Four Basic Revenue Models


There are four basic revenue models you can pursue. The first two models can be used separately or together. The third model is somewhatbut not entirelycompatible with the other two. Using the fourth model will generally preclude the use of the other three.

The Associate/Affiliate Model

Affiliate programs allow you to sell products to your listeners from your website and receive a commission. For most podcasters, this will be the revenue model of choice. It has a number of inherent advantages over the other approaches you might use:

  • It doesn't require you to sell anything.

  • You can begin generating revenue immediately.

  • It doesn't have the negative connotations that some people attach to other methods.

  • It allows you to deliver added value to your listeners.

The most popular affiliate programby faris the one offered by Amazon.com. An association with the largest bookseller on the Internet is a natural one for podcasters. After all, regardless of which topics you cover in your podcast, there are certainly books that are directly relevant. Beyond books, Amazon offers a range of products that is so large and diverse, it's virtually certain that you can find products to offer for sale that specifically relate to your audience's interests and needs.

When you become an Amazon Associate, you're supplied with an identifier that you can add to links to Amazon products that you feature on your website. When one of your listeners buys one of those products, you get a commission of up to 10 percent of the price of that product. In addition, you will receive a commission on anything else your listener buys from Amazon if they visit the site through one of your links.

To join the Amazon program, go to the home page at Amazon.com. Scroll to the very bottom of the page and you'll find a link that says "Join Associates." Click that link and follow the instructions you'll find onscreen. You'll be asked to create an Amazon account if you don't already have one. (If you do, your Amazon Associate account can be linked with your existing account.) You'll then be asked for information that will facilitate payments to you (such as your address and your tax I.D. or Social Security information) as well as information about your website.

Once your account has been set up, you're ready to start offering products on your website. The Amazon Associates website steps you through the process of building links and automatically generates HTML code that can be copied and pasted on to your website. As you can see in Figure 13.2, you're able to build links to specific products or you can create links based on product categories or keywords.

Figure 13.2. The Amazon Associates website allows you to build links to any product that Amazon offers.


Once you're enrolled in the program, the revenue generation opportunities are virtually endless. If your podcast is focused on a specific topic, you can offer your listeners books and other products that relate to that topic. In addition, whenever you mention a specific book or product on your podcast, you can offer it for sale, too. (Links to specific books are usually created by referencing the book's ISBN number. That's a unique identifier that every book has. A great way to get started is by creating a link to ISBN number 0789734559. Try it and see how it works!)

Amazon's product catalog is so large that finding suitable products to sell will always be easy. You won't ever have to offer anything that's inappropriate merely for the sake of making money.

Moreover, this approach to generating revenue represents a real value to your listeners. Chances are, if you're talking about a book or other product, it's something that your listeners will at least be interested in learning more about. Rather than having to remember the name of a product and then having to search for information about it, they'll simply be able to go to your website and find what they're looking for. You'll have created an opportunity to generate revenue while serving your listeners' best interests at the same time.

Donations

The most widely implemented strategy for generating revenue is also the simplest: Ask your listeners for money.

As unlikely as it might seem, this is a tried-and-true approach among bloggers that has migrated successfully to the world of podcasting. It has the advantage of being relatively straightforward. Your listeners find value in the podcasts you're creating and they compensate you directly for that value. What could be simpler?

There are two basic variations to this approach:

The Tip Jar (or Donation Button)

Podcasters who use the Tip Jar approach simply maintain a link on their websites that allows listeners to make a donation to support the podcast. When a listener clicks on the link, like the one you see in Figure 13.3, they're given the opportunity to make a contribution of any size they want.

Figure 13.3. IT Conversations, one of the most well-respected podcasts around, used the Tip Jar approach with a "Donate" link on the top of its web page.


Some podcasters are reluctant to use this model because they feel it is somehow unseemly or unprofessional. The truth is that some of the most well-respected podcasts around use this approach…and some of the biggest bloggers on the Web do, too, for that matter.

If you're going to use a Tip Jar, the easiest way is to set up a PayPal account to accept donations. An existing PayPal account that you might have set up for eBay purchases will do nicely. If you don't have a PayPal account, you can easily set one up at PayPal.com.

The Pledge Drive

This approach, a variation of the Tip Jar model, mimics the pledge drives that you find periodically on public television. With this approach, the normal Tip Jar model is augmented with periodic appeals for contributions.

The Pledge Drive approach has been used successfully in the blogosphere and will likely become a mainstream approach for podcasts over time.

The Sponsorship Model

The third basic model for making money with your podcast is to seek commercial sponsorship. This is, of course, the traditional approach for generating revenue with media of all types: charging a fee for mentioning a sponsor on your podcast. There are different approaches to sponsorship, as we'll discuss in a moment.

Seeking commercial sponsorship has some inherent drawbacks, however, and you'll want to consider them carefully before you decide whether or not it's the right model for you.

Sponsorships Must Be Sold

In a perfect world, you'd answer your phone one afternoon and hear someone on the other end of the line say, "I'm from Vandelay Industries. We just heard about your podcast and think it's terrific. We'd like to sponsor it. How much would that cost?" Like winning the lottery, it would be an exaggeration to say that this never happens. It is safe to say, though, that your odds of winning the lottery are only slightly longer than those of having a sponsor seek out your podcast.

In the real world, if you're going to find a sponsor, it's going to be necessary for you to seek out a number of potential sponsors and sell them on the idea of sponsoring your podcast. In all likelihood, you'll have to make several presentations before you're successful. If you're looking for relatively small amounts of money to offset some of your expenses, you'll be able to approach smaller companies with your sales proposition. This is a plausible approach if you have an existing relationship with the decision-makers at a particular company or if your podcast is a particularly good fit for that company's target market.

Podcasting Can Augment Your Other Business Ventures

When you think about generating revenue with podcasting, don't overlook the possibility of using your podcast to enhance the value of other business undertakings you might be involved in. One approach would be to use a podcast to provide added value for your existing customers.

An even simpler approach is to use podcasting technology to distribute existing audio content. Many traditional radio shows are being offered via podcast, enhancing their value to advertisers. Similarly, radio host Rush Limbaugh is using podcasting to add to the value of an existing offering for paid subscribers.

Finally, your existing business may deliver presentations from time to timeeither to customers or to employees. These presentations can be easily recorded and then distributed with podcasting technology.

The bottom line is that your best business model might not be to make money with your podcasts. It might be to use podcasts to make more money with your other business endeavors.


Larger companies generally allocate their marketing budgets through ad agencies. Selling sponsorships of this sort is a highly competitive undertaking. A sales effort of this sort is time-consuming and can be frustrating, particularly if you're not already adept at selling.

If you decide that this is the right business opportunity for you then it's important to come armed with as much information as possible. The best way to do that is to create a media kit.

Creating a Media Kit

A media kit is simply a concise sales presentation on paper (or in a standard computer file format such as Microsoft Word or Adobe's PDF format) that describes your podcast and its audience. If you're going to be successful offering sponsorships to corporations and their agencies, then an effective media kit, like the one in Figure 13.4, is essential.

Figure 13.4. This media kit from the Endurance Radio podcast provides potential sponsors with a concise overview of the podcast and its value proposition.


Your media kit should include

  • Information about the size of your audience

  • Information about the relevant demographic characteristics of your audience

  • An overview of what makes your podcast unique

  • Specific information about the sponsorship opportunities you're offering, including costs

Your media kit will not sell sponsorships by itself. If you're targeting the corporate market, however, it's a necessary tool for getting the conversation started.

Classic Sponsorship Versus Commercial Placements

By their nature, podcasts are more suited to the type of sponsorship arrangement that calls for a sponsor to underwrite the entire podcast. With this approach, you as the show's host would announce to your listeners something like, "This podcast is being brought to you by our good friends at Vandelay Industries. Let me take a moment to tell you about why you should support Vandelay Industries…"

Commercial placements like those found on traditional radio are generally unsuited to podcasts since listeners can fast forward past them.

The Aggregator Approach to Sponsorship

Another approach to sponsorship that's being developed is the distribution of podcasts through a central directory. The directory, or aggregator, would have the responsibility of attracting listeners. The directory would then sell sponsorships and share some portion of the resulting revenue with the individual podcast producers. Podshow.com is one example of a directory that's trying to develop this business model.

This approach has the advantage of alleviating the need for individual podcasters to sell their own sponsorships. In return, they'd give up control of their financial destinies and would receive only a portion of the revenue that their podcast might otherwise generate. For hobbyist podcasters, this might prove to be an attractive approach if the directory does a good job of generating revenue and attracting listeners.

Distribution to Paid Subscribers

At the beginning of this chapter, we mentioned that there is one way to extract value directly from your podcast's content. That method is to charge listeners to subscribe to your podcast.

As this chapter is being written, there are no examples of this approach to cite. We fully expect, however, that by the time you read this, some podcasters will have begun to offer their shows on a paid subscription basis.

There are two general approaches to doing this. The first involves charging a nominal fee for a subscription and attempting to attract a large audience. The other approach is to charge a large subscription fee to a small, select audience.

As we have said throughout this book, podcasts are not broadcasting. They are generally not designed to attract broad audiences and are not the best vehicle for broad, widespread distribution. That being the case, the prospects for success with a low-cost, high-distribution podcast are questionable. Even so, several companies have indicated that they will be attempting to facilitate such an approach. These companies include

  • PayPal (paypal.com)

  • BitPass (bitpass.com)

  • Click And Buy (clickandbuy.com)

  • Javien (javien.com)

  • RSS Bazaar (rssbazaar.com)

The second approach strikes us as much more promising ifand this is a big "if"your podcast contains unique information that's clearly valuable to a specific, well-defined audience. Both approaches will require a sustained marketing effort. Experience in other media demonstrates that selling a $20 subscription takes almost as much effort as selling a $200 subscription. If the content of your podcast lends itself to high-end positioning then this approach is plausible.



Absolute Beginner's Guide to Podcasting
Absolute Beginners Guide to Podcasting.
ISBN: B001U8C03Q
EAN: N/A
Year: 2004
Pages: 167

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