This model has been developed after a thorough analysis of the most successful subscription and/or donation models for podcasts and other premium content products such as Twitch, Spotify, Wikipedia, NPR, newsletters and other paid content sites.
Not all successful premium models use all seven elements, in fact some of them like Wikipedia, only use two of them: Patronage and Means of payment. However, in general the greater the number of elements the podcast/platform uses, the better they monetize.
Each of these elements can be unpacked and explained by drawing on examples from a number of podcasts and other successful paid content models.
P for Patronage
Patronage remains the single biggest driver of creator-based subscriptions/donations. When people feel a connection with the creator and feel their contribution helps the creator to continue with their work, then they are willing to support it, even if there are no additional benefits.
One of the most powerful examples of this is Wikipedia which is 100% donation funded. There is no material benefit to the patrons and they aren’t even recognized for their patronage, but they still want to support the project.
The single biggest driver of patronage is the strength of connection between the creator and the patron. We will see in later posts that some podcasts hugely over-index on their subscriber revenues because they have such a deep connection with their audience.
R is for Recognition
While the most important driver may be the warm glow of patronage, a close number two is being recognized for your contribution either privately (say a thank you email) or even better publicly. To give a famous example of this was in 1884 Joseph Pulitzer, publisher of the NewYork World, raised over $100,000 in six months for the Statue of Liberty pedestal. As thanks Pulitzer published the names of everyone who donated to the fund.
A more modern example of this is the game streaming site, Twitch. All content on Twitch is free to view but viewers can become subscribers to individual streamers. When they do become a subscriber they may get a live shout out and thanks from the streamer, and their chat avatar gains a subscriber badge. And this model works for Twitch streamers, with over half of their income coming from subscriptions/gifting.
Obviously for public recognition to really work you need to have an active community which we will cover below.
E is for Exclusive Content
The third most important lever is exclusive content. Interestingly many donation type models, like Wikipedia and NPR, don’t offer any exclusive content. Additionally, on Twitch there is no exclusive streaming content but subscribers often do get access to exclusive emotes.
In podcasting, exclusive shows have become a standard offering for premium subscribers. However, it is still early in the evolution of podcasts and unclear if that will continue to be the case or whether the market will evolve to become more like Twitch where the strength of the connection of the creator with the community plays a large part in its monetization strategy.
M is for Membership of a Community
Step inside of the velvet rope! You are now a member of this exclusive community where you can hang out with other paying members. Community is an exceptionally strong lever in building a successful product experience. Entrepreneur and venture capitalist, Chris Dixon, coined the phrase for consumer products which was “come for the tool but stay for the network” which underlined the power of community.
In creation of the daily fantasy sports industry, community was fundamental to our success. To enable community we built chatrooms, forums and organized live events to let the millions of players connect with each other, on and off-line. In addition, community sprung up around the product on affiliate sites and on Twitter.
I is for Insider Access
The holy grail of fandom is often to meet your heroes. Insider access is the opportunity to connect directly with the hosts and creators. At the high engagement level it can look like actual meet and greets, but it also encompasses behind the scenes coverage, having your questions answered, live Q&A’s, live group chats, thank you notes, etc.
One podcast we work with, the Secret Life of Weddings, said the top reason that fans let their Patreon subscription lapse is lack of access to the hosts. To address that they started a Flick Chat group where fans can engage with them and other listeners.
U is for Uninterrupted by Ads
Delivered well, podcasting ads can actually be a positive contribution to the listening experience. However, podcast ads are often not delivered well or aren’t really that intrinsically interesting. In addition, heavy podcast listeners get bombarded by the same ads for the same products multiple times, which gets annoying.
So the offer of an ad-free version of the show has become a popular benefit for premium podcast listeners. However, it really isn’t necessary for it to be either/or. Twitch premium subscribers generally also get advertizing. For the last 40 years cable TV subscribers watched lots of advertizing. Newspapers and magazines are paid for and carry ads.
M is for Means of Payment
In many ways this is the simplest one to understand (but often the trickiest to deliver), there needs to be a simple way for the fan to pay. One of the challenges of podcasting is the dominant listening platform, Apple Podcasts, doesn’t offer any way for the listener to pay. Because of this, podcasters have had to find ways to funnel listeners to other platforms like their own website or to Patreon to subscribe.
Over the past few years we have seen a transition towards monthly subscriptions with the entry level amount being $5 per month. Monthly subscriptions offer creators the certainty of a regular income on which they can rely in developing their art. We expect this will continue to be the dominant model.
The seven-element PREMIUM model is a useful model that provides content creators with a framework within which they can develop their monetization strategy. It can be used to figure out which elements will work best for their offering in their move towards a premium product.
Over the next few blog posts we will use this framework to deep dive into the top premium podcasts and other paid content providers to see how they have delivered against it.