John Newman is the type of person that companies like Spotify want to involve in podcasting. He has a niche of interest – collecting sports cards – and is passionate and knowledgeable about the subject. When he looked for a way to start his own show, Sports Card Nationin 2018, Anchor stood out. The podcast creation app, now owned by Spotify, makes it easy to record an episode and offers an innovative feature for new podcasters: sponsorship opportunities for everyone.
What Newman did not expect, however, was that the main advertiser using Anchor’s sponsorship feature would be Anchor itself. Newman says that over two and a half years on the platform, he had only three sponsors through Anchor: Anchor, Pocket Casts and a company called The Black Tux. One such company, Pocket Casts, did not even pay for the sponsorship, confirms a source close to the company – instead, Anchor covered its costs to promote the feature. Newman says the Pocket Casts and Black Tux sponsorships lasted less than a month and earned him no more than $ 50 in total. Anchor, on the other hand, paid him about $ 2,500 to advertise its own service.
“It’s just a speck compared to Anchor,” he says.
Nine podcasters count The Verge the same story: Anchor’s sponsorship feature appears to be seriously lacking in sponsors, and they have been given few, if any, opportunities other than Anchor or Spotify itself. Three people say they have won thousands just from Anchor and Spotify. Three also said they have already left or are considering leaving the Anchor platform because they are not receiving new sponsors.
Anchor’s software is designed to allow anyone to start a podcast by recording on their phone. He promised to help podcasters monetize these programs through a feature called Anchor Sponsorships, launched in November 2018 in the United States, just months before Spotify acquired the company for $ 140 million. The functionality is similar to something like YouTube ads – advertisers are automatically associated with podcasts that fit their target audience, and hosts can read ad readings for sponsors and earn money.
It is a radical idea, especially for smaller breeders. Typically, advertisers only work with programs that reach tens of thousands of listeners. With Anchor’s approach, sponsors can distribute their ad impressions across many programs, instead of focusing on one or two on a specific network. Hosts can also pass on a sponsorship opportunity if they are not interested.
“We are determined to level the playing field for podcast monetization, allowing new creators to be paid and brand new dollars to enter the market,” said Anchor when he announced the feature.
But now it looks like the big picture isn’t working and it may actually be costing Anchor money to keep it going. Sponsorships are becoming another marketing avenue for Spotify to attract new creators to join its platform and keep them there.
Most podcasters The Verge He spoke with signed up for the Anchor sponsorship feature last year and received Anchor herself as his first sponsor. They received $ 15 for every 1,000 people they reached. These podcasters say their Anchor sponsorships ended in the second half of 2020, and they were not offered a possible renewal date or a new sponsor to replace him. Three hosts claim they only won about $ 50. Newman said his sponsorship ended shortly about three months ago, but he emailed the company and Anchor re-activated it with a different CPM, or cost per 1,000 listeners. It is not clear why.
Newman says he has had no other sponsor than Anchor in the past two years, although his program has grown to now reach 1,500 to 3,000 people per episode. He estimates that Anchor paid him about $ 2,500 in his nearly two and a half years on the platform. Currently, he still maintains Anchor’s sponsorship at a $ 17 CPM, along with other ads he obtained on his own outside Anchor.
Blake Chastain, a podcaster that creates two programs, including one called Exvangélico about “coming to terms with the messy subculture of evangelicalism,” says his two programs lost Anchor’s sponsorship last year. His spirituality podcast safely reaches 2,000 or more people per episode, he says, while the other is incipient. He says he and five other podcaster friends haven’t had a sponsor in months since the end of Anchor’s sponsorship, and are now looking to switch to Megaphone, a hosting company recently acquired by Spotify.
The megaphone costs money to be used as a hosting provider, but in return, it offers an advertiser market, which allows companies to have their ads inserted into programs that fit their target audience, similarly to Anchor’s offer . The hosts do not read the ads, however. The main barrier to entry is that Megaphone offers its services only to programs or networks with more than 20,000 listeners per episode, which is why Chastain would have to coordinate with other podcasters.
“I feel that Spotify is well positioned to offer things to independent podcasters, as well as to develop their own stuff internally by buying stores like Gimlet, but it hasn’t materialized yet,” he says. “That’s why, when you’re younger, you’re just doing things on your own, just keeping your options open. That’s why we’re exploring [move to Megaphone]. “
Two other podcasters mentioned receiving sponsorships, in addition to Anchor himself, including one for a sleep podcast called Deep sleep sounds and one for Spotify itself. The podcaster who received Spotify’s sponsorship, Dalton Trigg, says he and his co-host won $ 1,700 from Anchor and $ 900 from Spotify while on the platform for about a year and a half. They have since left Anchor and joined the Blue Wire podcast network with their basketball program, Mavs Step Backand use Simplecast for hosting.
“We made the change because after almost two years with consistent advertising money, we spent two or three consecutive months at the end of last year without sponsors,” he wrote. The Verge. “And the NBA off-season is our busiest time of the year for the pod, so that was frustrating for us – it ended suddenly. The anchor’s support continued to preach patience and saying that they would continue to try to put us in partnership with new sponsors, but it got to the point where we had to make the change so that we could continue to grow. “
The fact that Anchor appears to be funding its own sponsorship does not bode well for Spotify, especially considering the critical role that Anchor plays in the company’s growth strategy. Anchor offers its software and hosting service for free, which brings new podcasters to the field. It also reinforces the Spotify trade show catalog. The company said The Verge that Anchor launched 1 million new programs in 2020 alone and supplies 70 percent of Spotify’s podcast catalog. Spotify also signed exclusive contracts with Anchor creators, and a spokesman said last month that 100,000 creators have generated revenue through Anchor’s sponsorship product so far.
Still, the situation that all these podcasters portray suggests that while Anchor is attracting creators, it may not be making a lot of money from selling ads. In fact, he is apparently just spending. In addition, the success that some of these podcasters have had in attracting outside advertisers demonstrates that once they reach a certain audience limit, they are sometimes willing to leave Spotify behind.
We contacted Spotify for information about which other advertisers currently use sponsorships, as well as how much money the company spent on these ads, but it declined to comment on the record.
Spotify put us in touch with the podcast How Long Gone, however, launched in March 2020 and distributed by Anchor, with most ads coming from Anchor sponsorships. The hosts, Jason Stewart and Chris Black, say most of their ads market programs made by Spotify, Anchor and Anchor. Spotify and Anchor paid them “tens of thousands” of dollars in advertising revenue in less than a year, they say. (They also host a separate program, exclusive to Spotify, that highlights Anchor’s newest feature – the ability to include music in programs – called How Long Gone Radio.)
“It’s like an interesting ecosystem,” says Stewart. “It’s like a garden that wateres itself, as long as you have Spotify’s good old deep pockets.”
They had three other sponsors during the lifetime of the show that came from Anchor Sponsorships, including Manscaped, Solaray and Roman. All three, they say, ran for about a month each.
“It’s nice to just be able to have this Spotify and that anchor as your baseline where, even if you’re making a dollar a day from it, or whatever it is at the beginning, it’s good to see it,” says Stewart. “It’s like playing or something. You look at your wallet and see every day how much more money you are making, and it helps you to control your growth and your goals, and having Spotify and Anchor there all the time was an incredible foundation to build upon. “
Citi analysts sent a note to customers last week advising them to sell their Spotify shares, mainly because their podcasting efforts had not yet resulted in a significant increase in premium subscribers or app downloads. Anchor has so far been a creative success story for the company. Even these podcasters, when questioned, all say they have no regrets about using the app and have found that podcasting has become accessible. Getting money from Anchor didn’t hurt either, and it was like a cherry on top.
But did Spotify enter the podcasting space to assist creators in producing new programs or to help themselves make more money? The anchor sponsorship situation appears to be testing this choice.