Can Listener Tipping Move the Needle for Podcasts?

… and how to tighten up the podcast listening ecosystem

86% of Survey Respondents said “They’d TIP the podcaster if it was EASY to do so”

I’ve been following Tanner Campbell’s post and the discussions on FB, where he talks about something many of us are concerned about.. paywalls, the necessary/imminent decrease of Ad CPMSs, and some suggestions on how to combat it.

Personally, I’ve been the beneficiary of hundreds of hours of joy and learning from podcasts. Those simply would not have been possible without a gifted artist taking their time, investing in their equipment/process, to be able to create things. I listened primarily in the car on a stupendous commute to Boston which could last from 2–3 hours each way. During these drives I’d take in 1–3 podcasts. Some were about startups, like Seeking Wisdom, Startups for the Rest of Us, Build Your Saas, and some were purely for enjoyment, like The Adventure Zone.

Once or twice a day, I found myself having these.. MOMENTS. Moments of joy, high emotion, or of epiphany after having been handed some golden piece of knowledge, or getting into the depths of some truly masterful storytelling. Yes, I’ve cried in the car listening to a podcast. I’ve also laughed so hard I hurt my sides. During these moments, my next thoughts were sometimes “Who else is experiencing this with me” and “I wish I could tell these guys what they did for me just now or do something to show my appreciation”. But.. alas, I was driving. I heard some talk about Patreon, but that meant I’d have to stop, go find it, sign up with an account, commit to it monthly, etc. (I eventually did, but not until maybe 50 Calls to Action to do so.)

Maybe 50 Calls to Action was a little much to motivate me

Sure, maybe the host would put a link in their show notes for their patreon or website, but I’d be super lucky to actually remember to go back and find it after getting to the parking garage, parking, walking to the office, etc. Or even after listening to a couple more podcasts. The received value to me was real, but the opportunity to take action on it was nearly non-existent, and was only on the other side of a LOT of different roadblocks. True, every once in a while I’d remember the name of a book or podcast that was mentioned, and go check it out. That’s how I finally read Play Bigger, which changed my thinking completely on how to create a product. Or I’d fiddle with my phone and leave myself a voice memo. But basically the conversion rate from me getting value to acting on that value on really SUCKED. Bigtime.

After months of recurring pains about this, I had enough. It occurred to me one day that I was at that moment hearing something very valuable to me in my journey as an entrepreneur. I felt that I truly wanted to follow up on it, but also knew that I would almost definitely forget to by the time I got to the office. It was a horrible moment of realization. The number of things which must have slipped through the cracks of my mind like this must be beyond count at this point. So I laid out some NEEDS for a new podcast app.

Things I wanted to see in a new podcast app:

• I wanted the ability to bookmark sections of podcast episodes so I could go back later and get to the parts that were super useful.
• I wanted to leave myself voice memos inspired by episodes, or send a voice message to a podcast host to answer one of their questions to the audience.
• I wanted to react, be seen and heard by other listeners who I KNEW were out there.
• I wanted to be able to answer questions, or as a podcaster, send questions directly to the listener and get a response IMMEDIATELY.
• Most of all, I wanted to be able to support these shows in the moments I was feeling most generous.. those moments of joy or epiphany.

So last December I began work on Magnus Rush (name inspired by Magnus, the warrior from the Adventure Zone who is always “rushing in”). The basic concept was to put all the little listener ecosystem things into one app, to make it as easy as possible for the listener to engage, tip, communicate, rate, react, etc.

On the other side of the fence, the podcaster side, they’d get super detailed analytics, increased engagement opportunities, actionable feedback, and money! I set up a new profile on IndieHackers, did some market research to validate these pains, and posted my progress daily on IH. I designed the basic infrastructure of a SaaS app and the mobile app, and created a gobton of tasks (aka Stories).

One February day in my ginormous ClubHouse task list, I got to the task I had setup to implement tipping, and realized I’d need to work out the actual tipping mechanic. So I fired up a new Google Sheet and got to work. The first and kind of most exciting number I had was from initial market research.. 80%+ of survey respondents said “they would tip the podcaster if it was EASY to do so”.

This was a really large and, to be honest, exciting number.

I didn’t intend for tipping to help ME make money personally, as I wanted the other features of the app to be useful enough to warrant some thousands of users to get a Pro subscription. I wanted tipping to be mostly for the artist, for their hard work, and to help keep things moving.

I also knew the Play Store and App Store cut was a steep 30%. This meant that, after the discounts for volume purchasing of points which could translate into $ tips for podcasters, I’d need to maintain a very high payout ratio to make it even begin to move the needle, otherwise it wouldn’t even be interesting to a podcaster. So with that information I began to come up with the package sizes and point values that could make sense to both the listener and to the podcaster.

I settled on the following mechanic:

• A user could tip, at any time while listening, by whacking a big ole Star Button, clearly labelled 5 Points
• If they held DOWN the button, the tip would increase rapidly
• A cool visual and audio effect would happen during tipping, and so we should also be able to see other people’s tip’s reactions
• For people who REALLY enjoyed the episode, they’d get the opportunity to send a much larger tip (25, 50, 100, 500, or 1000 Stars) ie Star Bombs
• I’d know if they liked the episode because of a Rating popup that I show on every episode 45–60 seconds before the end of the episode

Working out the cost of various point packages and the volume discounts that app users are familiar with in IAP world, I worked out a Star to be worth approximately $0.01. It comes out to less on half the packages, but I pad the payout difference to make up for it hopefully.

But.. does it move the needle?

Next I had to figure out if that meant ANYTHING reasonable to a podcaster, and how did to compare to ad CPMs? Let’s say they told their listeners to listen using the Magnus Rush app, and 1,000 people came over. I’ve got a buttload of experience in the online ad world after being a gaming website publisher for several years, working on ad servers, video ads, interactive cinema advertising, and in actual ad operations for some Boston startups. So the CPM math was easy.

1,000 listeners at a $20 CPM would bring in… wait for it.. $20! Per ad. Some podcasts had multiple ads, and some CPMs were higher, usually much lower. However, the advertiser gets no real metrics about performance, and.. truth be told, it’s probably better that way. Even with the use of simple tracking links, getting a listener to convert to a sponsor click was going to be difficult for all the reasons I mentioned above, and it would likely take many Calls to Action for that to happen, further increasing their cost to acquire that new customer. This causes them to decrease CPMs usually.

So what about that same 1,000 listeners who might convert to tippers in the Magnus Rush app? Well, 80% said they’d tip, so let’s plug that in. 80% of 1,000 is 800. Minimum tip works out to be 5 Stars, or $0.05. 800 x $0.05 = $40. If some of them sent Star Bombs (I don’t have metrics on that yet, as I’ve only just released), the upside is significant. Strictly speaking, with some help from Star Bombs, a podcaster could stand to TRIPLE or more their per-episode revenue. Furthermore, revenue on older episodes would not diminish simply because an ad campaign was over. It’d be active anytime the episode was listened to, due to tipping, effectively monetizing their whole back catalog. That sounds like moving the needle to me.

Next came the final piece of the puzzle in moving the needle for podcasters. I call these Easy Actions. They are there to solve the problem of not being able to convert a listener at the time of the Call to Action. When a podcaster sets up their Calls to Action in Magnus Rush for an episode, an Easy Action popup comes up at the right timestamp during the episode. At that time, the listener can dismiss the popup or hit a LARGE button to either Save it for later, or Follow the Call to Action on the spot. Both of these actions are tracked, so now we have direct insight into performance of Calls to Action in an episode, giving rationale for podcasters to ask for the higher CPMs on performant audiences.

Theoretically this should both increase conversion rates for sponsored Calls to Action, and provide golden metrics for campaign efficacy.

In case the listener skips around and missed the Easy Action popup, I put another button in the interface to show all of the Easy Actions at once.

It takes a couple of minutes to setup Easy Actions per episode, and the benefits are immediate. You can set them up for anything with a link.. guest Twitter accounts, books, websites, sponsors, whatever you want the listener to be able to go check out.

It was a massive surge of work for a few straight months, but I got through it to a basic releasable product. It has bugs, but I am sincerely hoping we can finally and atomically begin to move the needle for independent podcasters.

Yes, there is a rocket ship launching when a podcast starts playing. I like space ships.

To check out the Magnus Rush platform, visit the site. The links to the mobile apps are there as well if you feel so inclined. There is also pricing page to see what other features are in the platform, and I’m still happy to chat about setting up free accounts for awhile longer! I would LOVE to see someone take this and run with it, and start to earn some serious lifestyle revenue on their podcast.