Why the Podcast Industry’s Business Model Is Under More Pressure Than It Looks

Podcasting entered 2024 with all the surface markers of a healthy industry: growing listener numbers globally, Spotify and Apple continuing to invest in the format, major media companies building podcast divisions, and several shows charging significant advertising rates. The overall narrative was “the medium has arrived.” But the business model beneath that narrative had structural issues that have become more apparent in 2025 and 2026, and the podcast industry’s economics are under more genuine pressure than the stable listener growth figures convey.

Understanding what’s actually happening requires separating three distinct businesses that all use the word “podcast”: the advertising-supported open podcast ecosystem, the exclusive platform content deals that Spotify pioneered, and the creator-subscription model that’s emerged as a third path. They have different pressures, different outlooks, and different implications for where podcasting goes next.

The Ad-Supported Model’s Structural Problem

The dominant revenue model for independent and mid-tier podcasts remains host-read advertising—ads delivered by the show’s host in their natural voice, typically for direct-response brands (mattresses, VPNs, meal kits, financial apps). This model has significant advantages over display advertising: listeners trust host recommendations more than banner ads, host-read conversion rates are demonstrably higher, and the format is unskippable for listeners who care about the content around it.

The problem is attribution. Podcast advertising has always struggled with the question that every advertiser asks: “How do I know this is working?” The most common attribution methods—vanity URLs, promo codes, download-based CPM (cost-per-thousand-downloads)—are indirect proxies that consistently overcount or undercount actual conversion.

Download-based CPM is the industry standard metric, but a download does not equal a listen. Many podcast apps download episodes in advance; listening rates (completed or partial listens) are consistently lower than download counts. The IAB’s podcast measurement guidelines attempt to standardise what counts as a download and require some minimum engagement before counting—but the conversion from download-to-listen to listen-to-purchase is still measured indirectly.

The deterioration of third-party cookies and mobile tracking identifiers (Apple’s App Tracking Transparency, Android’s privacy sandbox changes) that hit display advertising in 2021–2023 has also affected podcast attribution. Cross-platform attribution—connecting a podcast listen to a web purchase days later—has become harder, making it more difficult to demonstrate podcast ROI to performance-focused advertisers who are comfortable with more measurable digital channels.

The result is that mid-tier podcasts—shows with 20,000–200,000 listeners per episode, which form the bulk of the monetisable-but-not-blockbuster tier—have seen CPM compression over the past two years as advertisers have applied more scrutiny to returns. The “podcast advertising is booming” narrative is accurate for the very top shows and for branded content; it’s less accurate for the long tail where most podcast creators live.

Spotify’s Exclusive Content Strategy: The Retreat

Spotify spent approximately $1 billion between 2019 and 2023 acquiring podcast companies and signing exclusive deals—Gimlet Media, The Ringer, Parcast, exclusive deals with Joe Rogan (reportedly $200M), Barack and Michelle Obama (Spotify for Obama Foundation), Brené Brown, Kim Kardashian, and others. The strategy was to make Spotify the Netflix of podcasting: create must-have exclusive content that drove subscription growth and listening time.

The strategy has not performed as hoped. Spotify’s podcast division reported losses for years before the company began reversing course in 2023 and 2024. Several high-profile exclusive deals have ended with shows returning to open distribution. Spotify announced layoffs specifically targeting its podcast division in January 2024, cutting approximately 200 positions including Spotify Studios staff. The Obama Foundation deal, the Kim Kardashian deal, and several others produced shows that generated media attention but not listener numbers that justified exclusivity premiums.

The fundamental problem is that podcasting’s strength—its open, RSS-based distribution that allows listeners to use any app—is incompatible with exclusivity strategies. Netflix can lock content to a platform because video streaming requires infrastructure that only a platform can provide. Podcasts are just audio files and RSS feeds; the technical barrier to distribution is minimal. Exclusive podcast content requires listeners to leave their preferred app and install Spotify specifically for those shows—a friction that most listeners decline to accept for audio content in a way they accept for video. The Netflix analogy never held for podcasting because the delivery medium doesn’t create the same switching cost.

Spotify’s current direction is toward advertising tools and open distribution rather than exclusivity—essentially pivoting back toward the model it was competing against. This retreat reflects honest feedback from the market about what podcast exclusivity is worth to listeners and advertisers.

The Creator Subscription Model: More Durable, Smaller Scale

The third model—creator subscriptions through Patreon, Substack, Apple Podcasts Subscriptions, Spotify Subscriptions, and similar platforms—has emerged as the most structurally stable, though also the most limited in scale. Subscription-supported podcasts trade on direct audience relationships: listeners who value the show enough to pay for it directly, without the advertiser intermediary.

This model works well for shows with deeply engaged niches: high-trust personal finance content, specialised professional information, community-oriented shows with a strong listener identity, and shows whose content is valuable enough that listeners would pay for it over free alternatives. It fails for shows whose listening is essentially passive entertainment that people would stop consuming rather than pay for.

The subscription model’s limitation is that it captures value primarily at the top of the attention and loyalty hierarchy. A show with 100,000 listeners might convert 2–5% to subscribers at $7–$10/month—producing $14,000–$50,000 monthly from subscriptions while leaving 95,000 listeners as non-payers. For many shows, this subscription revenue combines with advertising revenue from the overall listener base to produce a viable creator business. For shows that try to go subscription-only—paywalling all content—the audience typically shrinks faster than the subscription revenue grows, unless the content is genuinely irreplaceable to paying listeners.

The Attention Competition Problem

Separate from the monetisation mechanics, podcasting faces an intensifying attention competition that listener count growth partially obscures. Short-form video—TikTok, Instagram Reels, YouTube Shorts—competes directly for commute, gym, and household task listening time with algorithmic content that is specifically optimised to capture and retain attention moment-to-moment. The 40-minute podcast episode requires a sustained attention commitment; the algorithm-served video feed requires none.

YouTube Podcasts, which gives video podcast content the distribution and algorithm advantages of the world’s largest video platform, has meaningfully changed the competitive landscape. Shows that distribute as video on YouTube gain access to recommendation algorithms, advertising infrastructure, and viewer demographics that audio-only podcast distribution doesn’t provide. The shows that have grown largest in 2024–2026 are typically video-first, with audio available as a secondary format. The distinction between “podcast” and “long-form YouTube content” is increasingly artificial.

This creates pressure for audio-first creators who don’t want to add video production to their workflow and cost structure. The advantages of YouTube’s distribution are significant enough that audio-only shows compete at a disadvantage for discovery against video-format shows in the same category.

What’s Actually Working

Despite the structural pressures, several patterns in the podcast economy are working well:

Branded podcasts. Major companies producing podcasts as content marketing—not for advertising revenue, but to build brand affinity and establish subject matter authority—have become a significant segment of podcast production. A well-executed branded podcast doesn’t need to monetise through advertising because the show itself is the marketing investment. This model is structurally sound because it doesn’t depend on advertising market conditions.

Very large shows. The top tier of podcasting—shows with millions of monthly listeners—command advertising CPMs that remain strong, have diversified into live events, merchandise, and video that expand the revenue base, and have audience relationships resilient enough to maintain loyalty through platform and format changes. The Ringer’s podcast network, My Favorite Murder, Conan O’Brien Needs a Friend, and their peer group are genuinely healthy businesses.

Niche professional content. Podcasts serving professional audiences—lawyers, healthcare workers, financial advisers, engineers—can charge premium advertising rates per listener from sponsors targeting professional demographics, and can sustain subscription revenue because the content has professional value. A smaller show in a niche professional category can generate more revenue than a much larger show in a competitive general category.

Live show integration. Podcasts with strong community identity have built live show circuits that generate ticket revenue from dedicated fans. The live podcast experience—hearing familiar voices in person, being part of the audience, the community interaction—offers something the recorded audio format can’t replicate, and the best shows have monetised it effectively.

The Consolidation Signal

The broader signal from the industry in 2025–2026 is consolidation. Mid-tier podcast companies that were funded during the 2019–2022 podcast investment boom have been consolidating, shutting down shows that don’t justify their production cost, and restructuring toward profitable formats. Wondery (owned by Amazon), iHeart, Audacy (which went through bankruptcy), and Cumulus have all undergone significant restructuring. New independent podcast startups are raising less venture capital than three years ago.

This consolidation is consistent with the maturation of any media market: the initial investment period (2018–2022) overproduced content relative to sustainable advertising and subscription revenue; the rationalisation period (2023–present) corrects toward a smaller number of economically viable shows. The audience isn’t shrinking—listener numbers continue growing globally. The content ecosystem is contracting around the content that listeners actually choose to spend time with rather than the content that investors funded speculatively.

The podcast industry is not in crisis—the format is durable, the audience is real, and the best shows are healthy businesses. But the “podcasting is booming” narrative is a category average that conceals significant variation. At the top, the industry is thriving. In the middle and bottom, the economics are considerably harder than they looked during the investment peak, and the structural pressures—attribution difficulty, exclusivity’s failure, short-form competition, YouTube’s distribution advantages—haven’t resolved.