Only a Handful of Blockbuster Podcasts Are Profiting Significantly

The podcasting industry has transformed dramatically over the past decade, shifting from a platform for diverse voices to a realm dominated by megastars commanding lucrative deals. With Alex Cooper nearing a $100 million agreement for her “Call Her Daddy” podcast with Sirius, Trevor Noah in discussions for a second season with Spotify, and Joe Rogan securing a deal worth up to $250 million, it's evident that the industry is entering a new phase.

Initially, podcasting was a space for cultural commentary, true-crime discussions, and niche interests, requiring little more than a decent microphone. Today, however, nearly 450,000 active shows compete for listeners' attention, with the top 25 podcasts capturing nearly half of U.S. weekly listeners, according to Edison Research. This concentration has led to substantial revenue opportunities for top talents, who now engage in tours, merchandise sales, and multi-year, nine-figure deals, attracting significant interest from major advertisers.

Podcast distributors like Spotify and Amazon are adapting to this evolution by exploring new revenue streams. They are testing subscription models for popular shows to encourage audiences to pay for ad-free listening, early access, and exclusive content. Additionally, they are producing video versions of podcasts and partnering with larger brands, moving away from the startups that previously dominated the ad space. After a tumultuous period characterized by costly speculative deals—such as Prince Harry and Meghan Markle's $20 million contract for a single show—podcast platforms are now incorporating audience performance metrics into their agreements. For instance, Cooper's deal with Sirius may require her podcast to meet specific audience targets, a trend that is becoming standard practice.

Spotify's deal with Noah allows the platform to recoup its initial investment while sharing additional ad revenue with him, reflecting a model that balances risk and reward for both parties. As the industry matures, diversification of revenue sources—such as subscriptions, live events, and merchandise—has become crucial for profitability.

The podcasting audience continues to grow, with nearly 100 million Americans aged 12 and older listening weekly. Podcast advertising revenue is projected to increase by 12%, exceeding $2 billion this year and approaching $2.6 billion by 2026, according to IAB and PwC. Platforms are also seeing success in integrating video content, with Spotify reporting a significant increase in video podcast uploads since it introduced the feature in 2020. This diversification allows creators to connect with audiences in various formats, meeting the demands of younger consumers who desire more interactive experiences.

Amazon's Wondery podcast unit is capitalizing on the potential of popular podcasts to extend into other media forms, including film and television. The company has pursued control over future projects, exemplified by its $80 million deal with Dax Shepard for the “Armchair Expert” podcast, which includes co-ownership of new podcasts and exclusive merchandise rights.

While some talents can command substantial paychecks, less established hosts face tougher challenges. Many are finding that touring and merchandise sales are critical for financial sustainability, as the deals offered by distributors for smaller podcasts can be considerably lower. Many hosts continue to juggle their podcasts with other jobs to generate income. Podcasting gained significant traction in the U.S. around the time of “Serial,” which revolutionized audio storytelling. As Spotify made its significant investment in podcasting starting in 2019, the company faced mounting pressure to achieve profitability. This led to studio consolidations and a pruning of shows in response to a slowing ad market.

The podcasting landscape was further affected by changes from tech giants, such as a recent Apple software update that hindered ad tracking and led to declines in downloads for many shows. As large brands begin advertising on podcasts with substantial audiences, the potential for growth remains robust. Major players like BMW and DraftKings are increasingly investing in podcast advertising, signaling a shift towards traditional brands engaging with this medium.

Sirius plans to introduce a subscription service that bundles various shows, potentially including “Call Her Daddy,” as part of a growing trend toward monetizing podcast content through subscriptions. This move reflects the industry's ongoing evolution as it adapts to changing listener preferences and explores new revenue opportunities.

The podcasting industry has matured significantly, evolving from a collection of niche voices to a landscape of high-profile stars and substantial financial stakes. As major platforms and creators navigate this complex environment, the future of podcasting will likely continue to be shaped by audience engagement, innovative revenue models, and the ongoing pursuit of profitability.