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August 26, 2016

How podcasts make money

Podcasts are free. You can listen to them by just clicking on them on your phone. I have an iPhone, and there's an app for that. You just search for something that sounds interesting, click on it, and start listening. And some podcasts are even videos.

If you're puzzled about why podcasts are free, it's because most of them are audio, and it really doesn't take much to record people talking, which is what most podcasts are. So anyone can make a podcast, and put it out there. Of course, the more popular ones make money. And they do it the same way that old-time radio broadcasts used to, by having sponsors, and mentioning them. It's a lost art, that's returning.

I'm fascinated with the history of marketing, and in my lifetime radio stations mostly played music and then stopped playing music for a few minutes while a series of pre-recorded commercials were played. And since radio was free, we all knew that it was paid for by those commercials, which we listened to over and over and over and over. Even nowadays, on my short drive over to the gym in the morning, I am sickened by repetitious commercials screaming at me when I listen to the radio. But it didn't used to be that way.

Back when radio was new, there was a lot of talking. And just like podcasts nowadays, a station would produce a radio show and play it for free, hoping to attract sponsors. If you're interested in the process, you can listen to old public domain radio programs of the Martin and Lewis show, which ran for quite a while without attracting a sponsor. When Dean Martin and Jerry Lewis' radio show started attracting a large radio audience, it started attracting sponsors. And while commercials as we know them were developed, at first Dean and Jerry just talked about their sponsors, and recommended their products as if they were just mentioning them in passing. Radio regulations caught up with that, and insisted that the commercial announcements had to be made clearly different from the content.

But there is no such regulation for podcasts. If I were doing a podcast right now, I'd pause and thank my sponsor (maybe your company!) and remind my listeners that your company was the best place, had the best price, or whatever. Then I'd go back to talking about dachshunds, or whatever the content of my podcast was. You, the sponsor, would pay me money for mentioning your company on my podcast. That amount would be negotiated, and would depend on how large my audience is, and how much money I would want.

So that's how podcasts work, and why they're free. They're paid for by sponsors, or just by the people making them, hoping to attract sponsors.

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