Your Podcast Host Is Probably Overcharging You To Pay For Someone Else’s Show
Traditional podcast hosts overcharge the majority of podcasters to offset their cost for top shows. But in a world in which listeners can directly support the shows they listen to, no creator needs to pay at all.
As the co-founder and CTO of Anchor, a company that lets anyone in the world create and host a podcast for free, I truly believe that the traditional podcast hosting landscape is extremely antiquated. But more than that: it’s unfair to creators. A couple of weeks ago, I published an article about why you should never pay to host your podcast. The outpouring of support was incredible. But there were certainly some skeptics who asked for more of an explanation. So I thought this would be a good opportunity to draw a few graphs and explain why the future of podcasting is one in which no creator should ever need to pay to host their feeds.
Most traditional podcast companies offer various levels of paid accounts, from a few dollars a month to a few dozen dollars a month. You would pay more if you wanted to have more frequent or longer episodes, or perhaps access to certain data or tools. But one thing that these tiers do not depend on is your audience size. Regardless of whether they’re just starting out or have hundreds of thousands of listeners, all types of creators get charged the same average amount.
So that means that what podcasters pay looks something like this:
But this is the actual cost to the podcast hosting company of hosting your podcast:
The reason for this rising line is that storing files is cheap, but delivering them can get pricey for the handful of shows that have very large audiences. In other words, small shows (which make up most of the podcast market) are very inexpensive for hosting companies to host, while the few shows with huge listenership are taking up the bulk of the hosting company’s cost.
To put this in visual context, looking at these graphs together gets us this:
If you are a podcaster who wants to record casually or is just starting out, you are most likely in that left half of the graph. That means that you are overpaying in order to subsidize the hosting costs of much bigger shows. In what other industry do the vast majority of aspiring or amateur creators cover the costs of the handful of people who have attained a high level of success?
Creators probably would not mind this discrepancy if it were easy to offset the costs of hosting with revenue generated from their podcast.
But there’s another quirk to the podcasting ecosystem worth graphing, and that’s who makes money:
Yet again, the podcasts with large audiences have an exponentially better deal than everyone else. Virtually nobody earns revenue in podcasting except for the people with very large audiences. What about everyone else? The people making great content that also has real value, who are paying to host but don’t quite have the audience numbers to attract big-name advertisers?
Our philosophy is that the money you make should be directly tied to how many people consume, enjoy, and want to support your content. In that case, the revenue graph should look like this:
That is, we think it’s imperative to the health of the podcasting market (not to mention each individual podcaster) that the companies’ cost and the podcasters’ revenue graphs look the same:
In our first big move to get the entire ecosystem to this point, we just launched Listener Support: a brand new feature from Anchor that allows any podcaster to earn monthly income from their listeners directly (wherever they might be listening).
Here’s a basic example of why this helps address the problem: Small shows on Anchor cost us literal pennies to host every month. If you are able to get two friends to support you using Listener Support for $0.99 per month, our cut of that $1.98 (only 8 cents) covers Anchor’s cost for hosting your show. As shows get bigger, they get more supporters, and Anchor’s cut is modeled so that it allows us to cover the costs of these shows as well. And if one show spikes and starts making a lot of money from its fans, the creator and Anchor share in the value they created for the audience (with over 95% of the money going to the creator after payment processing fees).
Anchor was founded on the principle that audio should be democratized. And democratization means two things to us: First, anyone should be able to create without cost and without friction. Second, if someone out there is willing to pay for your podcast, they should be able to. Listener Support is one of many game-changing monetization opportunities that will help redefine the landscape of podcasting to help make it more accessible, more diverse, and more fair to creators. Given this approach, our platform and all others can be and should be free for all podcasters.
The bottom line is, the way things have always been done need not determine the way things should be done. Paying for podcast hosting has long been one of the many points of friction for aspiring podcasters, and it’s created an ecosystem that favors a few big podcasts while independent creators are left behind. Our solution is to democratize access to creation tools, alleviate the disproportionate hosting system, and make it possible for anyone — regardless of audience size — to make money from their podcast. No podcaster should spend a cent to do what they do best: create podcasts.