Alex Blumberg’s podcasting company Gimlet Media just crowd-funded $200,00 in less than two days. Only the company didn’t use Kickstarter, Indiegogo or another familiar platform. Instead Gimlet invited qualified investors to become actual equity stakeholders under a provision of the 2012 JOBS Act. Gimlet ran this campaign using the help of a new platform called Alphaworks.
You can learn much more about that law, and the restrictions Gimlet had to abide by–such as that qualified investors have to make at least $200,000 a year or have $1,000,000 in assets–on this week’s episode of his podcast, StartUp. It’s that episode, released Sunday, in which Blumberg announced the opening for investors. He then had to update the show a little more than a day later to let listeners know that the goal had been reached, and no new investors could be taken on.
That $200,000 of listener investment comes on top of $1.48 million of venture capital the company had already raised, as also documented on StartUp.
Gimlet’s success comes as PRX’s Radiotopia is nearing the end of its Kickstarter this week, having more than doubled its original $250,000 goal. PRX has now set “level up” goals which add new milestones for donations above the goal. As of midnight Tuesday Radiotopia is just under $25,000 shy of its next level up goal of $600,000. If that benchmark is hit then Radiotopia will create a pilot development fund to find new producers and hosts, with a focus on “subjects not well covered in traditional public media.”
Radiotopia’s backers, of course, are making donations akin to public radio contribution, for the sake of supporting current and new podcasts. Gimlet’s backers are getting an actual piece of the company, though that opportunity to participate was much more constrained.
Radiotopia’s Kickstarter take is in the range of a pledge drive or two at a large-market public radio station. By comparison, that kind of makes Radiotopia like a big, nationwide public station, but where a significantly larger percentage of the funding can be plowed into program development and production, rather than the cost of maintaining a large broadcast operation.
In one respect this is Radiotopia’s fourth Kickstarter, since one of its anchor podcasts, 99% Invisible, had already successfully Kickstarted three seasons of the show. It’s likely that Radiotopia is building on 99% Invisible’s success, but definitely expanding beyond it, too.
I will be curious to see if Radiotopia continues to rely upon Kickstarter as a fundraising platform. One nice aspect is that it provides much of the necessary infrastructure in a relatively plug-and-play fashion. In contrast, your typical public radio station needs an in-house development team, along with the web, phone and banking infrastructure to accept and process thousands of donations in a very short amount of time. Like a public station, Radiotopia will still have to run its own fulfillment of premium gifts, but that’s a relatively smaller effort.
One downside to Kickstarter is that it takes a 5% cut off the top. Another is that it’s unclear how many campaigns an organization can run before fatigue sets in. Contributing to a campaign to launch a new project or a major new phase is exciting; excitement may diminish as things move into sustain operating rather than building them.
But that’s just conjecture on my part. It may be that Kickstarter turns out to be a fruitful method for both launching and sustaining podcast and other public media style projects and networks. Annual, semi-annual or seasonal Kickstarters are not so different from pledge drives, and those continue to work, by and large.
It will also be interesting to see if Gimlet runs additional rounds of small investor funding. The idea of having equity in the podcast network that you love and support poses a fascinating new model not just for podcasting, but for small, independent media ventures in general. This is especially true if the rules that the SEC has to write for the JOBS Act ever come about, since this would lower the income and asset standards, permitting many more people to become podcast investors.
Of course, every investment is a risk. But, then, so is contributing to a Kickstarter. If a listener invests a small amount in a company like Gimlet principally to make sure the podcasts get made, then maybe any proceeds are just a bonus. At the same time, a for-profit company can’t only raise money by selling equity; it must have other, more substantial sources of real revenue.
While Kickstarters, venture funding and JOBS Act-style small investor funding all look to be promising ways to launch and support podcasts, I do have to note that both Gimlet and Radiotopia solicit advertisers. For Gimlet, that’s part of the revenue model. Also, you hear advertising on most public radio podcasts too, even if you don’t hear the same ones, or hear them presented in the same way, on the air. So it does also appear that the ad supported model isn’t going anywhere, even if it is supplemented or enhanced by other methods.
My main hope is that many more new podcaster will be able to take advantage of these and other new funding strategies to further diversify and enrich the podcasting world.