By Mei Chenfei and He Congcong

Earlier this year, Audible, an amazon-owned audiobook app, launched Channels, which, for $14.95 a month, allows users to listen to a variety of original audio content, including news stories from major media outlets like the New York Times and popular podcasts, in addition to audio books. For most other podcast producers, however, “paid subscriptions” seem to be an ideal far less important than expensive advertising. And third-party streaming platforms are still focused on aggregating different content, rather than offering value-added services to listeners through fees. While the “paid for subscription” model has been proven in text and video media, can it do the same for podcasting as an alternative pillar to advertising? Could podcasting, a not-so-new but always tepid industry, finally be the next Netflix? Maybe this podcast series on the industry will give you some inspiration.

Charging listeners directly isn’t a priority for most podcasting platforms. But when users do start paying, who will the money actually go into? Is it a production company, a podcast network, or a broadcast platform? This is the third article in a five-part series about the online audio on demand industry.

How much would you pay to listen to your favorite podcasts?

While podcast producers are frantically seeking sponsorship money from advertisers, they are also looking for more down-to-earth ways to cash in, experimenting with charging listeners directly as a second source of revenue.

Listeners have already proved that enthusiasm can lead to a show: Radiotopia has successfully raised enough money from listeners for its new show Roman Mars’ 99% Invisible. Although most people do not agree with this method of liquidation, they think it is difficult to generate sustained cash flow, and it is difficult to attract investment from industry leaders.

Content producers, on the other hand, are also experimenting with offering listeners good shows from the past, tidbits and special exclusives. Public radio, meanwhile, hopes to entice listeners to pay membership fees to listen to podcasts, hoping to boost revenues by ploughing this new frontier.

There are, however, more interesting ways to play.

“We hate the idea of advertising in podcasts,” says Eric Nuzum. He’s a well-known radio host who also runs Channels, an Audible podcast that launched in beta in July. The gameplay of Channels is simple: Listeners pay $4.95 a month to listen to all of Channels’ specials, including “20 Minutes of Relaxation,” “Meow! For CatLovers” and “Front Row Comedy.” Or, if you’re already a paying user of Audible, you can subscribe to Channels for free.

The low price of $4.95 is meant to get users into the paying habit. Podcasts still have a long way to go before they find a real business model, and for now they need the patience and funding of their parent companies. Just this week, Channels will make its content available for free to Amazon’s more than 50 million prime members. (This mirrors amazon’s strategy, announced a year ago, of offering subscriptions to the National edition of the Washington Post for free initially and at a low price later.)

We expect subscription fees for other podcasting platforms to be no more than $10 a month; Most of the content in the media and entertainment world is usually around $10.

Of course, Audible has a big built-in advantage: it has millions of audiobook subscribers (the company doesn’t break out numbers) that it has built up over the past 21 years, many of them also premium members. Sure, you can just subscribe to Channels, but premium memberships/audio books/podcasts come with extra deals; Amazon hopes the multiproduct bundle will benefit the company as a whole.

Channels offers dozens of Channels. Content from many shows is freely available online, such as American Public Media’s Marketplace, CNET’s Tech News, and Radiotopia’s Criminal. Channels also offers updates to many Media outlets, such as The New York Times, The Wall Street Journal, USA Today, Vox Media, French Courses, and Reader’s Digest.

“Channels wanted to provide an HBO-like experience,” Nuzum said. “Everything here is the best.” That was clearly an ambitious early positioning for Channels. Original content of initial stage, quality affirmation poor satisfactory. For now, convergence is its real selling point. Nuzum says we’ll see more original content over time.

We hear a lot of podcasting platforms call themselves the Netflix or HBO of audio. But if we’re going to continue to grow subscribers, we need to aggregate more quality content. When Channels first launched, you heard a phrase that was used a lot in the industry: “value-added”. And it will ultimately be up to consumers to decide what constitutes real “value added” — what is worth paying for and what is not.

Channels stood out from its competitors in 2016 due to its unique market positioning. Who will follow the model led by Channels and expand their own original audio content subscription business?

Here’s a short but impressive list. SiriusXM (SiriusXM), Spotify and Pandora (p) — all three have very large paid subscription businesses that focus on talk shows and music. Sirius and Spotify, in particular, claim more than 30 million subscribers and have built a sustainable paid subscription business model; Spotify has recently ramped up its podcasting business. Apple Music, which has just over 11 million paying subscribers, could also launch a subscription service for podcasts, tapping into that market with its iTunes/App role.

Each company has experienced setbacks and successes in its advertising business, and each has faced challenges in its core business. Is 2017 a good time? Is the market still too small? No company has said it will follow Audible’s model unless it confirms that the podcasting business can generate new and additional revenue. A lot of people are still looking at Channels.

Channels has a very high paywall, allowing users to listen to only 30 minutes of content without paying. Such limits are likely to limit the popularity of their shows, much as newspapers’ high paywalls have in some ways curtailed the growth of digital news readership.

Audible has its own gameplay and modes, and many of its competitors are already testing them in the market. These patterns can be boiled down to the following three:

• Early bird access, which allows users to watch video content before it is publicly available, either on DVD, streaming or on the platform. All of this is designed to get people to pay for it;
• Access to historical content;
• Extras, in the form of extra episodes or DVD backdrops for movie lovers.

Mans Ulvestams, founder and CEO of Acast podcasting platform, summed up two types of business models behind all media, digital and classics. “It’s the ultimate form of podcasting THAT I can imagine. You can make money from advertising or you can make money by charging users.”

“We’ve found that many listeners are very willing to pay to listen to podcasts they already follow and like because they can listen to exclusive shows, more in-depth content, or they can listen to all historical shows at once.” He said. In The UK, Acast has a popular podcast called The Football Ramble. It is a free program that is updated weekly, but a monthly special is only available to paying subscribers.

Midroll Media provided back-end AD recommendations for Howl. For $4.99 a month, Howl gives you 150 hours of ad-free podcasts, including “WTF With Marc Maron,” an original radio series and dozens of comedy shows. Most paying customers watch comedy shows.

Midroll’s chief revenue officer, Lex Friedman, says he is happy with the number of subscribers, but admits it is too small. Wondery is testing a service that lets paying subscribers listen to new shows early.

Where is the paid subscription business going in the future? Is it Audible’s flat-rate model, a variety of niches, or both? For now, it looks like the latter. Audible’s first-mover advantage is largely that they actually have content that consumers will pay for.

Such paid subscription strategies face a harsh reality of the digital subscription era: consumers have low willingness to pay, high expectations and are only willing to pay for one service provider. If they want to watch video content, they may choose Netflix, Amazon or Hulu. If they had to pay, they would pay for at most two of them.

Perhaps the podcasting industry will be different, since most of us subscribe to multiple services. But if not, only the biggest — and the best — podcast networks, which offer both featured original content (like the latest versions of Netflix and Hulu) and a wide variety of different shows, can sustain large, sustainable subscription businesses.

Yes, the “value-added content” package may work, but it has to be rich and broad. Existing podcasting value-added services are no match for TV (or “TV”) shows like HBO’s “Game of Thrones,” Netflix’s “Orange is the New Black” or Amazon’s “Transparent.” Channels is not there yet as a stand-alone product, and neither are the others.

There is another layer of complexity to the subscription model. Listening to many of the most popular podcasts doubles as the show is also broadcast on public radio stations — listeners listen for free. “This American Life” could have been the “House of Cards” of podcasting, but subscribers are unlikely to pay for a show they can hear for free on the radio.

Also, it’s important to remember that the digital subscription model — in general — is a relatively new phenomenon. Ten years ago, almost all the news, information, music and movies preached an insistence on freedom and independence. From the five-year-old newspaper paywall model to Netflix’s huge success as a movie and TV aggregator, consumers have proven their willingness to pay.

As podcasting steadily enters the paid subscription game, it will learn from video — and even decide to bundle with video. Online video on demand has found cable and satellite TV trying to take advantage of its dominance in the market. They face competition from Netflix, Hulu and the unique Amazon bundle.

There are a lot of uncertainties across the industry. We don’t know yet how many bundled and unbundled things will happen in the next few years. The podcasts package would work well with the video package and could grow independently, as Audible hopes.

Crowdfunding offers another way to make money from listeners, and one that has already made a small dent in the podcasting industry.

“When we started [PRX’s] Radiotopia Network, we started to get some support through crowdfunding and sponsorship, both of which have now become major sources of sustainable revenue for content producers.” Jake Shapiro, co-founder of PRX.

“Roman Mars is an independent content producer who works his butt off and focuses on doing his thing for a long time.” Said Shapiro, host of the popular show “99% Invisible.” “He set out to increase listening and how to communicate with his audience, and then he went to Kickstarter and did a crowdfunding campaign. It was his first crowdfunding project and it was a huge success.”

The success of the crowdfunding effort soon led to a lot of funding for the show: “In a way, it’s a replay of the way public radio used to finance itself, much like the fundraisers that radio used to do, and the sources of sponsorship, but it’s all applied to the way podcasts work today.”

“The goal for public radio is really to get donors who can give $100 a year.” “We have no problem with small amounts of funding,” says Kerri Hoffman, CEO of PRX, “because in the podcast world, we’re really building a community. Whether a person gives us $3 or $100, they will post on social media what they think about our content.” They may also listen to our [live] programming, and we think more about the value those sponsors bring than public radio.”

For all these reasons, Radiotopia — which now offers 14 shows and will soon have a 15th — is planning an annual crowdfunding campaign to support creative shows. The next one will be held in October.

New York Public Radio (WNYC) also got in on the crowdfunding craze, including a podcast called “Meet the Composer.” “We are committed to building a crowdfunding model and membership in the digital world.” Laura Walker, the head of WNYC, told me, “We believe there are some incredible opportunities here, but in a different way than radio.”

The tricky part for big podcasting stations like WNYC and WBUR is how to relate the growing, out-of-use value of podcasting to the subscription model. This will go a long way in retaining existing customers and acquiring new ones. For many stations that do not themselves produce content, the issue may be less clear. If they make a lot of public radio podcasts available to listeners through their apps and websites, will their own membership subscriptions get a boost from the halo effect?

Consider the strategy adopted by Oregon Public Radio (OPB). The national public media outlet just launched an app that’s like a licensed version of WNYC’s Discover app. OPB has launched a new wine and food podcast and is using this strategy to test how to create new value.

“It’s hard to tell how that looks to users right now.” Morgan Holm, OPB’s chief content officer, says, “As we develop our own podcasts, we want listeners to listen to them in addition to the more high-profile national podcasts from NPR and other public media. In a sense, this is the parallel local and national model that has become familiar to public radio listeners and television viewers.”

Public media isn’t the only medium considering podcasting bundling. Now, the New York Times also sees its forays into podcasting as a potential part of its paid subscription package, given the reader-paid model it uses in all its other businesses. To demonstrate that the subscription package is a way to provide value-added services, Times subscribers can listen in advance or listen to historical programming.

Membership is often a vague concept, still in the early stages of being defined by Gimlet Media. Gimlet Media has launched six shows so far and plans to launch four more this year. They charge $60 a year for membership. “It’s a membership subscription. It’s a small fee, but it’s a very important part of our revenue. And I think it’s going to grow into a more important part of our business in the future.” “It’s a very important community for us,” Gimlet president Matt Lieber said. Among other benefits, members get priority access to programs.

Finally, there is a way for podcast producers to make money without advertising.

Shows from NPR’s Wait, Wait, Don’t Tell Me to The Moth and other comedians made money by selling tickets. For companies that focus on comedy shows, it’s also a real revenue stream, even if it’s not a huge one. For public media companies, the strategy is to kill two birds with one stone, promoting engagement with audiences and increasing revenue. WNYC’s Greene Space and KPCC’s Crawford Family Forum are two major event venues based on this approach. The combination of podcasts and events offers plenty of opportunities.

In addition, comedians sell merchandise — a practice pioneered long ago by Bill Kling, a manager at Minnesota Public Radio. Kling built A large catalog retail company based on Garrison Keillor’s popular A Prairie Home Companion. Yet most public radio stations have not yet incorporated this model into their thinking about the “podcast” monetization model.

Today, we don’t feel the urgency in the podcasting world to develop a listener payment model. This is the opposite of what happens in print. There, “reader pays” is the cry of traditional print media, from The Times in New York to the Financial Times in London; At the same time, regional newspapers are looking for ways to increase revenue from online readers. HBO comedian John Oliver, a veteran of podcasting, has brought new attention to the pay-per-reader model. In the current podcast world, though, the focus seems misplaced.

With the exception of Audible, podcast producers believe that short-term monetization opportunities come from premium advertising; Ads here can even circumvent the digital AD monopolies of Facebook and Google. For now, charging listeners remains secondary.

This article was originally published at Niemanlab.org by Ken Doctor and translated by ONES Piece and Mei Chenfei and He Congcong. ONES Piece is a non-profit translation initiative launched by ONES Ventures that focuses on technology, venture capital and business.