Podcasting looks poised for a major infusion of consumer revenue in the next few years. The question is whether audio platforms, rather than individual creators or studios, will reap all the benefits.

Next week, on April 23, a venture-backed podcast app called Luminary will launch to the public, offering more than 1,000 hours’ worth of exclusive, ad-free content to subscribers, who will pay $7.99 per month for access. That content, which includes new shows from podcast networks including Wondery and the Ringer, will mix with ad-supported access to other shows in a standalone app designed to deliver recommendations and solve podcasting’s notoriously troubled discovery issues.

Luminary, which has raised $100 million in venture capital over two rounds since the spring of 2018, will join Stitcher Premium as the only two large subscription services featuring podcasts, and it hopes to be a friend to everybody in the ecosystem. Luminary rep said it developed relationships with 54 of the 160 creators it made offers to, including Guy Raz, Trevor Noah, Adam Davidson and Lena Dunham.

Podcasters have long struggled to add subscription revenue to their businesses, thanks in part to the challenges of delivering exclusive audio content. But a recent run of announcements, including the launch of Supporting Cast, made it seem like 2019 might be the year that could change. In other cases, subscription-focused publishers took matters into their own hands; in March, the Athletic announced it had built out its own podcast network and stashed it inside the Athletic’s own mobile app.

Podcasting currently is a mostly ad-driven medium. Its ad market has been growing healthily, albeit from a small base, for years, projected to reach $659 million in revenue in 2020, according to the IAB. While that total amounts to a rounding error compared to a format like digital video, podcast advertising has been plentiful enough to buoy media companies such as the Ringer, which reportedly earned $15 million in revenue from podcasts in 2018. Even a subs-focused publisher like The New York Times is relying on ads for its podcasts.

But the arrival of more platforms, and their interest in bundles, may wind up limiting creators’ opportunities to scale their own direct relationships to consumers. Though customers are used to the idea of paying creators for audio — podcasters are the second-largest category of creators on Patreon, and their numbers have more than quadrupled over the past three years — the concept of a premium audio bundle appears to have gotten some traction too: Stitcher Premium, about two years since its launch, is closing in on 100,000 subscribers, who pay either $4.99 per month or $34.99 per year, according to a source.

“I believe that it is time for the podcast industry to evolve into a true dual income revenue business,” said Hernan Lopez, CEO of Wondery, which will have two exclusive shows on Luminary. “The more platforms and voices beat the drum that premium content needs to be consumer-supported, the better.”

As that drumbeat grows louder, however, creators and publishers may have to contend with consumers expecting to access a library, rather than one specific show, when they pay for audio. “Both models [both individual subs and bundles] will coexist, but over time you will see a higher incidence of bundles, just because they’re more efficient for the consumer,” Lopez said.

Though podcasting has finally crossed over into the mainstream, with an estimated 70% of Americans aware of the format, less than a quarter of the U.S. population (aged 12 or older) listens to one on a weekly basis, according to Edison Research.

But major platforms are growing interested in them. Earlier this year, Spotify acquired Gimlet Media, the podcast startup responsible for shows including “Homecoming” and “Startup,” and Anchor, a podcast hosting service aimed at amateur creators, for a combined $340 million. Last fall, iHeartMedia acquired Stuff Media, the parent company of top podcast producer HowStuffWorks, for $55 million.

That interest has been good for purveyors of high-quality audio. In its most recent quarterly earnings, Spotify disclosed that it had licensed 14 different shows exclusively for its platform, and intends to invest more heavily in exclusive podcast content in 2019, both in the form of licenses for shows and other forms of acquisition.

Meanwhile, Luminary, flush with VC money and facing skepticism from creators, has been overpaying for shows, according to sources familiar with the platform’s pitch. One source, who asked not to be identified, said Luminary was offering anywhere from $700,000 to $1.5 million per show, provided that show hit subscriber acquisition targets for Luminary.

“The positive is, as someone who can produce podcasts well, there are a lot of people who can pay and pay well,” that source said. “The danger is that this is going to force independent voices out of the space.”

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