How Do Podcasts Make Money?

New podcasters always ask the same question before they take the plunge: “How do podcasts make money?” They want to know what the reward will be before they invest their time and energy growing a podcast audience.

Furthermore, how much money can podcasters make? To be frank, most make $0. In fact, many podcasts have negative cash flow because they spend money buying equipment and paying hosting fees before they earn a single dollar. 

Creative work like podcasting doesn’t make any money until people choose to watch you. It takes time for listeners to decide you have value. So if you’re looking to start a podcast because you need a paycheck this week, you should find another way to earn income.

But if you put in the work to make amazing content, publish new episodes consistently, and engage your audience, you’ll eventually build a show that rakes in money each episode. There are lots of people who make very comfortable livings working just working on their podcasts a few hours each day. 

In this article, we’ll explain how podcasts make money, we’ll review how the highest earning podcasters earn their incomes, and then we’ll talk about what the average podcaster makes. 

How Do Podcasts Make Money?

There are actually a lot of ways to monetize a podcast. The most successful podcasts use several monetization strategies so there’s money coming in from a lot of different places.

Why should you diversify your revenue? For safety. Imagine if all your revenue comes from publishing your podcast on YouTube, but then one day YouTube bans your channel. You would lose everything! So it’s best to create multiple revenue streams. 

We dive into all the ways your podcast can make money in our article on podcast monetization, but here we’ll go over the top four methods: Sponsorships, direct support including premium content, affiliate sales, and complementary products.

1. Sponsorships

Sponsorships are the most common way podcasters make money. This is when the podcast promotes the sponsor during the show. You probably hear your favorite shows plug their advertisers a few times in every episode.

How much you earn from a sponsor depends on the number of downloads your episodes earn. Sponsors pay on a cost per mille basis (mille is Latin for “thousand”). Rates range from $18 to $50 CPM, though hugely popular podcasts can pull in a lot more.

You can price your ads differently depending on where you place them within your episode. Pre-roll ads run at the beginning of the show, usually for about 15-30 seconds. Post-roll ads run at the end of the show, also for 15-30 seconds. They are worth the same to advertisers.

Mid-roll ads are more valuable because the audience is captive at the time. Sometimes the sponsor will give you a script to read. Other times the sponsor will give you more flexibility.

When you first start pitching advertising, we recommend asking for $15 for pre- and post-roll ads and $20 for mid-roll ads. Check out the Podcast Sponsorship Calculator to learn how much you can charge for ads.

2. Direct Support

Direct support is when you simply ask your fans to send you money to support your show. If your content and personality are good, there are plenty of people who will happily throw you a few dollars so you can keep producing episodes. 

This is one of the first solutions we recommend to podcasters looking to monetize their show because it’s easy to set up. The best method is to use Castos as your podcasting hosting platform and then enable Castos Commerce. Your audience can support you through one-time or recurring donations.

An alternative method is to create a Patreon account and make a page that explains why you deserve support and to collect money.

If you don’t want to use Patreon, you can add a PayPal button or open a Stripe account and add a donation form to your site.

3. Affiliate Sales

Affiliate sales are similar to sponsorships, but instead of getting paid by the download, you get paid based on what you sell for another company. The other company pays you a commission for each sale. 

Audible has a popular affiliate program that a lot of podcasters and YouTubers take advantage of. Audible gives you a special affiliate link to promote. When someone uses your link, you get credit for the sale and earn $15. (Audible UK also has an affiliate program.)

If you monetize with affiliate sales, make sure the company gives you a simple link that’s easy for you to say and your listeners to understand. It’s best to use affiliate marketing software to manage the whole process.

• Good affiliate URL: www.sponsor.com/your-name 
• Bad affiliate URL: www.sponsor.com/63hgh22?=3mbo6

4. Complementary Products

The fourth common way to monetize a podcast is to sell complementary products. This might include merchandise, courses, consulting services, books, or access to live events. 

When it comes to selling your own products, you don’t actually have to run your own fulfillment center. You can use a drop-shipping service or a print-on-demand service to send orders to your customers. You just need a place on your website for them to order. 

5. Premium Content

A great way to get your audience to support you is to compensate them with premium content. You could charge them for early access to episodes, bonus episodes, downloadable resources, live chats, or access to newsletters and Facebook groups.

Keep in mind, however, that this means you have to spend the time (and possibly money) producing special content that’s worth paying for. And you can only give it to the people who pay for it, not your audience at-large.

How Do Podcasts Make Money with Popular Advertising Networks?

There’s no doubt that podcast sponsorships are the most lucrative way shows make money. They’re also one of the easiest revenue streams once you finalize a deal with the sponsor. All you have to do is read your ads on your podcast recording according to your agreement. 

In fact, sponsorships are the most lucrative way to make money from your podcast. According to IAB and PwC, advertisers spent $678 million in 2019 and will spend more than a billion in 2020.

Where do you find sponsorship deals? You can negotiate a deal with any sponsor, but most new podcasters start with sponsorships by going through a broker. Here are a few places to find sponsorship deals:

• Ad Results Media
• Adopter Media
• AdvertiseCast
• True Native Media
• Midroll
• Podcorn

In the beginning, you won’t have the leverage to demand your own rates. Once your really starts to perform, however, sponsors will begin to reach out to you and you will have more control over what you get.

Some of the Highest Earning Podcasts

It’s important to keep in mind that we’ll never know for sure what a podcast makes because their earnings aren’t publically available. We only know what they tell us and what we can deduce. Only the podcast owners know exactly what their show earns. 

Furthermore, like any business, podcasts have expenses. We don’t know what the podcast owners pay just to run their show, so it’s hard to calculate the number we really care about: the profit.

If podcast A makes $10,000/month with $2,000/month in expenses and podcast B makes $12,000/month with $8,000/month in expenses, show A technically makes more money, but those are vastly different financial situations. We’d love to break down their profit (what the hosts actually take home), but we just don’t have that information.

With that in mind, here are some data points about some of the highest earning podcasters to help you understand what’s possible. 

• The Joe Rogan Experience makes about $800,000 per episode. At three episodes per week, his show makes $9.6 million per month. He makes another $16,500 to $264,000 per month on YouTube.
• Chapo Trap House has 32,874 patrons, which equals $147,262 per month.
• Pat Flynn’s Smart Passive Income has two podcasts. His most popular podcast doesn’t sell ads, but together they make more than $100,000 per month in affiliate revenue.
• Last Podcast On The Left has 11,290, which equal $53,958 per month.
• Tiny Meat Gang has 10,638 patrons, which equals $51,199 per month.
• Between ads, YouTube revenue, and Twitch revenue, The H3 Podcast makes just under $500,000 per month.
• The Ringer earns more than $15 million from podcast advertisements.

How Much Money Do Average Podcasts Make?

Whenever someone asks us “How do podcasts make money?” what they really mean is “How much can the average podcaster make?” You may intend to run a popular show with 10,000 million downloads, but that will be a while. So let’s talk about some practical numbers. 

First, let’s make a few reasonable assumptions.

• You put three ads in each episode: a one pre-roll, one mid-roll, and one post-roll ad. 
• 2% of your audience with support you on Patreon. They donate $5/month (the most common donation amount).
• 1% of your audience will purchase products using your affiliate link each month. The value of each commission is $15. 
• 0.05% of your audience purchases an online course each month. The course costs $99.
• You publish four episodes per month. There are technically 4.3 weeks in a month, but we’re using round numbers to keep things simple. 

(This multi-approach to monetization is a very popular way to make money from your podcast. A single monetization method is usually never enough on its own, so be prepared to dive into several methods.)

Based on these assumptions if you have 1,000 downloads per episode, sponsors aren’t interested in your show yet, but you can still make some money. 

• 100/month in Patreon support
• $150/month in affiliate sales
• $495/month in course sales
• Total = $745/month

If you have 5,000 downloads per episode, you’ll start to land sponsorships. You’ll be able to charge about $20 CPM for ads.

• $1,200/month in ads
• $500/month in Patreon support
• $750/month in affiliate sales
• $2,475/month in course sales
• Total = $4,925/month

If you have 10,000 downloads per episode, people will really start to notice your show. You’ll be able to charge about $50 CPM for ads.

• $6,000/month in ads
• $1,000/month in Patreon support
• $1,500/month in affiliate sales
• $4,950/month in course sales
• Total = $13,450/month

Keep in mind that these numbers are based on the assumptions we listed above. How much you are podcast makes from each revenue stream could be different. You may not start podcasting with an online course ready to go. You might find a sponsor to pay you a higher CPM because your audience overlaps with theirs. Or you might have an audience with deeper pockets who don’t mind supporting you on Patreon.

How Many Listeners Do You Need to Make Money on a Podcast?

There’s no specific number of listeners you need to generate revenue from your podcast. Technically, you could start earning money with just a single listener if they send a donation, purchase premium content, or buy a piece of merchandise.

But that doesn’t apply to sponsorships. Generally speaking, sponsors are looking for a minimum of 5,000 downloads per episode before they are willing to purchase ads. Many podcasters recommend waiting for 10,000 downloads per episode before you start going after sponsors. 

Obviously that doesn’t apply to all sponsors. Some are happy to support shows with smaller audiences, but naturally they’ll expect to pay less. 

In the beginning, it’s important to focus on increasing your listener base as quickly as possible. Sometimes that’s easier if you avoid monetizing your audience as long as you can. Some people are turned off by anything that feels like monetization, so the longer you hold out, the quicker your audience will grow.

So How Much Money Can Podcasters Make?

We hear the question “How do podcasts make money?” all the time. As you can see, there’s a big range. While most podcasters make very little in the beginning, podcast and can be a lucrative career if you stick with it, engage your audience, and consistently create quality content.