to come for sound content creators. However, creators will nevertheless need to take their place in this market and—of course—obtain financing. And what about if this last step depended in part on the close relationship that podcasts nurture with their audiences, to the point of making them their most loyal associates? Part one of a two-part analysis.
Let it be emphasized from the outset that it is very rare that Canadian podcast producers are able to earn a living from their listeners’ contributions alone. In Canada, podcast production generally requires multiple sources of financing (philanthropists, equity, loans, subsidies, advertising, training, voluntary contributions, etc.).
Canadaland, the popular podcast founded by journalist Jesse Brown, is the exception to the rule in that owes its popularity to its biting criticism of Canadian media. Not only can it boast the status of podcasting pioneer in Canada, but it’s also one of the first podcasts to have been financed in full by monthly contributions made through the Patreon platform. Its business model now includes advertising of which Patreon ‘patrons’ are spared (in exchange of a monthly contribution of $5).
Despite the fact that he has yet to pay himself a salary, Les mystérieux étonnants, a veteran in Quebec’s podcast universe (13 years in the making) dealing with pop and geek culture, also does very well thanks to crowdfunding. In addition to having brilliantly led an ambitious campaign to create a studio in 2015, the podcast is today financed to a large extent by its subscribers—also through the Patreon platform.
Podcasts and crowdfunding: back to the basics
If podcasts continue to gain ground with respect to Canadians’ consumption habits when it comes to media content, how they are financed is slow to follow. Firstly, because the financial assistance programs designed for the audiovisual industry are not quite adapted to the production of strictly audio content. “The emphasis is still placed on the image,” claims Zoé Gagnon-Paquin, cofounder of Magnéto. In this respect, there is good news on the horizon: the Canada Media Fund has just introduced its new guidelines for its performance envelope programs, revisiting its definition of digital media to include audio productions. That said, funding for podcasting that acts as a discoverability lever for another audiovisual production is now possible. Even though this formula will not fund native podcast projects, it will nevertheless be possible to finance audio creations through it.
“Next, with respect to Quebec, the number of listeners is too small to attract advertisers,” adds Zoé. GlobalWebIndex’s statistics tell her that she is right seeing as only 15.5% of Canada’s French-speaking population currently listens to podcasts. And there are full of reasons that explain this low percentage.
However, the history of media shows that there is nothing new about this gap between the uptake and financing of a new content proposal. About a century ago, in both the United States and Europe, the first radio productions were initially supported directly by listeners before the media reached ‘mass’ status and its broadcasts went commercial (advertising).
For the anecdote, the first financiers usually presented themselves as radio aficionados. Through ‘enthusiast clubs,’ they raised funds to ensure the survival of newly diffused material, as researchers Manuel Fernandez Sande and J. Ignacio Gallego emphasize in their study titled Crowdfunding as a source of financing for radio and audio content in Spain. These fundraisers were more or less the ‘pre-digital’ equivalent of crowdfunding campaigns! In addition to resorting to the same process—i.e., soliciting modest contributions from a large number of people—,they share the following three fundamental traits:
- A community that is both interested and apt to identify the project’s benefits for the community;
- Contributions made mainly by individuals rather than companies;
- The use of different communication channels to advertise the financing campaign.
Beyond the monetary contribution, these radio aficionados were also engaged in what is known as crowdsourcing: “Moreover, audiences felt they were a part of the medium as, even during those years, their participation was vital in creating radio broadcasting,” explain the Spanish researchers.
When advertising became the private sector’s main source of revenue, this practice was abandoned. Moreover, as the researchers claim, the overabundance of free content no longer makes it possible to reach a critical mass of listeners who are willing to pay for radio. As proof that history repeats itself, this phenomenon is very current in the world of podcasting.
The fact remains that, a century later, crowdfunding is making a comeback in the audio industry. Why now? Fernandez Sande and Gallego formulate a hypothesis based on the following transformational axes: the media financing crisis in general, the arrival of new digital intermediaries—including crowdfunding platforms—,the participative culture that has strengthened with the emergence of digital networks and the lack of innovation in the traditional radio sector. Thus, the Kickstarter, Indiegogo and La Ruche of this world simply compensate for the lack of financial resources by making it easier to solicit the audience directly.
Kickstarter: the springboard to a new industry?
And what if crowdfunding was instead a vector of the podcasting industry? That’s what media sociology researcher Tiziano Bonini advances in an analysis intriguingly titled The ‘Second Age’ of Podcasting: Reframing Podcasting as a New Digital Mass Medium. He claims that this ‘second age’ appeared in 2012 when the first business model supporting the production and independent broadcasting of podcasts was launched in the United States.
This model was born under the influence of journalist Roman Mars the day he decided that one of the most popular podcasts produced by KALW, San Francisco’s public radio station, i.e., 99% Invisible, would henceforth be independent and entirely financed by its listeners through the Kickstarter platform. Not only did he lead campaigns to fame ($170,000 in 2012, $375,000 the following year), but he also took advantage of his community’s exceptional support to launch Radiotopia—his own podcast broadcasting network. In 2015, his network raised more than $620,000 from a total of 21,808 contributors.
“Support the future of independent radio for all!,” stated Mars in the campaign’s promotional video for Radiotopia.
Within the young podcast industry, this campaign has become a case in point with respect to how to use crowdfunding as a springboard to independence. It teaches many inspiring lessons to future project promoters, namely by focusing on the conversation with the community and the sale of a promise (radio’s future!), i.e., a common passion with listeners rather than a broadcasting company. Bonini points out that, since 2012, the practice has become just as popular in Europe—to the point that an increasing number of radio personalities have quit their jobs and now use crowdfunding to finance their own productions.
Again, it’s worth repeating because many podcast project campaigns share this characteristic: they are spearheaded by creators whose voices are known or who can count on a community that is committed to their brand or work.
There is a world of difference between accessibility and success
Without going so far as to claim that crowdfunding is the solution to all monetary issues, Fernandez Sande and Gallego do conclude that it nevertheless represents a fundamental pillar for the development of audio formats, a vector for innovation that gives creators free rein when it comes to choosing themes (social, political and local) and enables them to mobilize audiences which they can then convert into communities of contributors.
A certain number of success stories (99% Invisible on Kickstarter, Les mystérieux étonnants on Indiegogo and, more recently, La balado de Fred Savard on La Ruche) illustrate their conclusion. However, that does not necessarily mean that this financing model, although it is accessible to all, favours a real equality of opportunity. That is surely the case of Canadian producers of French-language podcasts.
Among the reasons invoked to explain the gap between dream and reality, let’s remember the following: podcasting boasts a rising yet low penetration rate somewhere around 15.5% of all French-speaking Internet users in the country and there is a near absence of pay barriers to access this type of audio content which is usually available for free (talk about history repeating itself!).
Globally, it’s less than half—or more specifically 36.7% according to the statistics of the Crowdfunding Center which collects data from the world’s largest crowdfunding platforms—of all creators who manage to reach the objectives they initially set for their campaigns. We note that the ‘Radio and Podcast’ category only accounts for a small number of successful projects (249), which is testimony to podcasting’s recent arrival in the most popular crowdfunding arena, i.e., the one currently occupied by the likes of Kickstarter, Indiegogo, Ulule, La Ruche, etc.
“We have noted an increase in the number of podcast projects over the past two years, although this type of production has always existed with Ulule,” confirms Alexandre Grimault, Ulule’s product manager. He specifies that podcasts bear several names on his platform: documentaries, podcast platforms (or studios, labels, production companies), web radios, sound creations, etc.
Developing an overall view of the campaigns led specifically for radio and podcasting is therefore not an easy task. However, Graphtreon, the data tool used by Patreon (one of the major subscription-based crowdfunding platforms that is very popular with podcast creators), provides some numbers which illustrate the astronomical sum that monthly donations reach as well as the gap that separates star creators from those who are at the very bottom of the ladder.
If the amount of $1,521,969 was evenly distributed among all of the creators in the ‘Podcast’ category (9,617 in all), the latter would each be paid $158.26 per month. Given that Chapo Trap House, designated as one of Patreon’s top creators, collects $119,622 per month, it is easy to conclude that this is a system in which profitability is proportional to the project promoter’s popularity and, therefore, visibility.
The fact nevertheless remains that Gimlet’s spectacular acquisition by Spotify reassured the sector’s actors with respect to the credibility of the subscription-based model, as claims podcast producer and designer Xavier Kronström Richard. “This demonstrates that it is a real model that can be used to produce good-quality content.” If there is a financing avenue that is currently gaining attention, that’s the one!
“Each project must seize its opportunities,” however relativizes Xavier, who believes that, if podcasts do not currently stand out very much on crowdfunding platforms, it’s because, at the basis, there exists no fundraising culture for this type of production. The success of the campaign led for La balado de Fred Savard (120% of the initial objective), produced by Transistor Médias, would thus mark a major milestone in terms of a successful campaign for an upcoming French-language podcast in Canada. Like Roman Mars’s projects, the new Quebec podcast may pave the way for other creators.
The second part of this analysis will focus on the different crowdfunding tools available in 2019 (subscriptions, newsletters, minimal donations, etc.), which, in addition to being attractive and accessible, dangle the tantalizing prospect of converting listeners into contributors.