The Economics of Podcasting

First off, this post defines podcasting is an effective way to deliver highly niche audio to a very enthusiastic audience (the World English Bible translated into Klingon or Tips for Triathletes in the Southwestern US for example).

Secondly, the numbers used here are rough and make for easy math.

Let’s say you’re making one show a week for a year. Here’s a quick pass at some costs:

Monthly Server & Bandwidth costs ($40 * 12 months): $480
Production and editing effort per show ($200 * 52 shows): $10,400
Equipment Costs (mics, software, etc): $500

  • Beer, coffee, and other production/editing necessities per show ($20 * 52 shows): $1,040
  • Monthly Server & Bandwidth costs ($150 * 12 months): $1,800
  • Equipment Costs -mics, software, etc ($500 amoritized over 5 years): $100

Let’s say we’d like to gross $40,000 for the year (a fair amount for doing only one show a week).

Adding all this up puts your annual costs at $42,940.

For the sake of easy math, let’s say you have 1,000 listeners – the circulation of a small town Nebraskan newspaper like the Bayard Transcript. Frankly, the worldwide audience for a Klingon version of the Bible is probably a thousand.

Dividing the annual cost ($42,940) by the number of listeners (1,000) and the number of shows (52) makes the cost per listener: $0.8258

That’s less than a $1 per show per listener (iTunes – 99 cents, WalMart – 88 cents, coincidence?). One Dollar. $4 a month. $42.94 a year. Kris over at the Croncast settled on nearly the same numbers.

With numbers as small as these, I don’t see advertisers beating down the doors of podcasters. In the broadcast world, millions of dollars are sunk into spectrum, hardware, and talent. This gives advertisers the upper hand.

Early on, Heineken realized it was easier to start their own podcast than enter into an advertising agreement with the Rock ‘n Roll Geek Show. I agree. The economics of podcasting make it far more attractive to start your own thing than shoehorn in an awkward ad subsidized model.

If we go back to the original podcasting is best with niche audio assumption, there’s a point where the “ad message” is as valuable to the listener as the “show message”. One degreee further and the podcast is produced by the “advertiser” as part of their marketing campaign.

That’s far more interesting.

If your favorite podcaster has a tip jar (Croncast, IT Conversations, Evil Genius Chronicles) I encourage you to give them a dollar for every show you’ve enjoyed.

Micropayment pioneer Scott McCloud digs into this same issue in his I Can’t Stop Thinking comic.

On being Seth-dotted

I want to thank Seth Godin for linking to the Work Better Weblog yesterday. As expected, I saw it in the server logs.

Work Better saw quadruple the traffic of just 24 hrs earlier. It didn’t take down my server (slashdotted) but it did make my afternoon (seth-dotted ?). Plus, I got a great email from Joe Ely over at Learning about Lean – one of the blogs that inspired the Work Better Weblog.

It reminded me just how fast and direct internet communication is. Two other recent, personal, and measurable examples of this:

If You’re a Guru, You Need a Podcast

There are a handful of vocations ideally positioned for connecting with customers on a regular basis via audio (podcasting):

  • Politicians
  • Motivational Speakers
  • Professional Consultants
  • Musicians
  • Poet, Author, or other Professional Writers

If your vocation is in that list, find a speech or presentation and hit record. Then send it to your most passionate customers. It’s an easy way to effect them on a different level than just text – more along the lines of a telephone conversation or a voicemail. At a most basic level, audio is better than text for addressing many people at once (that’s why we talk – Grooming, Gossip, and the Evolution of Language).

Despite your reservations, marketing guru Seth Godin, you should podcast. Whether or not you charge for it that’s an entirely different conversation.

How Netflix Could Use Recommendations To Increase Subscriptions

One of the challenges of highly customer-driven systems like the iPod, Tivo, and Netflix is the keeping it fresh. I wrote about my experience with this problem last fall (New, Unexpected Music on Your iPod).

I’m sensing the same “2,000 songs and nothing’s on” wall with Netflix. Sure, there are 50 discs in our queue right now. But that’s down from nearly 80 a few months ago. This means, we’re adding movies at a slower frequency. Though we’re watching them at about the same frequency.

To add to this, the only reason I visit the Netflix.com is to add an item to my queue. I get the queue as an RSS feed and my ratings are posted via email. I never checkout their recommendations

This is a recipe for burnout.

Tivo solved this problem by developing recommendation engine that records things it thinks you’ll like. Though Netflix also offers recommendations, it doesn’t go the extra step – sending me the disc.

Since Netflix makes the bulk of their revenue on a tiered subscription model, the discs in each of their tiers could default to a ‘Netflix Suggestion’ with additional membership dollars going to override their recommendation engine with a something I’ve selected. The upshot is, of my 3-at-a-time subscription – 1 or more of them could be selected and delivered by Netflix – thereby guaranteeing new stuff is always in the queue.

Drawing the Line with Corn

Despite (or because of) growing up among fields and fields of it I’m not a big fan corn. It’s alright in pancakes (especially from Maria’s) and Red Hot Blues, just not on the cob, frozen, or in a can, or in my food as a sweetener. I’m not the only one. Mexico’s sugar industry has a lot to lose from imported US high fructose corn syrup and a number of studies have declared HFCS dangerous to our health.

So, I was pretty disappointed to see HFCS as the third ingredient (before dried apples) in Great Harvest’s otherwise healthy and ever delicious Apple Crunch.

I’d like to take all the corn out of my food and put more of it in my gasoline especially in places like Nebraska, Wisconsin, and Minnesota.

Looks like Senator Mark Dayton has similar view, at least on ethanol:

“We need to take whatever actions necessary to increase the use of alternative fuels such as ethanol. Right now in Minnesota, E-85 fuel which is 85% ethanol costs 22 to 25 cents a gallon less than regular unleaded, but many consumers cannot use it because they don’t have a vehicle with a flexible fuel engine.”

First Crack 43. Web 2.0 in Minneapolis

My coverage of Jim Cuene’s Web 2.0 presentation at the May 2005 Minnesota Interactive Marketing Association salon. One on one comments with attendees and Jim’s full presentation. Lots of insight into the current local interactive marketing scene vibe. Once again, I slide the Heisenberg’s Uncertainty Principle into conversation.

Listen to Web 2.0 in Minneapolis [1 hr 12 min]

The Buzzword Blacklist

Here’s a small (and growing) list of meaningless, negative words that I’d like to strike from my world.

  • User
  • Consumer
  • Content
  • Sticky
  • Leverage
  • Synergy
  • Facilitate

Doc Searles has a nice follow-up on these terms and language in Relating to Customers

…customers don’t like being “consumers” or “targets.” Being “reduced” doesn’t stir their hearts, either. Least of all do they wish to be “acquired.”

Doc, as always, gets right to the point with:

“…we’re living in a world where customers will only become more and more independent and self-reliant. And — even more importantly — that they can often supply themselves.”

A second Buzzword blacklist from Fortune magazine
Ask Annie – Business Buzzword That Make You Gag