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February 28, 2006 2:00 am

Is Ricky Gervais having a laugh?

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An experiment begins today for making money from the growing trend of podcasting, as comedian Ricky Gervais begins charging for downloads of his hit audio show which is distributed only over the internet.

Podcasting, the distribution of audio files over the internet for listening to on computers or portable music devices, has boomed over the past few years.

Podcasts are easy and inexpensive to create, and thousands of people are recording their own talk shows and audio diaries in their own bedrooms and posting them on the internet.

The Ricky Gervais Show, however, will be a test of whether consumers would be willing to pay directly for such content, which is finding an eager audience with a growing number of people who own iPods or other portable music players.

Analysts at Jupiter Research estimate that about 7 per cent of the US population regularly download podcasts, while Forrester Research forecasts that by the end of the decade, podcasts will be reaching 12.3m households worldwide.

Traditional media organisations have recently become interested in the trend, with newspapers such as the Financial Times, The Guardian and The Times as well as several radio stations putting out their own podcast content.

The media industry, however, is searching for a business model that would allow them to make money from podcasts, the majority of which have been free to date.

Most companies have been looking at an advertising or sponsorship model for commercial podcasts.

Mr Gervais will not be the first to charge subscriptions for his podcast. The Times already sells £6.95 monthly subscriptions to a five days a week podcast reading of its main stories and LBC, the London talk radio station, has been charging £2.50 a month since January for access to a catalogue of past shows and special podcast-only material.

However, The Ricky Gervais Show will be the most high-profile podcast to date to begin charging. The first series, distributed free through the Guardian Unlimited website, has been downloaded about 4.5m times and is to be included in the 2007 Guinness Book of World Records as the most popular podcast to date.

Now the show will be distributed through Apple's iTunes and Audible, an audio book and podcast website, at a charge of 95p per episode or £3.75 for the series. If all its former listeners were happy to start paying, the show could rake in some £4.28m in revenues.

The beauty of podcasting is that a show does not need to make anywhere near this amount of money to make a profit. The costs of podcasting are minimal. Apart from some basic recording equipment and software, which can even be downloaded free from the internet, the main costs are for buying enough internet capacity to be able to distribute the podcasts.

For very popular podcasts, the internet costs can mount up higher than amateur presenters and hobbyists are prepared for. For example, Mugglecast, a podcast created by a group of teenage Harry Potter fans in the US, found itself saddled with $60,000 (£34,400) a year running costs after being regularly ranked number one in the podcasting charts. The team were forced to bring in sponsors to help cover the costs and are in talks with AOL over a possible deal.

For a commercial organisation, however, this level of cost is easier to absorb and David Lloyd, managing director of LBC, says the radio station is able to make a 40 per cent margin on its £2.50 podcast subscription charge.

Although the media industry will be watching the fortunes of The Ricky Gervais Show with interest, many are sceptical about how widely the subscription model can be applied.

Emily Bell, editor-in-chief at Guardian Unlimited, believes Ricky Gervais may be something of a one-off. "The subscription model may be suitable for a small amount of content - talent-based work that appeals to an international audience," she said.

"But there is so much free radio content out there that it has to be something exceptional for people to pay for it. I believe podcasting is more about reach and growing an audience."

The Guardian is planning a number of podcasts after parting company with Mr Gervais, but has no plans to charge a subscription on these.

Similarly Kiss100, the Emap-owned radio station, is planning to keep its own chart-topping podcast, Faceless, free for listeners.

The show, which features the amorous confessions of an anonymous London girl, has rivalled Mr Gervais at the top of the podcast charts, but Kiss is looking at building advertising opportunities rather than subscriptions around the show.

The advertising slots near to 7.45am, when snippets of the Faceless podcast are aired on the radio, are already commanding a premium price, Kiss said.

Podcasting may open up interesting possibilities for advertisers, points out Mr Lloyd. Podcasts are not subject to the same broadcasting regulations as on-air radio shows, and so they could include elements such as endorsements by presenters, which are prohibited under radio rules.

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