A hot potato: If a special guest appears on your favorite podcast, they might have paid the host thousands for the opportunity. It is especially likely if the person promotes a product or business on the episode. Without full disclosure, the practice raises ethical and legal concerns, possibly falling under the definition of payola.
In the US, it's illegal for record labels to pay radio stations to play their music without informing listeners. This month, a PR CEO and an FTC spokesperson told Bloomberg that, regarding payola law, doling out money to a podcast for an appearance without disclosure falls into a gray area at best. Nonetheless, multiple podcasting companies facilitating such deals are thriving.
Guestio CEO Travis Chappell said many guests pay PR companies to introduce them to podcast hosts, though he thinks it's better to go directly to the podcasts without the middleman. Multiple guests have paid between $20,000 and $50,000 for an appearance. The Guestio boss suggests a fee of around $100 to $150 per thousand listeners. Other podcasts might instead take commissions through affiliate links.
This type of sponsorship seems most prevalent in wellness, cryptocurrency, and business podcasts. In one case, business coach Nick Unsworth paid the podcast "Entrepreneurs on Fire" $35,000 for two appearances and 12 weeks of ads, which returned $150,000 in revenue from listeners who became new customers.
Podcasts often struggle for financing, with advertising as a primary source. Direct payments can provide funding while the guest gets publicity in a young, relatively unregulated medium.
"If you can be in that position and make your offer, you have no barriers," Unsworth said. "No one is listening to that episode thinking it's a commercial. There's immediate trust and a perception that you're held in a high light."
The situation isn't unlike how YouTubers and social media influencers get accused of advertising products without clarifying that they received compensation for doing so. In 2020, the UK's Competition and Markets Authority forced Instagram to crack down on influencers who didn't disclose commercial arrangements.
Some podcasters make guest payments clear to listeners, but the field doesn't have uniform full disclosure rules. One podcast host recorded disclosures and added them to old episodes only after Bloomberg broached the issue with them. Chappell also admitted his company should standardize sponsorship clarification.
"As someone who's making money for that type of advertorial content, it should be disclosed," said New York Media Lawyer Craig Delsack. "It's just good practice and builds trust with the podcaster. It can't be the Wild West."