Monetizing Podcasts and Newsletters - Chris Best of Substack and Jonathan Gill of Backtracks

So Chris, what do you do?

I'm the CEO of Substack. We make it simple to start a paid newsletter, and also you can put audio in it now.

In Jonathan.

I'm Jonathan Gill, co-founder and CEO of Backtracks. We help audio content creators know and grow their audience and in the revenue.

And you guys have two different strategies, paid versus advertising?

Yes, what's your take?

Jonathan: I think from the current state of the podcasting market, ad-supported sponsorship is one way forward. When people are used to free products versus television and cable, where they're used to different tiers, so there is subscription revenue. There is à la carte. But from our view, the podcast ecosystem at large is not really ready for subscription content, and I think there's alternate viewpoints of that.

Yeah, I think that's actually an interesting way to put it. I mean, obviously we think that paid content, paid relationships even, is sort of the way to go. It's a huge missing force in like the media in general. We started with newsletters; we think the default assumption that everything has to be free is kind of something that's like breaking the world in a couple of important ways. And it may well be true that with the existing podcasting ecosystem, especially in the U.S., that it's really hard to do paid stuff in a compelling way, just because of the way that it kind of evolved and the way that the people control the ecosystem. But I think that the podcast market that can be supported by advertising is small and sad compared to the audio market that could be supported if we had an effective way to pay for it. And the kinds of things you're seeing happen in China right now sort of hinted that.

Yeah, and in terms of the Chinese market, the Chinese market's a little different than the U.S. and worldwide in that they're used to paying for audio content. Some of it is richer in quality; they pay for educational content. The ecosystem for podcasting and paid for content in China is much greater than ten times your size.

Exactly, yeah, it's different historically. And like I think there's a good blend of there's content that works that's ad-supported. There's directly attributable, and even see it through Patreon sponsorships where people are paying for that content by being a fan, by being a patron, by the direct payment systems. But then I think there can be a mix. I think in the U.S. market in the current state, sponsorship is one way. There's private pay-walled content. There's the blend of the two. And kind of our viewpoint at Backtracks is from the advertising standpoint. People don't like advertising when it doesn't fit with the content and the messaging, but advertising can add value if it's actually in relation to the content, if it's not in the creepy factor that Google and things have. But you can basically blend the two for a healthy ecosystem. It doesn't need to be one way or the other.

Can I ask a question that I'm genuinely curious about? Are advertisers today overpaying or underpaying, or paying about the right amount for podcast ads in general?

So it depends on the particular piece of content, a particular advertiser. One of the problems in the industry is measurement and how to uniquely measure a listener and how do you know engagement. It feels a little bit like podcast downloads are almost like the banner ad impressions of the early internet. So we have a spec and technologists around measuring the actual engagement. And so should you base your advertising spend on a metric like downloads or more engagement or other if you're doing advertising? But I think in terms of the industry, the metrics aren't there in the same way video and text are. And that's part of the tech stack that we have is you can directly measure how long someone listened to a podcast. And in certain cases, we...

Okay, but we saw that change a few years ago with the biggest podcasts anyways, because a lot of these companies are using affiliate codes now.

Exactly, so that's how they actually track it, right? Because of, you know, you're just like, "I'm gonna sponsor Joe Rogan," and I think... are you willing to pay for like whatever 10 million...