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Luminary Looming

Ahead of next week's launch, a Digiday article highlights some money details.

A small glimpse into the deals being offered to the paywalled shows on Luminary via this otherwise unremarkable Digiday piece about the rise of paid podcasting. The golden nugget:

“One source, who asked not to be identified, said Luminary was offering anywhere from $700,000 to $1.5 million per show, provided that show hit subscriber acquisition targets for Luminary.”

If true, there are two things I’d take from this. The first is just your basic “wow, that’s a lot of money”. But the second is the alleged link between creator remuneration and subscriber acquisition. Of course, we don’t know for sure how these deals are specifically structured, but the idea that Luminary would so clearly link these two things is interesting to me. Since the app, which launches in the US, UK, Canada and Australia on 23 April, will function both as a general podcatcher and a container of their original ad-free paywalled audio, I had been expecting that the plan would follow the classic free-to-paid funnel model and bombard free users with promos for the premium content and drive signups that way.

But this seems to suggest that the paywalled shows have both been chosen for their ability to bring an existing audience behind the paywall, and will be rewarded for their efforts in doing so. This will probably yield good figures in the short term, but I wonder how sustainable it is beyond the initial drop — if a whole lot of existing fans come in just for one show, what’s the incentive for them not to cancel their $8 a month payment as soon as their fave finishes their run? Perhaps, like lots of premium subscription-based products, Luminary is banking on consumer inertia to help them out of that one.

Nick’s Note: It’s useful to contextualize the nature of that $700,000 to $1.5 million — one shouldn’t perceive that as pre-tax personal income for individual creators, but straight-up seed funding for the creation of those exclusive shows. Viewed through that framework, those numbers are a little more complicated than simply being a lot, particularly when you consider that signed creators would have to go off and hire producers, pay for production travel, and in some cases, renting out office space. In many ways, Luminary is functioning in a manner similar to a venture capital firm: spread around a bunch of bets, and hopefully a handful of them would break big enough to justify and outpace the investment risk. (Pegging further unlocked money to subscriber acquisition targets is also ~very venture capital~… also I suppose you could make the hackneyed claim that book publishers and film studios are also largely structured in this way. Hmm.) Of course, the major difference here is that Luminary controls the boundaries of monetization, which isn’t an insignificant factor.

Anyway, another aspect to the question of whether those money numbers are big enough depends on, of course, the nature of the show: a six-part episodic series that requires extensive legwork would require more operating budget than a weekly interview series featuring a celebrity. But it also depends on the proportion of the number that’s actually distributed up-front. I imagine the whole lot of them are going through process of learning what economics work, and what doesn’t, as we speak.