Luminary Raises Another $30 Million to Flush Down the Toilet

Speaking of the business of podcasting, here’s Lucas Shaw and Priya Anand, reporting for 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.

I called this a year ago, when I said Luminary’s initial funding of $100 million was being flushed down the toilet:

It might be a great idea to start a company to produce podcasts with celebrity hosts like Lena Dunham, Russell Brand, Trevor Noah, and whomever else Luminary has signed. Those shows, if done well, could be hugely popular and make tons of money — from ads. But a company bringing that talent together does not need $100 million in funding and will never be worth 1/100th of Netflix.

Part of the nature of podcasting is that the cost overhead is remarkably low. You can produce a truly professional show with a few hundred dollars worth of equipment and software. That’s fundamentally different from the cost structure of streaming video. Now Luminary is trying to recover the money they’ve already flushed down the toilet by flushing some more. This isn’t a good idea that just needs more time — it’s a terrible idea predicated on a complete misunderstanding of how both the podcasting and streaming video industries work. Trying to build “the Netflix of podcasting” is like trying to build the “the PlayStation of sudokus”.

When’s the last time you even heard about Luminary? Whoever is funding this round is the proverbial fool soon parted from their money.

* Again: you know.

Saturday, 23 May 2020