Buoyed by US traction, Pocket FM eyes more global forays

“As a format, audio is way more engaging and monetizable than audiobooks and podcasts,” Rohan Nayak, cofounder at Pocket FM, told ET.

Pocket FM recorded more than $25 million (about Rs 205 crore) annualised revenue run-rate (ARR) as of October 2022. In November last year, the platform launched in the US. And the company decided to lay more emphasis on figuring out the business model to fuel these ambitions.

“We are operating at approximately a 65-70% gross margin right now. And if you compare that with the industry standard on content products, like music, or any of the video formats, you will see that it’s quite healthy,” he said, hinting how the company is pursuing a goal towards hitting profitability.

“We wanted to build a freemium business model, because in the long run, freemium is a lot better in terms of aggregating users and converting them to paying users,” Nayak said. “We realised that micropayments worked a lot better for us… Although 90% of our revenue comes from micro payments, we are now sort of expanding our ad team to get more as we are a freemium product, we need ad revenue coming as a sort of reasonable source of revenue.”

Nayak said at a time when ad spends were being cut extensively, Pocket FM was relatively shielded from the impact as it is not really dependent on advertisement dollars considering most of its revenue comes from micropayments, which come from the user.

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“So any of these things in the advertisement space don’t impact us at all from a revenue standpoint,” he clarified. “And actually, amidst this downturn, we have actually scaled our revenues. We have grown efficiently, despite all of the turns around us. Fortunately, we are in a position where we have figured out monetization really well.”Nayak added that audio has the highest engagement amongst all formats compared to short video or long video content. The reason being that audio is easy to consume as it doesn’t tie a user down and is the only 24/7 consumption medium. He added that in 2021 when the company started scaling the platform in terms of a user base, it saw 8-9 times growth in users.