Bands and podcasters, they’re not that different
There’s a strong analogy between independent podcast creators and music bands when it comes to diversifying revenue streams to earn money.
Podcast monetization has long been fragmented and illusive. Podcast advertising efforts of radio ad sales have often made it a lesser alternative to what’s known in the industry.
Podcast content is also inherently different, and radio business structures rarely look like podcast subscriptions or podcast networks.
There should be more money in podcasting, in general without caveats. Ideally, it’s spread around to cultivate a future for the medium.
There is certainly more podcast listeners and the podcast audience is becoming more sophisticated.
Money podcasting attracts from advertisers is mostly at the core product.
Other monetization methods or monetization strategies have centred on the creator doing much more than the podcast.
The core product should be the biggest earning, but opportunities have been eroded.
For podcast creators, the core product is the podcast itself, similar to how the core product for music bands is their music (albums or singles). In both cases, the core content often doesn’t generate substantial revenue on its own.
A podcast might get decent downloads but struggle to land high-paying ad deals, similar to a band that gets good streaming numbers but earns minimal royalties.
As a result, both turn to multiple income sources to make up for the limitations of core revenue.
1. Multiple Revenue Streams: Diversification
- Podcasters and music bands both often find that relying solely on one income source — like ad sales for podcasts or album sales/streaming for bands — is not enough for financial sustainability.
- Instead, they diversify through several channels:
- Podcasters: Ad sales, sponsorships, listener subscriptions (e.g., Patreon), merchandise, live shows, premium content, and consulting gigs.
- Music Bands/Artists: Streaming royalties, physical/digital album sales, merchandise, touring, licensing for commercials/TV, and VIP fan experiences.
2. Building a Loyal Audience: Cultivating a Fan Base
- Podcasters and bands both rely heavily on cultivating a dedicated and engaged audience. This fan base is often what drives revenue across multiple streams, whether it’s converting listeners to subscribers or ticket buyers.
- The engagement often goes beyond casual consumption, fostering a sense of community and loyalty that encourages fans to support the creator/band in various ways — buying merchandise, attending live events, or contributing through platforms like Patreon.
3. Touring and Live Events: Live Interaction
- For music bands, live tours have traditionally been a significant revenue stream, often bringing in more than album sales. Similarly, podcasters have increasingly embraced live shows as a way to generate revenue while also deepening audience connections.
- These live events often have an added element: merchandise sales. Both bands and podcasters use live shows as an opportunity to sell exclusive merchandise, which helps boost revenue.
4. Merchandise Sales: Expanding the Brand
- Merchandise is a significant income stream for both podcasters and bands. Branded T-shirts, mugs, and limited edition items are popular ways to generate revenue while also promoting the brand.
- While bands have been selling merchandise at shows and online for years, podcasters are catching up with branded items that reflect their show’s themes or in-jokes, offering another layer of monetization.
5. Licensing and Syndication: Re-use of Content
- Bands often license music for use in films, TV shows, or commercials — extending the use of their creations.
- Similarly, podcasters can syndicate their shows, partner with networks, or license segments to other media outlets, expanding revenue opportunities.
6. Fan Support Platforms: Direct-to-Fan Income
- Both bands and podcasters leverage platforms like Patreon, Buy Me a Coffee, or even their own subscription services, allowing fans to directly support them in exchange for exclusive content or perks.
- This creates a steady income stream that’s separate from ad dollars or streaming royalties, giving creators more financial stability.
7. Ownership: Rights and Intellectual Property
- Bands that own their masters and publishing rights maintain greater control over their revenue, while podcasters who own their content can negotiate better terms for ad sales, syndication, and licensing.
- This control allows for flexibility in terms of licensing and monetization, creating more sustainable long-term income.
Survival through Diverse Streams
Just like indie bands that need a mix of touring, merch, streaming royalties, and fan support to make a living, podcasters often need to explore diverse income streams like ads, sponsorships, subscriptions, and events to achieve financial sustainability.
Both require a “hustle mentality,” creativity, and adaptability to make the most of all available opportunities.
Listener Support is a great fit for Podcast Creators
Listener support — whether through direct donations, subscriptions, like Lenny.fm — offer a practical, reliable income stream for podcast creators. It’s a monthly subscription. Here’s why listener support is beneficial:
1. Steady, Predictable Revenue
- Unlike ad sales, which can fluctuate based on market demand or seasonality, listener support is more consistent. Monthly contributions from listeners create a reliable income stream that helps cover production costs and other expenses, ensuring sustainability even when ad revenue dips.
2. Direct Connection with Your Audience
- Listener support fosters a stronger relationship with your audience. When listeners contribute financially, they feel a deeper sense of connection and investment in the show’s success. This support can turn casual listeners into loyal superfans, which is critical for long-term growth and community building.
3. Greater Creative Freedom
- Relying more on listener support gives creators more flexibility in their content. Without needing to meet specific advertiser demands, creators can experiment with new formats, cover niche topics, or introduce premium content that aligns with their core audience’s interests.
4. Monetization from Day One
- Unlike ad revenue, which usually requires a sizable listener base to attract sponsors, listener support can start small and grow over time. Even a handful of dedicated listeners can generate meaningful early income, motivating creators to continue producing content.
If people are paying for streaming, why aren’t podcasts receiving royalties like music?
The short answer is, they don’t have to pay. Which is legal but not fair.
So, how many downloads do I need to start monetizing my podcast?
One. Lenny.fm is built for one to 1 million.
Music vs. Podcasts: Different Cost Structures
- Music Streaming: For music, Spotify operates under a revenue-sharing model with rights holders (record labels, artists, songwriters). Approximately 70% of music streaming revenue goes to these rights holders, which leaves Spotify with around 30% of its revenue.
- Podcasts: Spotify does not pay royalties for podcasts. Unlike music, there are no mandated royalty payments to third parties like labels or songwriters for podcast streams. Instead, Spotify only pays for production costs (for in-house content) or acquisition fees (for exclusive rights).
Zero Licensing Fees
- In music streaming, Spotify pays licensing fees to rights holders every time a song is streamed. In podcasting, there are no equivalent licensing fees, making it cost-efficient for Spotify.
- This means that each additional podcast stream costs Spotify virtually nothing, unlike music streams, where costs rise with each additional play.
Higher Margins and Profitability
- Without royalties or licensing fees, the gross profit margin on podcasts is much higher than music. Even if Spotify spends on exclusive podcast deals or acquisitions, these are usually one-time or fixed costs, rather than recurring royalties.
- This allows Spotify to earn nearly 100% of ad revenue and subscription fees from podcasts, as the ongoing variable costs are minimal compared to music.
While podcasts have a pretty consistent format, music has gone through huge changes
The Evolution of the Music Industry: From CDs to Streaming (1990s–2024)
The music industry has undergone a radical transformation over the past three decades. Starting with the dominance of CDs in the 1990s, the industry experienced the disruptive impact of digital downloads, the rise of streaming platforms, and a shift back toward experiential and niche physical formats in recent years. Here’s how the music business has evolved over this period.
1990s: The Golden Age of CDs
The 1990s marked the peak of compact discs (CDs) as the primary music format. CDs offered better sound quality, portability, and durability than cassettes and vinyl, making them the preferred medium for music consumption. This era was characterized by high profit margins for record labels, with albums often selling for $15–20 each. Key artists like Nirvana, Mariah Carey, and Tupac Shakur became global superstars, driven by high CD sales and major label promotion.
Record stores, like Tower Records and HMV, were central to music culture, with fans lining up for midnight releases. The industry was highly profitable, selling millions of physical units and earning substantial revenues from radio airplay, live performances, and brand partnerships.
Early 2000s: The Disruption of Digital Downloads
The early 2000s saw the first major disruption: digital downloads. With faster internet connections and the rise of peer-to-peer sharing sites like Napster and LimeWire, music piracy surged. Albums were suddenly available for free, undercutting CD sales and causing record labels to panic.
In 2003, Apple launched the iTunes Store, offering legal downloads of singles and albums. Consumers embraced the ability to buy single tracks instead of full albums, changing the economics of the industry. Artists and labels had to adjust to lower margins, as digital downloads generated less revenue than CDs. While iTunes created a new revenue stream, it did not completely offset the decline in physical sales.
Late 2000s–2010s: The Rise of Streaming Services
The music industry faced a slow recovery until the emergence of streaming services like Spotify, Pandora, and Apple Music. Launched in 2008, Spotify offered a new way to consume music legally: a subscription model that allowed users to stream millions of songs on-demand. As streaming gained popularity, the model shifted from ownership (CDs, downloads) to access.
By 2016, streaming became the dominant form of music consumption, accounting for more than 50% of the industry’s revenue. The transition to streaming reshaped how artists were compensated, as royalties were now based on per-stream payouts rather than one-time sales. While streaming democratized music discovery — making it easier for new artists to reach global audiences — it also reduced earnings for many musicians, with fractions of a cent paid per stream. Artists like Taylor Swift and Radiohead initially protested streaming’s low payouts but ultimately joined these platforms, acknowledging their influence on the market.
2020–2024: The Streaming Economy and Niche Formats
As streaming matured, platforms like Spotify, Apple Music, Amazon Music, and Tidal became the primary revenue drivers for the music industry. Subscription-based models were supplemented by ad-supported tiers, increasing revenue potential. Playlist curation, led by algorithms and editors, became a crucial factor for artist success. Viral hits and social media platforms like TikTok began dictating music trends, pushing labels to invest in digital marketing strategies to boost streaming numbers.
However, streaming brought challenges. Artists and labels had to contend with lower revenue per stream, forcing many musicians to diversify income through merchandising, touring, and fan-supported platforms like Patreon. In 2023, the industry saw a shift toward more fair compensation models, with some streaming platforms adopting blockchain technology to improve transparency in royalty payments.
At the same time, there was a resurgence in niche physical formats. Vinyl records, once considered obsolete, made a strong comeback among audiophiles and collectors, with sales surpassing CDs for the first time in 2020. Limited editions, colored vinyl, and box sets became popular ways to offer a tangible music experience that streaming couldn’t provide. Even cassette tapes and CDs found a modest revival among nostalgic fans and indie music enthusiasts.
