What We Can Learn About Podcast Subscriptions In China, Where FOMO Is A $7B Industry
Getting consumers to pay directly for content has been slow to catch on in the U.S., but platforms like Patreon are helping to make it easier for podcasters to get paid by fans.
Fear of missing out and the accompanying anxiety it produces could mean paid subscriptions may have greater market potential in China than in the U.S.
By comparison, the U.S. podcast industry mainly makes money through advertising, and double-digit increases are expected in ad spend in the coming years.
China has podcasts that are free and ad-driven, just like in the U.S. but for some Chinese, the quality of free content is considered more entertainment than useful for real self-improvement, according to Marketplace, distributed by American Public Media.
In China, the “pay-for-knowledge” economy refers to podcasts with subscription fees, interactive online Q&As with experts or celebrities and live-streaming lecture-sessions where the audience can pay and participate.
Economic podcasts can be big moneymakers in China. One of the most popular is a show by a former economics professor Xue Zhaofeng from Peking University. He has sold $8 million worth of podcasts on the Dedao audio platform.
“The revenue share from the podcast platform Dedao can be more than what we as professors can earn in 10 years or even a lifetime in China,” said Zheng, another professor.
In 2017, the pay-for-knowledge industry in China was estimated to be worth $7.3 billion. Most of the revenue came from paid podcasts, according to a research institute run by China’s State Administration of Press, Publication, Radio, Film and Television. That figure does not include ad-driven podcasts, according to Jennifer Pak, Marketplace’s China correspondent based in Shanghai.
By comparison, the U.S. podcast industry mainly makes money through advertising, reporting ad revenues of $314 million in 2017, according to the Interactive Advertising Bureau.
“The growing trend toward ‘anywhere and everywhere’ media engagement has created tremendous opportunity for digital media, of which podcasting is a significant component,” said David Silverman, a Partner at PwC U.S., in a prepared statement. “Whether at home on a smart speaker, at work on a PC, or somewhere in between on a mobile device, more and more Americans are listening while they live, providing a robust podcast platform where advertisers can connect with today’s consumers.”
The pay-for-knowledge economy is a multibillion-dollar industry in China for several reasons, according to a separate government-linked research institute:
- Desire for focused information that’s useful and relevant.
- Need to update skills constantly in China’s competitive job market.
- Ease of paying on a mobile phone.
- FOMO — the fear of missing out.
“People may not be purchasing knowledge to learn, but the simple act of buying information online helps alleviate people’s anxiety about their knowledge gap and gives people a sense of security that they are not left behind,” a report by a research institute under state-owned newspaper the People’s Daily said.
For example, one popular podcast called “How to Make Your Voice More Attractive” has 218,000 subscribers who pay less than $3. Its founder is broadcasting professor Zheng Wei, of Kede College at Capital Normal University in Beijing. Most of his subscribers are white-collar workers anxious to keep up, he told Marketplace:
“Some of them may have worked in cities like Beijing for many years, but they still have accents from their villages and make fools of themselves in social settings,” Zheng said. “China’s middle class feel that free content will not be good quality and that paid products are packed with useful information and save people time.”
The most popular paid podcast genres in China are self-growth, finance, business and education, Chinese poetry and history.
China’s audio platforms invite experts and work with them to develop podcasts. They’re still experimenting with what content people will pay for.
Timothy Taylor with the Journal of Economic Perspectives in Minnesota recently signed a deal to do a 90-episode podcast for China’s biggest audio platform, Ximalaya, Marketplace reported. The podcast is named “Stanford Classical Economics” because Taylor once taught at the prestigious Stanford University.
So far he has 7,000 subscribers in China. He said he does not plan to do a podcast in the U.S.
“I doubt that (the podcast will) work as a commercial venture in the U.S.,” Taylor told Marketplace. “All the classes at MIT are free online now you know, so if you want an intro econ class, you can go get one.”
Here’s how the podcast description reads in China:
“You may not care about productivity, but you must care about promotion and salary raises. You may not care about national product, but you must care about preserving and increasing the value of assets. Economics can help you understand these issues and teach you the ways to see the world from different angles. It can help you decisively weigh the advantages and disadvantages of a situation, make the right decisions quickly, and increase your fortune and happiness index.”
Ad revenue growth in U.S. podcasts grew 86 percent in 2017 over 2016, according to the Interactive advertising bureau. Even stronger returns are predicted in the years ahead. Researchers forecast that podcast revenue will be at $659 million by 2020, a triple-digit increase over 2017.
Preferred types of ad revenue in U.S. podcasts
Host-read ads were the preferred ad type, with more than two-thirds of ads in 2017. Direct response ads transacted on a cost per thousand basis made up the majority of campaigns, followed by brand awareness ads (29 percent). Ads integrated or edited into programming accounted for 58 percent of the podcast ad inventory in 2017.
Of the 14 podcast content genres measured, the top four generated more than half of the advertising revenue in 2017:
- Arts/Entertainment (17 percent)
- Technology (15 percent)
- News/Politics/Current Events (13 percent)
- Business (11 percent)
Who is paying to advertise on podcasts?
By category, these are the advertisers that are spending on podcasts:
- Financial services: 18 percent share
- Direct-to-consumer retailers: 16 percent
- Arts and entertainment: 13 percent.
The numbers speak to advertisers’ increasing recognition that podcasts are a powerful platform for reaching and engaging audiences, said Anna Bager, an executive VP at IAB, in a prepared statement:
“Advertisers that range from traditional financial services to direct brand retailers are tapping into (podcasts’) highly engaged audience”