The ubiquity of streaming platforms like Spotify, Apple, and Google has led to criticism of these services’ relationships with content creators. The presence alone on these platforms is typically incentive enough for artists to accept a sparse deal, and creators outside of the mainstream market are often left behind by the cost structure.

The market is surprisingly similar for podcasts, yet the rapidly growing popularity and the ample advertisement space has created a huge monetization opportunity.

Matt MacDonald is the Chief Product Officer of RadioPublic, a relationship-first podcast platform optimized for podcast discovery and publisher ad revenue. If you remember, we highlighted RadioPublic as a “Deal To Watch” just a couple weeks ago. We sat down with Matt to dive even deeper into the business, and how this team is disrupting the rapid-growth podcast market.

This conversation has been shortened and edited for brevity

Funding Round Details

RadioPublic logo
Company: RadioPublic
Security Type: SAFE
Valuation: $10,000,000
Min Investment: $50
Platform: Republic
Deadline: Sep 1, 2018
View Deal

Could you tell me a little about you and your team’s past experience?

Jake Shapiro’s our CEO, Chris Quamme Rhoden is our CTO, and I’m the Chief Product Officer. The three of us have been working together for over 10 years now, and our former company PRX was an non-profit, independent marketplace for public radio producers to market their work to stations. 

We’ve been interested in the monetization aspects of creative work and playing matchmaker between creators and listeners looking for new content. When we started to build out our first set of iPhone apps in 2008, we got a good handle on what the space looked like in terms of distribution and how little innovation there was at the time.

Big players like Apple, Google, and Spotify had their focus elsewhere, so we identified a gap in monetization.

What was the gap you identified on the monetization side?

It wasn’t just about the volume of ads, it was also about increasing the CPM rates for them too. It’s also valuable to be able to create new revenue opportunities for podcasters that might not be able to participate in the podcast economy. Only a very small cohort of podcasts are able to secure and attract any advertisers at all.

We saw the opportunity to create a two-sided platform for both listeners and podcasters. We can increase the total volume of money that’s being spent and made in the podcasting space. Our apps for iPhone and Android are the core start of developing that marketplace.

What exactly is the pain point and the reason that so many of them can't monetize their podcasts?

The way in which it works right now is that the relationship between the brand and the listener is intermediated by the podcaster or the sales team that represents that podcast.

A brand looking to find listeners will communicate to a podcast sales team, which will then air those ads across the small number of podcasts that they actually represent.

There’s hundreds of these small agencies that represent the multitude of podcasters though, so it’s fragmented. There’s no easy way to target the demographics that these brands are looking for. The message gets spread across thousands of listeners and it’s incredibly inefficient for these brands.

These brands are trying to reach the listener, not the podcast, so we can provide the mechanism for brands or sponsors to reach that listener across multiple shows.

Sponsors like ads read out by the host, so there’s a belief that a connection will be lost if it’s separated from the show. There’s still a large opportunity for these ads, though. A popular host, for example, can record an ad and then have that run across multiple different shows. It’s disconnected from the one particular show, but the affinity for the host is still there.

On the listener side, what is the advantage of RadioPublic over a platform like Castbox, Spotify, or iTunes?

Our users have responded best to the discovery aspects that we have. Our hand-curated playlists make it easy for new listeners to find podcasts they’ll like.

Our platform pays the podcasters relative to how many listeners they have, so there’s a connection that helps listeners support their favorite podcasts. The creators will also be incentivized to draw people to RadioPublic because they’ll make more money from that increased traffic. They don’t get paid the same when hosting through Apple, for example.

Podcasters that we’ve interviewed over the years told us that the costs associated with hosting were often too much to continue airing the show, especially for those doing it as a hobby. On RadioPublic, though, they have greater incentive to keep the show going.

We can help identify something that you might be interested in. Similar to the Pandora experience, we have stations that you can shuffle through to find what suits you. If you find something you like, you can continue listening, or you can just press skip and we’ll play you something else.

In terms of your core consumer, is there a challenge in flipping devotee listeners of podcasts from another app to yours?

There’s estimated to be 10 million people who are going to listen to podcasts for the very first time this year. We saw the opportunity to create an experience that helps someone migrate from competitors.

But the real opportunity is creating an experience that a brand new podcast listener would find familiar. I attended a podcast listening 101 class the other night to learn more about the challenges of people unfamiliar with podcasts. The tech wasn’t the problem, most just couldn’t understand how it could be free and what they should listen to.

Our strategy has been to provide incentive and encouragement for those podcasters to tell people where they could or should be listening. And that message to the listeners is great in order to differentiate us among the 20 different services out there.

Is this B2B2C model different from the traditional model, and how did you decide on this business model?

I think there’s a very limited understanding in the podcast community about the different platforms out there and how each one is different.

Apple, for one, became the default for many podcasters without much strategy behind the choice. And for us, it was very purposefully done to say, the way in which we grow is by aligning our interests, with publisher’s interests.

For many other podcast apps, the monetization strategies are either a paid app fee or a recurring monthly fee to get access. There are podcast apps who use ad premium models as their method for revenue generation. Apple has no revenue generation at all.

They have not and possibly never will decided to monetize the podcasts. I believe that we are the only platform that is directly aligned with those publisher needs where we can provide membership packages that gives them publisher control and a revenue stream from us.

Why is building this relationship with the publishers so important to protect the integrity of the podcast market?

The publishers want to have that direct relationship with the people who are consuming the media that they’re creating. Publishers and myself alike don’t want a version of a podcast app similar to Facebook, where the platforms owns the relationships to the user and decides which content is provided for them.

From a product and company perspective, we’re a relationship broker between the listener and the publisher. That’s an important decision because the publisher has more autonomy in a two-way relationship.

It’s sometimes a complicated message to explain, and it often gets oversimplified into a “Pandora for podcasts,” but we do certainly help listeners discover, engage, and reward publishers. The reality is that users, publishers, and platforms all interact differently and we’re trying to solve for that.

What are your plans to monetize the platform and will it come from the user or publisher side?

We have an idea to collect transaction fees on top of podcast subscription fees. A highly valuable podcast could possibly charge $20/month for users to listen and get full web access, and we can take a slice of that transaction.

As we grow, our user base will grow and we’ll have access to more demographic data. We’ll introduce the ad platform that will allow a brand or publisher to come in and flight their own ads directly on the platform. 

A big publisher like the New York Times that generally manages their own ad inventory with their own ad sales teams might want to enhance their ads on RadioPublic. They can do this by paying a fee and inserting their ads into the supply side platform.

Do you have any sense of your customer acquisition costs?

We’ve been able to identify that the B2B2C method of customer acquisition has dramatically lowered our customer acquisition cost.

The costs have been a tenth of what they were back with traditional acquisition methods. It was a huge shift for us when we thought about where we were allocating our resources.

How do you plan on using the capital raised on Republic?

The revenue from the crowd we raised is more about a positioning statement. Certainly if we hit the cap that would be spectacular, but it’s not just about funding the operation.

We want to gives the podcasters and listeners the opportunity to invest in the platform that they use. The money is obviously great, but it’s really about sending a signal to the community that we want them to be a part of what we’re building.

Do you look at this equity crowdfunding raise as a way to grow your user base and your unique position in the market?

We’re a public benefit corporation, which is really unique in this space, especially as a seed stage public benefit corporation that’s already raised $3MM. Republic and the crowdfunding that we’re raising is really an extension of the inclusiveness of the brand.

There’s a phrase that we use: when you listen, everyone benefits. And we had to make sure that there was a way for those people who were adding value to the platform to also benefit directly through investment.

Many thanks to Matt for sitting down with me to discuss RadioPublic. Their raise is live on Republic here up until Sept. 2.