Luminary, the anticipated, debated, ridiculed, hyped, all-star-studded podcast app launches today. Nearly since their announcement, Luminary has been met with equal parts disdain and curiosity. Their pitch is simple, yet not all that original: the Netflix for podcasts. They do, however, seem like the tool best equipped to execute on this premise.

They’ve raised some serious capital, $100 million to be exact. And what they’ve done with that money isn’t necessarily a secret. They’re launching a premium podcast app with exclusive podcasts from Lena Dunham, Trevor Noah, Guy Raz, Malcolm Gladwell, Leon Neyfakh, and several other marquee names with mass appeal. The catch is to access these podcasts you’ll have to fork over $7.99 a month. The price is notable since Disney recently announced their new Netflix-competing streaming service will be $6.99 a month. For a dollar less you’ll have access to the entire Disney, Pixar, Star Wars, and Marvel libraries. It’s a tough comparison for Luminary.

Whatever your feelings on the company and maybe-inevitable shift to paywalled podcasts, all eyes will be on Luminary to see if it’s a sustainable business model.

How Luminary can succeed

The list of exclusive podcasts and podcasters is a truly strategic mix that’s undoubtedly their greatest strength right now. The mix is especially genius because they were able to grab names who will appeal to the masses — people who may not even listen to podcasts already (grow the denominator) — such as Conan O’Brien, Russell Brand, Hannibal Buress, to go along with the names I listed above. These personalities have built-in fanbases who may subscribe simply because of their fandom and may be new to the podcast genre.

The other side of the equation are the seasoned podcast folks they brought on with devout podcast-specific fanbases. These include The Bright Sessions’ Lauren Shippen developing an anticipated spin-off, The Ringer spinning off their popular The Rewatchables podcast, a new podcast from Slow Burn’s Leon Neyfakh, seemingly buying(?) Love+Radio, and several others.

Anecdotally, I’ve heard good things about the new shows, notably The AM Archives.

The key equation here will be if they can convert enough existing podcast fans and introduce new fans to the medium to sustain what I can assume are lucrative deals in place with the creators.

The other side of their model is as a podcast app which will could serve ads similar to other players out there. The idea is that all (more on this later) your podcasts will be freely available like any other player and they’d slowly entice you into a subscription to access their exclusive shows. If Luminary can build an intuitive, user-friendly app that allures both existing podcast fans and easy for newcomers, there’s an opportunity for success here.

How Luminary can fail

Podflix

The “Netflix for podcasts” pitch is tired, but more importantly, it’s not accurate. Netflix didn’t start with original content behind a subscription service. They “started” — after their pivot from mail-order DVD rentals — by having a mass catalogue of network and studio content readily available to stream. These titles had trust, relevance, fans, and convenience to stream where no other players truly had a competing product. Netflix started creating original content once the networks and studios saw the writing on the wall and began to pull their content. If Netflix started day 1 with only unknown original titles they likely would have had a much harder user acquisition model and substantially slower growth.

The other issue with the Netflix-esque model is one startups everywhere face: will their capital last long enough to prove out their business model? Sure, $100 million is a lot to go on. However, they first raised money in May 2018 and unless I’m missing something, they haven’t been earning any revenue until the subscriptions are opened. How many $7/month subscriptions will they need to stay afloat after these celebrity contracts are paid out and they’re paying an entire employee staff? What does their burn rate look like?

Podcast App

I’ve played around with their app a little bit and it’s … fine. It’s a pretty basic player without some of the advanced features you find in other apps. That said, I imagine this will be a tough area to compete in for a variety reasons. First and foremost, there are already several very good podcast apps out their with substantial market share. Will the future iterations of the Luminary app be substantially better than Overcast, Pocket Casts, Spotify, Stitcher, or the much-improved Apple Podcasts app? These apps have been around long enough and have improved based on user feedback and needs.

Furthermore, they’re starting at a disadvantage since The New York Times and Spotify announced they wouldn’t allow their shows to go on Luminary’s free app. No The Daily, Reply All, and several other major shows is a ding to Luminary’s catalogue. I also pondered whether Stitcher would pull theirs (and Earwolfs) shows as well. Luminary can still succeed overall even if their free app isn’t a runaway hit, it’ll simply be yet another obstacle they’d face in gaining significant traction.

Podcast Creators and Fans

It’s very difficult to even squint to see how you could spin Luminary into a pitch that’s good for users. To date nearly all podcasts are free. Luminary needs to convey that their podcasts are markedly better than the litany of free podcasts out there. A tall order.

It’s made tougher when there’s questionable commitment from the creators as well. Many creators seem to be testing the waters of Luminary rather than jumping right in. Take The Ringer, for example. The Rewatchables is one of their most popular podcasts (and one of my personal favorites). Instead of putting this entire feed behind Luminary’s paywall, they made a spin-off to focus only on movies made in 1999 (which is also already an existing podcast). By going hyper-specific in the movies they’ll cover, they’re also only agreeing to a finite amount of episodes (Update: they’re committed to 15 episodes). Same goes for several other creators. Instead of bringing their main project to Luminary, they’re creating something new or a spin-off. Is this uncertainty over the business model?

Taking something that’s basically always been free for existing users and suddenly charging for it will always be met with criticism and anger. Luminary hasn’t helped their case with some questionable tweets and marketing. Many podcasts fans view this move as a company holding their favorite podcasts and personalities for ransom.

Netflix won because of their catalogue and convenience of streaming. It’s unclear if Luminary has an advantage on either front.