Micro payments-based monetisation strategy led the audio series startup Pocket FM post a 75x increase in revenue over the past 24 months and a 9x increase in paying users.
Micro transactions mean that there’s no fixed monthly or annual charge which users need to pay for the app. Instead payment is linked to usage after a point.
For instance, Pocket FM offers a limited number of free episodes per audio series every 24 hours and charges for binge-listening and accessing more episodes. Additionally, it offers a pay-per-episode model, giving listeners the flexibility to pay for what they consume.
“By lowering the entry barrier, micro transactions have provided our audience with the freedom and flexibility to engage with our content on their terms. This has not only driven revenue growth but has also fueled it,” co-founder and CEO Rohan Nayak told Fe.
In 2023, the over-the-top (OTT) startup registered over 20 million transactions globally. “We believe that through bold experimentation and innovative thinking, we have pioneered a new category and cracked the monetisation code with our micro transaction model,” he added.
Approximately 90% of the company’s revenue comes from monetising its audio series, while about 10% comes from brand solutions and ads.
“Our entire content monetisation strategy is driven by micro payments, tailored for binge-listening to audio series,” Nayak added.
Founded in 2018 by Nayak, Nishanth KS and Prateek Dixit, Pocket FM offers long-form audio content such as audio shows and stories. Last month, it raised $103 million in a Series D round led by Lightspeed, and with participation from Stepstone Group. The company’s valuation almost doubled in this round to about $750 million.
The platform continues to bet heavily on exclusive content. “From the outset, we understood that to establish a sustainable business model and offer genuine value to our listeners, we needed to produce unique, high-quality content that couldn’t be found elsewhere,” he said.
The company’s content library offers over 100,000 hours of audio series content, most of which is exclusive to the platform. It currently offers over 2,000 audio series to its listener community, and claims to actively scale this in a sustainable manner with a growth rate of 30-40% quarter-on-quarter (QoQ).
The startup’s monetisation journey started in early 2022 and has grown by $0-150 million ARR (annual recurring revenue) since then. At present, the company is growing at 57% (QoQ). “As we are entering into newer markets, we expect to further expedite this growth,” Nayak said.
In terms of vertical growth, Pocket FM plans to scale its recently launched online novel reading platform. Since its inception, Pocket Novel has garnered over 7.5 million listeners. “We aim to sustain this momentum,” he said.
The platform’s shows, Saving Nora and Insta Millionaire, have crossed $18 million and $15 million in revenues respectively. With these successes, the company plans to build an intellectual property (IP) business as a byproduct of Pocket FM.
The appetite for audio content in India has increased since the pandemic. This has led to the rise of many players. Some of the prominent startups in the segment besides Pocket FM include Kuku FM, Pratilipi, Spotify and IVM podcasts.
According to Statista, the audio OTT market in India is expected to grow up to $1.1 billion by 2027 and $2.5 billion by the end of the financial year 2030.