Issue 227,  published September 24, 2019

Options for Everyone Else

If you squint, you might notice a quiet arms race forming around an increasingly apparent gap: monetization opportunities for podcasters who are finding conventional podcast advertising revenue progressively harder to access.

Existing players in this space include Slate’s Supporting Cast (which I wrote about in February); a new startup called Supercast (which Caroline wrote about last week); and emerging initiatives from companies primarily focused on other media formats, like Patreon and Substack.

These efforts appear to be fueled by twin observations: firstly, that the number of podcasters — and therefore potential customers — have ballooned to astronomical levels over the past couple of years, and secondly, that conventional podcast advertising, long the default economic engine for the industry, feels increasingly contained within layer of established publishers and similarly established newcomers (i.e. legacy brands, celebrities, and so on). As such, there’s potent opportunity to create better tools, systems, and pathways for the wide universe of everyone else to access alternative means of monetization. The question is what those tools will be, and who will be able to effectively build them for the masses.

One recent addition to this cadre of note is RedCircle, a San Francisco-based startup founded by Mike Kadin and Jeremy Lermitte, a pair of tech industry operatives who, as they’re quick to tell you, hail from Uber, the (often controversial) ride-sharing giant. “When we looked at the [podcast] industry, we made the observation that there just wasn’t a lot of sophisticated technology in place,” said Lermitte when we spoke over the phone last week. “A lot of the tools we built for Uber were were around providing marketers and operations people with tools to run and grow their cities, and so we felt like we could actually apply a lot of what we’ve done for and learned from Uber to create value for a lot of people.”

When the startup made its first press push back in April, much of the emphasis was clustered in a cross promotion-oriented audience development tool. Since then, RedCircle has expanded its value proposition to offer a broader suite of solutions, including free hosting, standard analytics, and most importantly, infrastructure to help podcast creators directly monetize their shows through channels like donations and premium subscription. The website does a pretty good job showing you how the back-end of its platform works right off the bat, so I won’t go into the technicals here.

RedCircle’s plan, it seems, is to develop an ever-iterating platform that will be a lot of things for a lot of podcast creators. Which is also to say: RedCircle will very likely continue expanding the toolset it’s offering, up to and including eventually building out an alternative on-platform advertising marketplace. (I’m told that the company has already gotten a few brands on-board with that program.) In our phone call, Kadin and Lermitte emphasized a focus on independent publishers, which they seem to broadly define; their current client list includes YouTubers (Approachables), reality TV figures (Dear Albie), and sports radio talent (Tony Bruno).

At the moment, the startup claims to be gaining some steam. Kadin and Lermitte says that they’re growing 38% month-over-month; when pressed, I was told that the number refers to growth in downloads of podcast episodes hosted on the platform. Personally, I’d be more interested to see growth metrics tethered to direct revenue volume transacted on the platform, but I suppose we all have to start somewhere.

Speaking of which, we should talk about RedCircle’s business model. In its current iteration, the startup’s revenue engines are primarily attached to its direct monetization tools: podcasters using its donation solutions will be charged 4.5% of their received donations (plus Stripe fees), while podcasters using its premium subscription solutions will be charged 12% (plus Stripe fees). Again, RedCircle is likely to expand its services, which means that its revenue channels will also expand along with it.

Given the current business model, I asked Kadin and Lermitte if people should think about RedCircle as, say, “Substack or Memberful, but for podcasts.” The duo prefers a different reference point: Shopify, the Canadian e-commerce platform giant that offers a suite of services (payments, marketing, customer engagement, shipping, and so on) to a wide range of online merchants. It’s an appealing evocation, given that Shopify, which is publicly listed, brought in over $1 billion in revenues last year. And you can probably derive the startup’s endgame from this metaphor: if RedCircle is successful in going about its business, it can become an entire layer of the growing podcast ecosystem.

Of course, the metaphor has its limits. It’s fairly reasonable to conceptualize the growth potential of the online merchant category as theoretically infinite. After all, as long as people need goods and services, there will always be an ever-growing, ever-iterating, and ever-evolving pool of online merchants to meet those needs. But is it appropriate to think of media companies, and podcast publishers in specific, along similar lines? Or are the boundaries of that pool significantly smaller and much more defined?

Lofty questions, these. They’re worth mulling over, I think, not just in the context of the ambition of upstarts like RedCircle, but also in terms of how we should think about the broader trends informing the creation of these ventures. To reframe the questions in the prior paragraph: we know that the number of podcasts have ballooned to astronomical levels over the past few years. To what extent are those volumes sustainable? In other words, is there enough listening, and subsequent direct revenue engagement, to keep most of those podcasts around?

But those are broader considerations, and I’d understand if you think it to be navel-gazing. For now, and for whatever proportion of those new small-to-midsize podcasts will persist, there exists a definite need for an alternative economy along with tools to support that. Whether RedCircle — or Supporting Cast, Patreon, and so on — ends up being the main solution over the long-term remains to be seen, but the opportunity is nonetheless very much there.