A few blockbuster podcasts are making all the money (2024)

The podcast industry was initially a way for a crowd of voices from culture watchers to true-crime nerds to talk about everything from murders to science and sex. All you needed was a decent microphone.

Now, podcasting is turning into an industry of megastars who command the most money and the biggest audiences. There are still nearly 450,000 active shows that have published recent episodes, according to Podcast Industry Insights. But the top 25 podcasts reach nearly half of U.S. weekly listeners, according to Edison Research. The top talents have tours, merchandise and multiyear deals in the nine figures. Big advertisers want in.

Podcast distributors, like Spotify and Amazon, are capitalizing on this dynamic. Some are experimenting with selling subscriptions for their top shows, in the hopes of persuading audiences to pay more to listen without ads, get early access or exclusive bonus content. They are making video versions of podcasts. Some are selling more ads to bigger brands like car manufacturers and alcohol distributors that spend much more than the startups that peppered most podcast ads for years, such as mattress-makers, health supplement brands, mindfulness apps and meal kit delivery companies.

After a costly boom-and-bust cycle that spanned about half a decade, the podcasting business is growing up. Spotify made speculative deals with celebrities in hopes they’d hit big, but they often didn’t and lost money. Prince Harry and Meghan Markle, for example, signed a $20 million deal but only made one show. Other platforms like Amazon, iHeart and Sirius also splurged. Now, the distributors are working language into their podcast deals to protect them from such big losses.

In Cooper’s anticipated deal with Sirius, the podcast would have to hit minimum audience targets, people familiar with the negotiations said. That kind of provision is becoming increasingly common.

Noah’s deal with Spotify allows the streaming platform to recoup its initial multimillion-dollar investment and share any additional ad revenue with him, people familiar with the matter said. That structure has become a model for the audio streamer’s pared-down roster of talent deals.

“The business model used to be simple: create a new podcast, make a deal, and sell ads," saidMax Cutler, who was Spotify’s vice president of talk creator content and partnerships until leaving to launch media company Pave Studios. Now, other revenue streams including subscriptions, live events, and merchandise are core to making podcasts profitable, he said. “Diversification is crucial."

Nearly 100 million Americans age 12 and older listen to podcasts every week, according to Edison. Podcast advertising revenue is projected to grow 12% to more than $2 billion this year and hit nearly $2.6 billion by 2026, according IAB and PwC.

Podcasters regularly record both audio and video of episodes and post them on YouTube—and they get a cut of revenue from any ads sold against those videos. Podcast listeners sometimes put their favorite shows on a living-room TV.

Spotify introduced video in 2020, which took off with stars Joe Rogan and Alex Cooper. Now it has a quarter million podcasters uploading video to its service.

“Younger consumers want more ways to interact with creators and creators want better ways to express themselves," said Spotify Chief Executive Daniel Ek. Consumers today move between formats—audio, video, even reading—effortlessly, and creators should make their content available in as many formats as possible, he said.

Amazon’s Wondery podcast unit is betting that today’s top podcasts have the potential to become hits in other media like film, TV and books, and has sought more control of future projects in its deals. Beyond YouTube—where most people watch podcasters’ videos—Wondery has free, ad-supported TV channels.

It plans to launch video episodes of hit podcast “Armchair Expert" after striking an $80 million deal with comedian Dax Shepard. The company will co-own two new podcasts it will create with Shepard, sell ads and hawk exclusive merchandise. It also has the right to livestream his show once a year.

Wondery Chief Executive Jen Sargent said some talent can still command large paychecks, but because of the new ways studios are making money from podcasting, “when you do the math, it pencils out."

National Football League star brothers and “New Heights" hosts Jason and Travis Kelce are seeking a deal in the $100 million range and have had discussions with Wondery, people familiar with the talks said.

Smaller and less proven stars can make deals with distributors, but the checks are much smaller and some don’t have deals at all, making merch sales and touring even more important, executives say. Many hosts do their podcasts on the side and have other jobs to make money.

Podcasting emerged in the early 2000s and entered dinner-table conversations in the U.S. a decade ago, when “Serial" launched a new era of audio storytelling with the tale of Adnan Syed, a man working to overturn his murder conviction. “Serial" and others like it offered listeners fascinating yarns born of rigorous reporting, backed by compelling music scores.

Spotify kicked off its big bet on podcasting in 2019, sparking an arms race among media and technology giants for tech, talent and content. Spotify spent over $1 billion scaling up its podcast business, but it struggled to make the business profitable, and investors soon lost patience.

Under Wall Street’s pressure to make money, Spotify consolidated its studios and culled shows.

Then the ad market slowed. Direct-to-consumer brands that had anchored the podcast ad business struggled early last year amid rising interest rates. And a software update from Apple late last year hindered the podcast industry’s advertising efforts.

For years, if an iPhone user subscribed to a podcast, Apple would download every subsequent episode onto that listener’s phone, even if the person never listened to them. After the update, those episodes stopped downloading automatically and many shows saw a 20% to 30% decline or more in downloads.

Over the past year, big brands like BMW, DraftKings and Home Depot began advertising, primarily on the podcasts with the biggest audiences.

“That’s going to be a big driver of the next wave of podcast advertising growth," said Jordan Fox, chief executive of Ad Results Media, which works with brands like Molson Coors, FanDuel, BetterHelp and Liquid Death.

Selling subscriptions to listeners is also a growing strategy.

Sirius is planning to launch a subscription that bundles some of its shows together for around $6 a month, according to people familiar with the matter. That may include Conan O’Brien’s podcast, “Freakonomics Radio," “Crime Junkie" and “Smartless," which signed a new distribution deal with Sirius earlier this year, the people said. It would likely include “Call Her Daddy" if the company reaches a deal with Cooper.