Podcaster Luminary Seeks Fresh Cash to Buoy Struggling Business
(Bloomberg) -- Luminary Media, the money-losing podcasting startup, has raised more than $30 million in a new round and is seeking more funding as it tries to ride out the global pandemic, according to people familiar with the matter.
The funds were raised at a level below last year’s $200 million valuation, said the people, who asked not to be identified because the process is private. The company, which is also cutting costs after struggling to attract subscribers, plans to use the money to fund operations and future programming.
This current round of investment would bring Luminary’s total fundraising to more than $160 million, comparable to the value of the entire company.
Luminary, backed by investors such as Sinai Ventures, NEA and former HBO executive Richard Plepler, previously raised at least $130 million to build what it said would be the Netflix of podcasts -- a subscription service packed with top-notch, exclusive shows from journalists, TV hosts and celebrities. Its slate of original shows include Guy Raz’s “Wisdom From the Top” and “The Trevor Noah Podcast.”
But the app has struggled to find an audience since its debut in April 2019. Only about 80,000 people who tried the app have remained paying subscribers, said the people.
Consumers have proven reluctant to pay for a service when so many of the top podcasts are available for free via Apple Inc. and Spotify Technology SA. What’s more, Spotify -- the world’s top paid audio service -- has bid aggressively for exclusive rights to shows, boosting the costs of many of the podcasts Luminary might have wanted.
Offering the most money in the market was a key part of Luminary’s initial sales pitch to podcast producers.
Luminary was burning through more than $4 million a month before the coronavirus outbreak, while generating less than $500,000 in monthly revenue. To manage costs, the company has cut spending on marketing, new shows and staff.
Luminary is hoping to further boost its customer base with new shows over the summer. And it’s aiming to secure distribution deals with phone and media companies.
The pandemic has put a cloud over the whole industry. With fewer people commuting to work because of coronavirus lockdowns, podcast listenership has been down overall in recent months.
But the decline is beginning to level off. And listening is still growing for newer entrants such as Spotify and Luminary.
©2020 Bloomberg L.P.