Among listeners, podcasts are more popular than ever. But from a business standpoint, the industry has lost its way.

The golden age of podcasting spanned from 2015 to 2022. During this time, shows like Serial popularized the medium, and the COVID-19 pandemic led to a boom in podcast production and engagement. Media companies began putting a lot of money into the medium. For example:

• Spotify invested over $1 billion into podcasting, acquiring Anchor and Gimlet, and inking multimillion-dollar partnerships with public figures including the Obamas, Joe Rogan, and Meghan Markle.
• Amazon purchased Wondery, incorporating content from the podcast network into the Amazon Music platform.

Though 60% of adults in the U.S. identify as podcast listeners, the industry hasn’t demonstrated the same growth trend for profitability. Over the past year, we’ve seen investments in the podcast industry scale back. Markers of this include:

• Spotify’s string of layoffs shuttered Gimlet media and the podcasts it produced. The company has also ended its partnerships with Archwell and Higher Ground Productions.
• NPR’s layoffs led to the cancellation of four major shows.
• SiriusXM shutting down the once-popular podcast player Stitcher.

What happened? Podcasting has yet to find a sustainable path to profitability.

Podcast listenership is growing — who’s footing the bill?

Unlike other types of media such as radio and print, podcast production and distribution are pretty democratized. When you open your podcasting app or check out Apple’s New and Noteworthy section, you’ll see shows produced by individuals recording in their basements right alongside big-budget shows by media conglomerates like The New York Times.

Though how these shows are produced and their budgets may vary, the final product is roughly the same: it’s content that audiences expect to receive for free, minus having to listen to ads.

Sure, some shows have been able to successfully monetize their podcasts through crowd-sourced platforms like Patreon, but it’s worth noting the average Patreon creator makes between $315 to $1575 per month, which barely covers the production cost of a high-quality podcast (especially if including video, which is becoming a necessity).

Essentially, the most important end-users of the product (listeners) aren’t the ones paying to keep it afloat — corporations and advertisers are, and the market is in a state of correction.

Have podcasts been a good investment for companies?

The U.S. economy has been teetering on the edge of a recession for the past year. Typically when that happens, marketing and advertising budgets are among the first to go for companies that want to curb spending. The podcast industry has seen this in real-time and has been in its own recession since late 2022.

While companies are continuing to spend on podcast advertising (to the tune of $2.25 billion in 2023) what is considered a “good ROI” is changing.

Podcast advertising (along with other creator-focused mediums) is no longer about awareness or top-of-funnel exposure. Instead, companies are looking to invest in shows that can demonstrate an ability to convert listeners into customers — and quickly.

It’s also worth noting that advertising isn’t the only way companies have invested in podcasting. Exclusive deals with creators and the production of branded shows were also on the rise during the recent podcast boom. From 2018 through 2022, many companies were in experimentation mode as podcasting shifted from an emerging channel to a core medium.

So what’s next?

Podcasting is far from over, but the industry is in a period of transition where companies and creators should evaluate where their time and resources are most valuable.

If companies want to continue investing in the production of their own shows or funding creator-led shows, the path to ROI will need to be clear, swift, and able to provide more value than a high follower count.

It also means aspiring podcasters shouldn’t expect to be next in line for a blockbuster deal like Alex Cooper’s $60 million Spotify payday. However, exploring independent podcasting to connect with niche audiences can be a valuable channel for creators and entrepreneurs who are looking to expand and connect with their audiences and customers.

The podcast industry is primed for its next disruptor to help the business side be as democratized as distribution.