Are Podcasting 2.0 micropayments actually worth it? Thank you for joining me for The Audacity to Podcast! I'm Daniel J. Lewis. Podcasting 2.0 introduced a new way for your audience to support your podcast by sending micropayments. This is usually measured by "satoshis", abbreviated as sats. That's S-A-T-S or 1 sat, S-A-T, and 1 sat is 100 millionth of a bitcoin. As such a small portion of cryptocurrency, many people might wonder whether the effort is even worth the return. And I really hope
that my mention of bitcoin and cryptocurrency doesn't scare you off. What I'm about to share with you is really not about cryptocurrency or bitcoin and this is not financial or investment advice. Instead, I want you to consider whether micropayments are really worth it. Whether that's through some other system that might come along in the future, through the Podcasting 2.0 value spec and micropayments through cryptocurrency, or something else. That's what this episode
is about. Follow along in the notes or outline inside of your app, a tap or swipe away, or Or go to theaudacitytopodcast.com/micropayments. First what is a micropayment? As you can probably guess from the word itself, micropayments are very small transactions. The business world often actually considers any transaction below $20 to be a micropayment. Now I don't know about you, but I still consider $20 to be a nice bit of money.
So where our personal finances are concerned, we might think of micropayments closer to $5 or below. With a Podcasting 2.0 podcast app, audiences can stream satoshis, or sats, to Podcasting 2.0 compatible podcasts by automatically sending amounts for every minute of listening. Like 100 sats per minute, or 1000 sats per minute, or 200 sats per minute, or whatever number they set or that is inherited by default.
Another way is to send a boostergram, which is a one-time payment that can include a message. As you might guess, the "gram" part comes from the idea of a telegram. And the "boost" part, which is a term often used in podcast apps, comes from the idea of boosting how much you're supporting because you liked something you heard at a particular point in the episode. Perhaps even boosting beyond the amount you normally stream to the podcast.
So you're listening to something maybe streaming only a hundred sats per minute and you hear a Fantastic point or a hilarious joke or something that really just went mind equals blown So you want to boost that because you think wow that little nugget right there Oh that was just more than a nugget. That was a value bomb a truth bomb some kind of bomb that was explosive, that is worth a lot more than I've been giving to the podcast. I want to boost
this idea right now. You might hear some podcasters mention their boosts or streams from only a couple hundred sats to a hundred thousand or more. While these numbers seem large, they still convert to small amounts in US dollars, at least as of March 2023. And I apologize in advance that I didn't and couldn't really include every single potential currency. So you'll have to do the math and find the calculators on your own if you're looking
at currency outside of the United States dollar. But I'm basing this on the US dollar. So while these donations of satoshis, maybe thousands, tens of thousands, or hundreds of thousands, convert to very small amounts in dollars and pennies, that's actually a good thing. And Before I can really explain that and why that's a good thing, we need to look at a current big problem in the financial space right now. It's the legacy problem with micropayments.
PayPal and Stripe are very popular methods of receiving payments. It's now quite easy to put a simple button on your site allowing your audience to support your podcast through one-time or even recurring donations, even with a credit card. You don't have to pay for super expensive SSL certificates and have a merchant account and all of that stuff. You used to have to have a merchant account and you used to have to have a really expensive security certificate.
I've done those things before, for myself and for clients and for employers. And those things would have their own additional monthly or yearly fees. But PayPal and Stripe and other services like them have made it far more affordable and accessible to receive payments, including ACH transfers, paying from a balance, or debit or credit card payments. Even though there's no monthly fee for these more modern payment
methods, there are transaction fees. As of March 2023, those fees are usually about 2.9% of the transaction plus a flat fee of usually 30 to 50 cents. You might already see the problem. If your audience wanted to donate $1 via PayPal, you would get less than half of that after PayPal's 2.89% fee and their 49 cent flat fee. Even worse, those fees will likely be even higher outside the United States, whether you're outside the United States
or the person donating to you is outside the United States. Even if you call it a donation, still paying those fees. Losing around 50 cents might not seem like much, but multiply that by how many people might be willing to give you $1 donations per episode or per month. At that small of an individual donation, multiplied by whatever the size of your audience is, you would lose half your income in payment fees because half of that $1 is going to the
payment processor, mostly because of that flat fee. Even worse, this makes 50 cent donations completely impossible. Some of these systems won't even allow it. You try to say I want to give 50 cents and they'll just say nope, nope, it needs to be more than that. That's not possible for the systems. And you might still be thinking, oh 50 cents, I don't want 50 cents from my audience, that's pathetic. Please stop thinking that way, I'll address that more in a moment.
But Podcasting 2.0's value feature makes micropayments possible. The value feature, as we call it, in the Podcasting 2.0 standard, and that feature is added with the podcast colon value RSS tag, allows you to receive satoshis from your audience via a Podcasting 2.0 podcast app, or even sometimes a web browser extension or a website. Your audience can choose to send any amount of satoshis and you will probably pay only a small percentage in fees, but no
additional flat fees. Consider the one dollar example again. Legacy payment systems would take around half of that, but receiving the equivalent amount in satoshis would cost you only around three to five cents, depending on the small fees in the payment chain that is. While that three to five percent could obviously be higher than other payment methods, that percentage is all you pay. Thus, you could receive even a 10 cent donation and still keep
nearly all of it. Plus, there's the community value of the value feature. When you send a payment via PayPal or Stripe, those large corporations are receiving those fees. Even when you use a donation system built for content creators, systems like Patreon, Glow.fm, or Supercast, the payment fees, which are often much higher than Stripe or PayPal because those systems have built a much larger system to support you and they have to make their
money too on top of the fees they have to pass on to you. So those fees are often around 10% or more. Those fees are still going to those companies. But when you use the Podcasting 2.0 value feature for micropayments, you and your audience can know that any fees are going to the people actually making the podcasting engine run. For example, if you generate your RSS feed with Blueberry's free PowerPress plugin for WordPress, then a small percentage
goes to Blueberry for maintaining the free PowerPress plugin. Another small percentage probably goes to the podcast app, like Fountain or whatever app your listener is using, to support then the development of that app and keep it free or inexpensive. And another small percentage might go to Podcast Index which maintains a free and open podcast catalog and a robust API for podcast app developers, keeping this ecosystem open, free, and away
from corporate control or censorship. This means what little fees are taken out, the 3-5%, are supporting the people actively involved in helping you engage with your audience. I think that's much better than seeing those fees go to large faceless corporations who care very little about what you do. Plus, this makes your audience the sponsors of your
podcast, more deeply engaging them. And if you thank your audience supporters in your episodes, you're investing that time back into relationships with them, your audience, instead of shilling for a sponsor. So what are podcasting 2.0 micropayments worth? Going back to this idea of using satoshis as the form of the micropayment, a satoshi or sat is only one hundred millionth of a
bitcoin. Kraken and some other places provide some different handy converters and calculators so you can go back and forth between dollars and satoshis or whatever your currency is that you want to see what the value of the satoshi is. But here's a quick way to do the math yourself, at least in dollars. Every 1000 sats equals the cost of bitcoin in pennies. So if Bitcoin is worth $25,000 then 1,000 sats would be worth $0.25. 10,000 sats then would be worth $2.50.
And 100,000 sats would be worth $25. And you can more quickly do the math on your own from that basic idea that 1,000 sats is worth the cost of Bitcoin in pennies. And make sure you check this for your own currency as well. And yes, the value of Bitcoin fluctuates so the value of the satoshis also fluctuates It's because a satoshi is merely a much smaller portion of a bitcoin, just like a penny or a cent is one hundredth of a dollar.
So receiving only 1000 satoshis per episode might sound pointless, because that's only 25 cents. But multiply that by how many episodes you publish and by how many people would be willing to give you a mere 25 cents. is the key if it's easy and integrated into their podcast apps. Plus, remember that such a small transaction would be completely impossible with most other payment systems. And yet, you get to keep nearly all of it with the Podcasting 2.0 approach.
Micropayments can also be easier for your audience. Many studies regularly confirm that usually only 3-5% of an audience will buy or donate. I often wonder why that number is so low. Could it be because the price of the thing is too high? Could it be because the process has too many steps? Or could it be because they simply can't take immediate
action when they hear that promotion? Like if someone is listening to a podcast in the car, they can't and really shouldn't try to take action on something that they hear for their own safety and the safety of anyone in their car and the safety of anyone around them. So why is it only 3-5%? I think it has more to do with the process and how easily the audience can take action. The beauty of these modern micropayments is that they're
being built directly into the podcast apps. This means your audience would be able to automatically stream sats to you while they listen to you without their having to do anything. They can just set it and forget it and you're getting streaming sats whenever they listen. Or it could take only a few taps, maybe even only one or two for them to boost or send a boostogram all without leaving their podcast app or interfering with their listening experience. They can do it all right there.
They don't have to log into anything else. They don't have to go somewhere else. It's all right there inside their podcast app. And yes, I know that right now it's still a little complicated for audiences to get into this ecosystem. But developers know that has a high barrier to entry. So they are working to make it much easier. And I feel quite confident that the process will improve every month. And imagine how much easier it could be in only a year from now.
Micropayments also allow fun creativity. Some people enjoy sending hidden messages or being meaningful with their donation numbers. For example, a donation with the numbers 1776 has been called the Liberty Donation because of the United States Declaration of Independence in 1776. But maybe your patriotic audience can't actually afford $17.76, but they can afford
1776 sats. 1776. And if they feel that amount is actually too low, they can simply add some zeros on the end, multiplying the value by 10 or more. As another example, PodNews Weekly Review receives regular Sats donations from Buzzsprout where the number of Sats represents the number of new customers Buzzsprout received in that week. And I remember a little book from my childhood Sunday school that taught kids to use a calculator with different numbers from the Bible.
And then you turn the calculator upside down to solve some kind of riddle or get the punch line to a joke or something like that. For example, the numbers 37818 on a traditional calculator would spell Bible, B-I-B-L-E, when you flip the calculator upside down. 37818. Go ahead, try it on your own calculator. You see, that's some of the creativity some people could do. send me a 37,818 sat donation, or those numbers in a donation, I'm going to see that, oh,
that's the Bible donation. And the 1776, that's the Liberty donation. Other people have other things that are borderline profane or obscene in some cases, but some people have fun with it. Sometimes they pick a number that's meaningful to them, like their birth year, or their favorite number, their "please don't send your social security number". It could be anything really.
And this highly divisible micropayment approach, because we're talking about very tiny portions of money, this highly divisible approach offers limitless yet affordable possibilities for this kind of fun numerology in your donations. Try it. Have some fun with it. Think of some numbers that are meaningful to you, some numbers that are fun, numbers that are appropriate for the podcast you're sending them to, and try it and see if they recognize it.
You could send it and see if they can figure out what it is, or you could tell them what it is. It can be a lot of fun that way. Sending these little numbers, hidden messages, or clues or anything like that. Just again, please be appropriate to the podcast that you're sending such donations to and encouraging for your audience. Now maybe your audience and your podcast are on the fringe of things and you're very explicit. You're an R-rated or higher podcast.
Then go ahead and have whatever kind of fun that you want with that and open it up to whatever. It's up to you and your audience. And you have that kind of flexibility with these micropayments. And you might be thinking then, "Well, wait a minute. 25 cents. We're still only talking about 25 cents or 50 cents or 10 cents or a dollar or these tiny micropayments. There's a reason we call them micropayments because they're micro."
You might be thinking of that compared to a traditional CPM-based sponsorship. So is it really worth it when your audience could be sending you only pennies? First, remember that you get to keep nearly all of those pennies. So that's one thing right there. None of this 30% goes to the network or 30% to the payment processors or half of it to these systems. No, nothing like that. get to keep most of it with a very small percentage going to these other "podcasting people".
But you might still be thinking a traditional CPM-based sponsor would be more profitable. CPM, in case you don't know, stands for Cost Per Mille, M-I-L-L-E, which means cost per thousand. And maybe it would be profitable for some podcasters, but usually only those who get thousands and thousands of downloads per episode. And yet, consider the math of it all.
With a $25 CPM sponsorship deal, and that's around the average usually for a host-endorsed ad spot, and this is assuming that that $25 isn't split with your ad network where you're getting then maybe only 70% or 50% of that. But let's assume that you get the full $25 CPM for your ad. So you're getting paid $25 for every 1000 qualified downloads your podcast episode delivers, usually limited to the first 30 days. By qualified downloads, that would filter out bots and many repeat downloads.
That's reasonable, we understand that. But it might also have to exclude downloads outside of the target market. For example, counting only downloads from the United States and Canada, but nothing from anywhere else. Or if it's a podcast from people in the United Kingdom, counting only downloads from other people in the United Kingdom because maybe the sponsor serves only people in the United Kingdom so you have to exclude everything else.
But let's go back to assuming you get the full $25 and all 1000 downloads per episode all qualify under this sponsorship deal. So with simple math, that makes each listener worth only 2.5 cents. Yikes. This gets even worse with dynamically inserted programmatic ads that might pay only $10 CPM or less, making each listener worth only one penny. Compare that to accepting micropayments from your audience. If you could get only 5% of the same 1000 listeners to give only 50 cents per episode.
So again, we're not talking get your entire audience to give you 50 cents now. That would be awesome. I know, that would be fantastic. You could live off of that. So let's assume you can only get 5% of your audience and get only 50 cents per episode. That is tiny. With that, you would still make the same $25 per episode. But in a far more fun, engaging, and community-focused way. This is why the Podcasting 2.0 micropayment system is commonly included in the bigger idea of value for value.
Where you are giving value, your audience gives value back to you. This has been modeled by the podfather himself, Adam Curry, and his co-host John C. Dvorak on their podcast No Agenda. You're giving value to your audience through the content that you publish, and then your audience gives value in return for the value you have given them. And I really like the way that Adam Curry puts this, is it's their time, talent, and treasure.
And he says that that was inspired by something he read in the Bible. And even the podcast app developers along the way are giving and receiving value too. If you're one of those who's like, "I sense communism!" No, this isn't communism or anything like that. This is giving the value to the people who deserve it because they've done something of value too. It's paying the laborers their wages. You are worthy of the value you can receive from your audience.
Also consider that the only way to increase your income from CPM advertising is to either grow your audience or insert more ads. It reminds me of this hilarious scene from the movie Ready Player One where this evil corporate guy who is controlling this virtual reality company that has this virtual reality set. Kind of this whole meta-universe thing. He is this evil guy that just thinks about money, and he's presenting to the board this new idea for how they can make a whole lot more money.
Listen to this from the perspective of a podcaster. "Shareholders won't be happy." "It's not our job to make them happy, it's our job to make them money. But once we launch this little baby, they're gonna flip. We call this Pure O2. This is the first of our planned upgrades once we can roll back some of the holiday ad restrictions. We estimate we can sell up to 80% of an individual's visual field before inducing seizures." I love it.
Up to 80% of an individual's visual field before inducing seizures. Oh, doesn't that describe so many of the podcasts out there? Yeah. Because that's their only option. the audience or put in more ads. Because sometimes the advertisers don't want to pay more or they can't afford to pay more. So you have to have more of something else in order to
make more. That's the principle always. It takes more to make more. But there are countless other ways to increase your income from your existing audience, so without growing your audience or inserting more ads before inducing seizures. And that is providing more value through your content, engaging your audience better, offering shoutouts or special titles for particular support levels, or even simply asking for more. You'd be amazed
what happens when you ask people. It reminds me of a study that if I can find the actual link to it, I'll put it in the notes for this episode. Tap or swipe away or at theaudacitytopodcast.com/micropayments. This study was on what it takes to get people to do something. And they looked at a Kinko's line where people were waiting in line to make copies. And they had someone cut in line and then evaluated how these other people who didn't know about
the study responded to that person cutting in line. And they found that people were far more likely to be okay with a person cutting in line if they gave a reason, but also even if that reason was simply to make copies. It's like, guys, we're all here to make copies. You want to cut in line so you can make copies? Oh, oh, okay. That's okay. Go ahead. You can cut in line to make copies. Crazy, right? But it was the asking and giving a reason.
So for you with your podcast, don't underestimate the power of asking your audience. There are countless other examples out there, charities, organizations, politicians, all of these people who have to ask for money. Why? Because it works. They ask and they receive. More scripture for you. You have not because you ask not. So ask your audience. Sometimes maybe you even say, "Hey, during this season, would you consider giving a hundred more
sats than you usually do? Or 10% more? Or something like that?" Ask. That is a great way to increase your support and your income from your podcast instead of trying to load so many advertisers into your podcast that you're inducing seizures in your audience. As you can tell, I think yes, micropayments from your audience are worth it. The Podcasting 2.0 approach to micropayments and support from your audience might not only be more financially profitable,
But it's also more engaging. It makes your audience feel more involved, builds deeper loyalty, and is more fun. That, I think, is priceless. Even if you're not making lots of income, you are still profiting from your podcast and your audience is profiting too. Remember, profit, P-R-O-F-I-T, popularity, relationships, opportunities, fun, income, and tangibles. So yes, I think it's worth it. And this inspires me too. You might remember that I
accepted some sponsors for The Audacity to Podcast wayyyyy in the past. Far, far past. I think we all accepted the same sponsors back then. And I'm not entirely opposed to accepting sponsors again, because I do need my business to provide for my son and me. But I would only accept sponsors if if I believed they were totally relevant and valuable to you. But even then, I still often think that, and I even say this, I actually can't afford to have sponsors because of
what that costs me in opportunity. In opportunities for growing my business through the products and services I personally made and sell. Like my podcast reviews, or my Zoom H6 for Podcasters course, or other products and services that I create and offer in the future. Consulting, coaching, stuff like that. Things that I offer you that I sell instead of a sponsor.
So if I'm advertising for a sponsor, then I need to either put more ads in my podcast, thus getting closer to that seizure line, or I need to not promote my own thing so that I'm promoting the sponsor and making it profitable for them. And maybe even more expensive than anything else is what it would cost you and me both in our relationship. Instead of that, The Audacity to Podcast accepts streaming sats and boostograms.
I've actually had that enabled for a while and have earned over 100,000 satoshis all without my asking for it or promoting it. And I've only once said I even had it set up and that was in my episode about Podcasting 2.0 and why you should pay attention to podcasting 2.0 and why it mattered. In the past I've given shoutouts for podcast reviews and while those still have their own value, the reviews are very valuable for certain things and certain outcomes and they're a great way to engage
your audience. That's why I made my service mypodcastreviews.com. But starting now, I want to try, at least for a season, of giving shoutouts to your podcast for any booster grams of around 10,000 sats or more. And I have to reserve the right to alter this or to not promote things or share messages as I see fit. So that whole disclosure and disclaimer aside. You might be tempted to skip listening to such segments if I have them in upcoming episodes.
But even if you give nothing at all and you don't care about any of the other audience members, I still encourage you to observe and deconstruct what I do so that you can improve your engagement with your audience. Whether that's innovating on something I do, imitating something I do, or trying the total opposite of what I do. I want it to inspire you. That's one of the reasons why I want to share the experience with you. Let you see a little bit of
what it's like. Some examples. I'll try some things along the way. Maybe it will work, maybe it won't work. We'll get to see it and observe together. We'll be a little scientists. For science. And if you want more information about this and so much more about the Podcasting 2.0 project and the future of podcasting, then really you need to listen to the podcast, The Future of Podcasting. This is not a new show, but I'm thrilled to be the new co-host for The
Future of Podcasting with Dave Jackson from School of Podcasting. In our shared show,
we discuss emerging podcasting trends and technologies. And in our very next episode, I'll be asking Dave about his experience and mindset behind why he has given micropayments to other podcasts and what he's thought of the process, what it's been like, how easy it's been, why did he do that, what was he thinking, what did that feel like, so you can get inside the mind of someone who supported a podcast so you can learn how
to leverage that for your own podcast and beyond just that one episode that we'll do, and we'll talk about value for value and other stuff like that in other episodes and a lot more. We're endeavoring to make Podcasting 2.0 and other more modern podcasting trends and technology more understandable and actionable so you can improve your podcast and leverage these new opportunities. It's a lot of fun. We've already had some good episodes, some
in-depth stuff, some surface level stuff. Dave has several episodes from the past that he did on his own. I'm thrilled to be part of this. I really like the new podcast cover art that I designed for it as well. So if nothing else, please check it out just for the cover art. I hope you'll join us for the future of podcasting over at futureofpodcasting.net
as we talk about these technologies and other ideas in depth and otherwise. And we haven't even recorded that episode yet where I get inside Dave's mind about the experience of supporting, boosting, and such other podcasts that he listens to. But when it's available, I will link to it in the notes for this episode at theaudacitytopodcast.com/micropayments. So I hope that you'll listen and join us for the future of podcasting at futureofpodcasting.net.
Now that I've given you some of the guts and taught you some of the tools, it's time for you to go start and grow your own podcast for passion and profit. I'm Daniel J. Lewis from theaudacitytopodcast.com looking forward to your booster grams and thanks for listening! [MUSIC PLAYING]