It’s no secret that podcasts are the new radio. I personally listen to 4 or 5 podcasts a week, & one of the more trashy podcasts I listen to is Frenemies. Unfortunately for me, Frenemies just got cancelled, & the main reason was because of money. Fortunately for those interested in podcast financials, this gives us a good look at the business of podcasts.
What was Frenemies & why did it fall apart? 💔
Frenemies was a comedy show centred around the two co-host’s (Ethan & Trisha) chemistry & their commentary on internet culture. The podcast was produced & owned by H3, Ethan’s production company.
The financials of the show were transparent from the beginning, as it became a regular topic which was discussed & it was clear Trisha didn’t like the revenue split. The revenue from the podcast episodes was split 50/50 after a 5% production fee was taken out by H3. They also chopped up podcast episodes into short videos & uploaded those onto a separate YouTube channel; H3 kept 100% of this revenue.
The justification of keeping the clip revenue was because this pays for production costs (as H3 paid for the set, employees, equipment, etc) & is reinvested into the brand. However, Trisha disagreed with that decision (along with the 5% for production), & wanted more financial control in addition to being involved in production. As Frenemies isn’t its own business & is just a show owned by H3, this would mean either creating a new business just for Frenemies or giving Trisha equity of H3.
As Ethan takes on all the financial risks of the podcast, it would not make sense for Trisha to have equity in H3.
How did the podcast generate revenue? 💸
The podcast generates revenue in two ways; directly through the show, & as a ripple effect from the show’s popularity.
All of the Frenemies podcast revenue was generated through advertising spots. This includes paid spoken adverts during the podcast episodes, & through mid-roll adverts provided by YouTube. Neither Trisha nor Ethan have revealed the advertising revenue numbers.
Frenemies clothing was also planned to be released in July, however this has potentially been cancelled.
In addition to this revenue, the podcast also allowed both Trisha & Ethan to promote their other businesses. Each podcast recently received between 3 & 5 million views.
Trisha used the platform to promote her OnlyFans, skincare line, pop-punk band (including their merchandise), & more. This included showing video ads she produced.
Ethan verbally promoted his wife’s clothing brand Teddy Fresh in addition to the other products & shows H3 was creating.
Whilst the two hosts arguments centred around splitting the advertising revenue, it’s very likely that the biggest amount of revenue generated from the podcast was actually through these other businesses. This amount was not split, & none of those businesses had to pay for advertising slots.
What is the cost of running a podcast? 🧾
A lot of the costs associated with the podcast accumulated as both Trisha & Ethan were as hands-off as possible. The H3 employees seem to have most the podcast responsibilities delegated to them. From selecting topics & organising skits, to digital & physical production, & even ordering pizza whilst they record the show.
Several employees work part-time on the show. The cost could be minimised if they were more hands-on, but neither would likely want this responsibility in addition to their existing careers.
Extra expenses include a set/stage which cost in excess of $30k, ordering merchandise (in which apparently several hundred-thousand was spent), costumes, makeup, equipment & more.
It was stated that the merchandise has a profit margin of 30%. As they ordered the merchandise upfront, we can only assume this is if the clothing is sold out.
Outside of the actual podcast, Ethan also mentions needing accounting to breakdown the podcast revenue & provide payment to Trisha.
Creator lesson 1: if you want ownership, get it at the start 🏁
When Frenemies began Trisha enjoyed the benefits of not taking any financial risk whilst splitting the revenue. The cost of doing so was not having ownership of the podcast. She joked that she didn’t see the podcast running longterm or making real money, which is likely why she didn’t take this initial risk.
Later when the podcast began making healthy revenue, she wanted ownership. On the flip-side, if the podcast wasn’t earning revenue she probably wouldn’t be wanting to pay for the production, & the ownership conversation wouldn’t exist.
When starting a podcast you have 3 options:
- Do all production yourselves to reduce costs but potentially lower quality.
- Pay a production company per episode & accept you may not be able to recoup this cost.
- Sacrifice ownership to a production company.
Over the last few years several podcasts which chose sacrificing ownership have since spoken out about their regrets.
Creator lesson 2: leverage your popularity for promotion 📢
Trisha’s issue with revenue splits ignored that she leveraged the show’s success to sell her own products. Realistically this is where the most value is for anyone involved, so if seems silly to give up the platform due to ownership (which she never had or was entitled to).
Ethan also failed to acknowledge this, stating the show helped grow his other shows but not really acknowledging the other financial benefits of the show’s popularity.
Creator lesson 3: acknowledge a winning situation 🏆
Their hands-off approach may have been financially inefficient from an outside perspective, but they were still highly profitable, & neither of them wanted to handle production to reduce costs.
As they were utilising their existing H3 production team, this did help increase profitability.
As a result, Trisha gaining control of the podcast would have only resulted in either the show quality dropping as less experienced individuals assumed the production roles, or a production team taking a larger cut to profit from the show.
There was no winning solution because they already had it. Trisha couldn’t see this, though, & both individuals are now possibly missing out on millions in future revenue as a result.