Don't Quit Your Day Job, Podcasters

Grammar Girl hit it big, but so far few others have been able to make the shows pay

Listening to Grammar Girl's Quick and Dirty Tips for Better Writing, one of the Web's most popular independent podcasts, isn't the chore you might imagine. For 5 to 8 minutes each week, host Mignon Fogarty soothingly guides listeners around the pitfalls of common grammatical usage. Worried about when to use the word bad vs. badly? No problem. Yet even as you're taking in advice about whether split infinitives are acceptable (they are, she contends), it's hard not to wonder why you voluntarily took a seat at your fifth grade desk again. Or, more important, why you didn't think of doing this show yourself.

With Grammar Girl, Fogarty has skyrocketed to the top of the iTunes 100 list of the most popular podcasters, drawing around 150,000 weekly downloads. That has led to an appearance on The Oprah Winfrey Show and advertising and book deals that will enable Fogarty to pull in a little under $100,000 this year, letting her quit her day job as a technical writer.

Because podcasting appeared around the time that blogging, social networks, and RSS data delivery services were becoming more commercial, expectations immediately soared that this would be the next Web phenomenon to hit it big. "It took years for bloggers and even publishers who are embracing RSS to start asking, 'How are we going to make money off this?' But it took podcasters about a day," says Rick Klau, vice-president at FeedBurner, which helps publishers distribute blogs and podcasts.

Most of them are still asking. Fogarty's success is more the exception than the rule among indie podcasters. While there has been an explosion of shows over the past couple of years, offering everything from advice on how to manage your money to Italian lessons, podcasting's business prospects are just developing. The share of Americans who listen to audio downloads from the Web has grown only slightly in the past year, to 13% from 11%, according to a survey released last month by Edison Media Research. Those listeners increasingly are crowding around the most popular podcasts. But a lack of standards for placing podcast ads or measuring audiences has hobbled ad spending, which only hit $80 million last year.

Many of the top podcasters are turning to ad networks such as FeedBurner and Podtrac Inc., which have sales teams courting ad agencies. But results so far are mixed. Podtrac has worked with advertisers such as Dell (DELL ), AT&T (T ), and HBO (TWX ) to sell short audio spots across its network of 5,000 independent podcasts. For the most part, though, marketers are doing only short runs of one to three months, and there aren't nearly enough spots to fill available slots. "Significant budgets aren't shifting to podcasting," says Jeff Marshall, a senior vice-president at advertising agency Starcom USA. "We're selectively choosing when and where to use podcasting."

At the high end of the scale are video bloggers such as Rocketboom, which pulled in around $250,000 last year. At the other end is MuggleCast, a show created by eight Harry Potter fans. MuggleCast isn't hurting for audience: It attracts 50,000 weekly listeners and is consistently in the iTunes Top 100. Yet ad deals are sporadic, and the crew behind the show, all under age 25, don't work full-time on it. So MuggleCast brings in only around $1,000 to $1,200 each month, though that's still more than most indies. Indeed, fewer than 100 of the people running the 55,000 active podcasts have been able to quit their day jobs, estimates Rob Walch, a podcasting veteran who produces Presidential candidate John Edwards' podcast.

In the absence of consistent advertising support, indie podcasters have to be inventive. Keith Malley and Chemda Khalili, the couple behind Keith and the Girl, an engaging, sometimes raunchy Howard Stern-like podcast, have cultivated a devoted online audience. (Six fans have already had Keith and the Girl tattoos done.) The show, which has 35,000 daily listeners, is just one part of the brand. Just as important to fans are the online forums and (NWS ) pages where they gather to talk about the show and their lives. As a result of this devotion, the audience last year was willing to snap up about $80,000 worth of T-shirts, key chains, and other merchandise emblazoned with the Keith and the Girl logo, showing a stick figure boy and girl.

For other indie podcasters, working with companies to create internal corporate podcasts or signing up to front for more traditional media is a way to stay in the game until advertising picks up. That has been the case for Skepticality, a podcast hosted by Derek Colanduno and Robynn McCarthy about debunking myths. One of the first breakout podcasts, Skepticality regularly appeared in the Top 100 in 2005. Then, at the height of the show's popularity, tragedy struck. On Sept. 6, 2005, Apple CEO Steve Jobs featured Skepticality in a closely followed speech at an event in San Francisco. During a celebratory meal that night in Atlanta, Colanduno collapsed and was rushed to a hospital. He fell into a six-week coma because of bleeding in his brain. McCarthy used the podcast to send out updates to listeners. During the six months he spent learning to walk and read again, Colanduno's speech therapist used the podcast recordings to teach him to talk.

Colanduno began recording again and the pair was asked to do an official podcast for Skeptic magazine. They jumped at the chance. The publication ponies up a small fee per podcast, but the real payoff for Colanduno and McCarthy is the free plug they get for their own show.

Even the most successful podcasters have to rely on some luck. In late 2005, Grammar Girl's Fogarty was working full-time writing technical documents for biotech companies and hospitals, and spending 10 to 20 hours a week working on another podcast, Absolute Science. For six months she and a friend toiled away on the one-hour science news show, which was only moderately successful. Still, inspired by the shorter podcasts she was listening to and the endless flow of grammar faults she encountered in her day job, Fogarty decided to try something else. Grammar Girl debuted last July. She was quickly noticed by the gatekeepers at iTunes, which look for variety to feature on the home page.


That catapulted Grammar Girl into the Top 100 and gave Fogarty a heady dose of instant fame. She spent hours before and after work cultivating her new community, publishing a word-for-word transcript of each show and answering e-mails personally. By integrating into the show the e-mail and MP3 questions from listeners, Fogarty spurred word-of-mouth popularity. Sharing the issues other listeners were grappling with helped make the show more intimate, clinching Grammar Girl's appeal.

The next couple of years will reveal whether the hard-working indie podcasters are pioneering a nascent industry or destined to occupy a dedicated niche. It helps that more people are buying digital media players such as iPods and smartphones capable of playing podcasts, as does the inclusion of podcasting technology in the new Windows Vista operating system and Apple (AAPL ) TV. The ad networks are working on developing more sophisticated metrics. And more polished podcasts are also helping create a broader audience, says Tim Bourquin, founder of the popular Podcast & New Media Expo conference. "On the production side, we're a lot more mature," says Bourquin, who points to the lessons people have learned about sound quality and focusing more sharply on subjects. "There are lots of people who are getting serious about the quality of podcasts."

Still, it's becoming clear that podcasting won't be the one new innovation that will gather together rapidly fragmenting audiences. Instead, it's just one of many technologies contributing to the dispersion of the crowd. That will continue to make it difficult for many podcasters to cash in. But it should give anyone with a passion to create a podcast hope of finding at least a small audience.

By Heather Green

    Before it's here, it's on the Bloomberg Terminal.