Looking at The New York Times' Quarterly Results

ARPU is down, but for good reason?

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One of the downsides of talking about media is so many companies are private, so we have to speculate a lot on how they’re doing.

The New York Times is one of the rare exceptions to this. Because the company is public, we get to look at the numbers and see how things are going. Since I don’t get to do this often (and it’s just a lot of fun), let’s dive in.

In the press release announcing the results, the company said:

Operating profit decreased to $25.1 million in the third quarter of 2019 from $41.4 million in the same period of 2018 and adjusted operating profit (defined below) decreased to $44.1 million from $53.7 million in the prior year, as higher costs and lower advertising revenues more than offset higher digital-only subscription revenues and other revenues.

As you can imagine, print advertising dropped, but so did its digital advertising business. The company blamed that on a particularly good Q3 2018 thanks to a big ad deal from Google not happening in 2019. The Times mentioned that it was expecting a Q4 drop in digital revenue in the mid-teens.

I’d be curious to see if their digital ad revenue is also dropping because of the continued tightening of cookie-based advertising. The company did hint toward that type of advertising becoming less important over time. During the conference call, CEO Mark Thompson said:

Let's take mobile apps. Our iOS and Android apps are the digital services that drive the highest per user consumption of our journalism. We've decided that beginning January 2020, in an effort to improve low time and the overall user experience, we will no longer present open market programmatic advertising within these apps. That will result in the loss of digital advertising revenue in the single-digit millions, but we believe that this will be more than made up by gains in engagement and a higher propensity by app users, both to subscribe and retain.

This isn’t all that surprising. The people who are most likely to use the mobile app are the same people that are going to subscribe because they’re going to hit the paywall fast.

I would be curious to see how much programmatic they’ve been earning from their mobile app over the past few years. If this has already been trending down, it’s not really that big of a deal. The money was going away, so might as well yank the crappy ads and see if that results in more people subscribing or staying subscribed.

Subscriptions were the big news for the quarter.

Paid digital-only subscriptions totaled approximately 4,053,000 at the end of the third quarter of 2019, a net increase of 273,000 subscriptions compared with the end of the second quarter of 2019 and a 31.0 percent increase compared with the end of the third quarter of 2018. Of the 273,000 additions, 209,000 came from the Company’s digital news product, while the remainder came from the Company’s Cooking and Crossword products.

By 2025, The Times hopes to have 10 million subscribers across its various subscription products (of which I would wager there are more coming). But while the number of subscriptions is increasing, the revenue per user is dropping rather aggressively.

The news sparked a great debate on Twitter that’s worth looking at. Read the entire thread in the tweet below.

I’ve embedded the chart that Jeff created and put it below. As a quick aside, I seriously appreciate Jeff (a subsciber) for making this chart. It makes it much easier to see how things are looking.

Essentially, in Q3-19, The Times had 3,197,000 digital news subscribers, 856,000 crossword & cooking subscribers, and revenue of $115,864,000. The math comes out that The Times apparently earned $28.59 per subscriber in the quarter.

The big concern that Jeff called out is that the revenue per user continues to drop quarter-over-quarter. At what point is this going to drop too low and suddenly The Times is struggling from a revenue perspective?

I think it’s a fair argument. But there are a few things to understand about the numbers:

  1. These are subscriptions, not subscribers, according to Joshua Benton from Nieman. That means that if I have a news subscription and the crosswords, that would be equal to two subscribers up above.

  2. The Times is focused on getting users to commit to paying and then transitioning from low-cost to higher-cost products. They’re not hiding that.

In the conference call, Roland Caputo, CFO of The Times, talked about how ARPU declined:

Quarterly digital news subscription ARPU declined approximately 11% compared to the prior year and approximately 3% compared to the prior quarter, as the impact from the large number of newly acquired subscribers, mostly on the $1 a week promotion, was significantly larger than the benefit from existing subscribers whose promotional offers ended and graduated to higher prices during the period.

This quarter also included the conclusion of the 52-week promotional period for the first $1 per week cohort whose subscriptions began in late August and September of 2018. As Mark said, we're very happy with the retention we're seeing from the first cohort, who has now passed their second post-promotion billing cycle. While many of these subscribers were stepped up to full price, a portion of this cohort was stepped up to an intermediate price, providing a somewhat smaller benefit on ARPU than would otherwise have been realized.

Even at this time, The Times is advertising a “pop-up sale” where they charge $1 per week for an entire year. That’s damn cheap, but it’s also clear why they’re able to get so many people to sign up and it explains why the revenue per subscription looks incredibly weak.

The question is whether they’re going to be able to convince subscribers to start paying more. Although there will be churn, the hardest part is getting the user to pay. Once payment happens and the credit card is on file, users are less likely to cancel, especially because The Times spends a considerable amount of energy on engagement—such as removing slow-loading programmatic ads on their mobile app.

But this is pivotal for The Times. Having 10 million people who are spending $1 a week and then churning isn’t success. I’ll be very curious to see how well The Times does converting users from low-cost to regular-cost pricing.

The other lever that The Times appears to be investigating is earning more from its ultra-loyal customers. According to The Times, I’ve been a subscriber for two years, though that might just be the history they share. I’ve never once considered canceling my subscription and they’ve received my $15 every four weeks without me thinking about, making my ARPU $195 (13 pay cycles * $15).

What happens if they increase that to $18? My ARPU becomes $234. Am I going to cancel over $39 in a year? It’s unlikely. How many ultra-loyal customers does The Times have? 1 million? Maybe 2 million? I’d wager it’s at least 1 million, so we’re talking an additional $39 million per year in subscriber revenue. As The Times continues to add more scale, small changes to the subscription cost can have huge impacts on revenue.

Despite this, management is not hiding the fact that ARPU is going to remain depressed for a while because of these low-cost subscription offerings that they believe will help them hit their goal of 10 million subscribers by 2025.

Free registration

I honestly didn’t expect to see this get called out, but The Times talked about its recently introduced free registration. This is a strategy that I am a big fan of. I wrote:

The registration wall is a smart way to approach this problem. Instead of being given cash for content with a subscription, the publisher is given user data. At the very least, it’s an email address, but publishers can get more creative.

As the publisher collects this data, it’s able to better understand who the user is and what their interests are. This data is powerful because it allows you to focus on content that the user actually wants and it also is actionable when trying to find advertisers to do more direct-like deals. The good news is, it’s not terribly difficult to build a registration wall out.

The easiest approach is to just treat the registration wall as a precursor to the paywall. If a user reads a certain number of articles, present them with a registration. Include copy that says “to continue reading articles for free, please create an account.” They create the account, they get to consume more articles, and everyone is happy. Then if they read even more, you can charge. Even if it’s only a single article difference, that user data will come in handy.

Times’ CEO Thompson said:

But in Q3, we also made a significant change to our pay model. Most anonymous users now have to register and log into The New York Times if they want to read more than a very limited number of stories. Now it's much easier for us to encourage these logged-in users to engage more deeply with our content and consider subscribing. And we certainly saw a positive effect from this change in our net subscription adds during the quarter.

We also believe that we have a big opportunity around first-party data. Our new digital access model means that we're going to know far more about millions of our most engaged users, and we'll be able to tailor advertising messages to them more effectively in ways that rely on this first-party data.

The logic is sound. Anonymous traffic is going to increasingly become useless as browsers block cookies. Publishers can’t pass the buck on ad tech to figure out who the audience is. Instead, publishers have to collect that data themselves and then build products to support them.

The best part is that The Times didn’t see a material impact to its unique users. The reality is, people are willing to register if the content is good enough.

If you’re still on the sidelines about introducing a free registration, please reconsider. If you’re still on the sidelines and you’ve derived a solid chunk of revenue from programmatic advertising, do not hesitate, do not collect $200, get building. You’ll need this revenue to get advertising deals.

One thing to consider… According to Comscore, The Times got 92 million visits in September. If they hit 10 million subscribers by 2025, that would mean more than 10% of their audience is paid. Couple that with the majority of their audience registering for a free account and The New York Times becomes one of those rare media companies that fundamentally controls its destiny.

What business are we in?

I want to stop looking at the results and talk about something I’ve been thinking about a lot recently.

We are in the audience business. Journalism is the vehicle that we use to convert audiences, but ultimately, we are in the audience business.

I think people sometimes forget this. Audiences certainly care about journalism, but they are ultimately going to go wherever they are best served. Historically, the only option was media brands. But as platforms appeared, audiences found they could get more from the platforms.

You could argue that a big reason media brands have suffered so much over the years is they forgot that they have to fight for their audience every day. Fighting for your audience means putting out the best possible product that you can.

For The New York Times, that includes its cooking and crosswords products. These are lower cost options to get users spending more money, but they’re not related to the journalism business.

I like to think of this like dinner and dessert. A user subscribed to the news is them having their dinner, but then they also get to eat their dessert and play some games.

The New York Times is also a brand that many people trust. How can that fact-driven reporting extend to other niches? The Times already has its parenting brand. It’s not news, but it’s about serving its audience in new ways to keep them engaged with the brand.

I fully expect The Times to continue launching other products like this. They’re hiring an entrepreneur in residence, which sounds like a great job.

We’ve identified several domains that we intend to explore next, and we are looking for talented, entrepreneurial leaders to identify, define and build the essential products to meet the market opportunity.

The very first problem that this person will tackle is “Will consumers pay for a subscription product in the domain?”

It makes you wonder what other verticals they’re thinking about exploring next. The Athletic has proven that sports is something people will pay for. Could The Times be looking at sports as a possible vehicle? The above job description says one of the problems is “What acquisition targets might we evaluate to accelerate our goals?” Although I don’t see The Athletic being acquired by The New York Times (that valuation is a tough pill to swallow), I wonder if there are other ways for the two companies to work together.

This was an interesting tweet and does present a possible idea for The Times. If it wants to enter sports, one option could be to bundle.

The Information and Bloomberg did this recently where you do one subscription and get two content packages. It’s a smart play for both sides because both get additional marketing to drive more subscriptions. Rather than $20 a month for both The Athletic and The New York Times, maybe you only spend $15 and the two companies split it at an agreed upon rate.

What other niches could The New York Times be thinking about? A couple that come to mind are:

  • Personal finance: There are plenty of buy options here

  • Careers: Could we see The Times expand its job board offerings?

Identify sub-niches of your current audience that already trust you and then offer different topics to them. None of it is hard news, but in aggregate, it gives The Times a very strong and sticky content offering. Audience will stick around for that.

Quick Facebook News update

We already knew this, but The New York Times is included in Facebook’s News product that is being rolled out. Thompson had some thoughts on that:

Under the agreement, The New York Times will make its content available in the form of headlines, very short summaries and links. A small number of stories, under 1% of the whole, will be unlocked so that Facebook users can read them in their entirety. To do so, just as with the other stories, users will have to move from Facebook to our digital assets.

Facebook News should bring new users to The Times. Consumption of the overwhelming majority of stories will increment our pay meter and support our subscription model. But we chose to participate in the model only after we reached a multiyear agreement for a license fee, which is a step change compared to previous content deals.

But more important than the immediate financial benefit of the agreement is its strategic significance. Although we previously received small payments for participation in various experiments and innovations launched by the digital -- different digital platforms. This is the first time that a Silicon Valley major has recognized the value of Times journalism to its platform with a substantial multiyear fee.

They have the right mindset on this. Facebook is paying to distribute a headline/summary feed. By bringing people back to the site, it helps the dynamic paywall hit its target quicker, which in turn should convert more users to the paid subscriptions. But even if it doesn’t have that immediate effect, it will absolutely result in more people getting a free registration.

This is a key point that’s worth repeating ad nauseum. Getting a platform user to convert to a known user is how media companies can start to build relationships with audiences. Ultimately, that’s the goal. We’re in the audience business. Serve and nurture that audience.


Thanks for reading! This was a long one, so I appreciate you making it all the way to the bottom. Thanks again, Jeff, for sparking this whole essay. If you have colleagues that you think would like this newsletter, be sure to share it. If you’re new here, subscribe now. And if you have thoughts, hit reply. I hope you all have a great weekend and see you on Tuesday!

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Figuring Out Why to Go Paid

We know it's for user revenue, but what's the why for the audience?

With every media company looking at reader revenue and trying to figure out how they can introduce a paywall, there’s never really the conversation around why and when to introduce the paid offering.

Jessica Lessin, founder of subscription-darling The Information, said at one of their Media Bootcamp events in September that “you can’t put a paywall on a pig.” Yet, so many media companies are doing that.

Rather than looking at the content and assessing whether it’s worth paying for, media companies are looking at paywalls as the next great tactic to generate revenue without having a strategy.

In an interview back in May, Lessin said:

As journalists, we think our story is so much better than this other story, but in the eyes of a reader who is maybe not paying a ton of attention, it may seem similar. I always say, you really need to go for the 10x and focus on the things that are 10 times better or different than what other people are doing.

Often times, the news you’re creating is not explicitly 10x better what someone else is creating. So long as that’s the case, the content might be read by an audience, but not paid for.

This is especially true in consumer media. Everyone and their mother is doing political reporting. How many of these entities are actually producing high volume, solid, original reporting? Yet, everyone has a subscription of sorts despite the fact the content doesn’t warrant it. I suppose it makes sense. As ad rates continue to drop, these mid-tier publishers are desperate to get revenue anywhere they can.

But they never stopped to ask why. Why should my reader pay for content?

I was recently chatting with the CEO of a niche publication and we were talking about subscriptions. He wants to put off rolling out a subscription, though I get the feeling his investors are pressuring him. Rather than trying to charge $500 a year now, he’d rather build out a much more robust offering and charge 4-5 figures a year.

When it comes to niche publications, I find this approach appealing. I’ve talked at my own company about the difference between a subscription and a membership. The differences are subtle, but they do exist.

A subscription is what Bloomberg, The New York Times, and the other major media brands offer. You get access to the news. It feels like a true trade of dollars for content.

A membership feels more like a partnership. While it is a trade of dollars for content, there’s more associated with it. It takes a variety of products the company offers and bundles them together. By doing this, I would wager margins increase because you’re getting a flat fee versus having to sell things bespoke.

Here’s a hypothetical… You put out 20 reports a year for $500 each, hold two conferences for an average ticket price of $1,500 and have the smartest analysts in the space. You could create a membership for $5,000 and the person gets access to the full library of reports, a ticket to the event and access to quarterly analyst conference calls where they can get their questions answered.

By mixing these various products together, you only have to sell once.

This distinction between subscriptions and memberships is super blurry, though, so different people will have different definitions. And the truth is, a subscription is not a bad business. You simply have to answer the question: why am I offering this?

In my opinion, there are only two ways to justify a subscription:

  1. You have exclusive news.

  2. You offer depth to a specific topic through various channels (my membership model)

Let me dive into both of these.

Exclusive News

If you have a subscription to The Information, you know they don’t publish a lot of content. At that media bootcamp I mentioned, Jessica Lessin specifically said she would have her team publish fewer stories if she could.

Their model is to only report on exclusive stories. They do a phenomenal job at it, covering things that no other media company does.

That’s worth subscribing to. As an investor, do you want to miss information that could impact one of your investments? Absolutely not. You’ll spend hundreds of dollars a year for that one piece of information.

Now, The Information does a good job of offering more for that subscription—and I might even call it a membership as they continue to grow—but it’s this exclusivity that really matters. If you have a subscription to The Wall Street Journal, they may not have a story that The Information does, so you need to subscribe to both.

To offer exclusivity, you need to give the journalists freedom to explore. This is gritty investigative work. A story might take weeks or even months to come together.

But if the news is important and you’ve got the exclusive, it might be enough to convince readers to pay.

Depth with membership models

I already covered this above but, in my opinion, this is the right approach for most niche B2B publications.

When blending various products together, you get a stronger community and can demonstrate the value of your moat. If you couple that with member-only content or events, it creates an even stronger bond between members and the publications.

Like I said, I am a big fan of this approach. If you’re exploring this and want to talk through this, hit reply and let me know what you’re thinking. I spend more time than I like to admit thinking through these types of products.

Buying something for the subscription

Let’s say you agree that you can’t put a paywall on a pig, but you also know that you need to start generating user revenue. Only diversified businesses survive. What do you do?

If you’ve already looked at your business and determined that there’s not a membership play there, then I would look externally. I’ve written about this before, but the difference between whether you should offer a subscription or not can be as simple as a small bolt on.

From my piece about smart acquisitions:

In your niche, are there sub-niche products that you can bolt onto your brand? Skift’s approach of buying a subscription product made perfect sense and I imagine there are plenty of other opportunities out there similar to this.

If you run a publication about the business of eSports, for example, and there’s a small team doing analysis out there, can you combine the two to then generate user revenue?

If you’re already profitable, you win. Use that resource to pick up small pieces to bolt onto your content offerings and that could be enough to answer the “why” of subscriptions.


Thanks for reading! Reader revenue is incredibly important, but it only works if you think about it correctly. If you have thoughts, be sure to hit reply. If you have colleagues that would find this newsletter useful, please share it. And if you’re new, hit subscribe. See you on Friday!

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Do We Really Need a Political News App?

G/O Mayhem + B2B Niche Holding Industries Accountable

Happy Friday! I appreciate everyone sending me their opinions earlier this week about newsrooms being the greatest asset. If you ever have something to say, feel free to hit reply. I’m testing out a different format for this post where I pull a few things going on and offer my thoughts. So, without further ado, let’s jump right in!

Political Video

Vanity Fair wrote a story on the launch of The Recount, the new video venture led by veteran journalists, John Heilemann and John Battelle. Heilemann summed up the project as the following:

There wasn’t really an answer to the question of, on your phone, where do you go to see what’s happening in politics right now? People do a good job summarizing in text what’s [currently] happening in politics, but there’s not really an answer to that question [with video]. At some point in the not-too-distant future, someone was going to build the thing that was to this age, for politics, what ESPN was to sports in the age of cable.

I downloaded the app to check it out…

The truth is, the product is actually nice. The quality of the video is pretty solid. Right now, it looks like they produce 5-6 videos per day that are each under 5-minutes in length. In approximately 30-minutes, I can get an update on what’s going on politically in the United States.

The team is also comprised of a bunch of media heavy-weights from Disney, BuzzFeed, Viacom, Vice and Mic, not to mention a newsroom of roughly 20 people. All in all, it’s a video news company with $10 million in funding.

The business model, according to them, is primarily sponsorship at this point. They have a few launch partners and run short pre-roll in front of the clips. Apparently there is also an events business being planned, though they’re still looking for someone to lead this part of the company.

The longer-term strategy is to supplement the daily remix model with an original content component. That’s what Recount viewers will eventually have to pay for, and the company also plans to develop stuff it can potentially sell to other platforms—imagine, say, a six-part series for Hulu or Netflix or whoever, at 30 minutes per episode, shorter clips that could be repurposed for Recount subscribers. Recount recently struck a partnership with David Chang’s Majordomo Media to produce short-form videos as well as events, focused on the intersection of food and political culture. (Think Anthony Bourdain interviewing Barack Obama in Hanoi.)

Based on all of the information presented to me today, I think the investors have taken $10 million and lit it on fire like so many other investors in consumer media have in the past.

It’s not because the quality of the product is bad. I think it’s higher quality than NowThis, which does short-form video and distributes it across various social channels. I actually found myself enjoying it when I downloaded it on Tuesday, learning quite a bit about what was going on that day.

It’s also not because there’s already too much political content out there, though I do sort of question the need for more. Their argument that this is for people that want video that isn’t cable TV is acceptable.

The reason I think this is $10 million lit on fire is because their target demographic does not open news apps. According to Battelle:

There are over 150 million people who actively seek out news. We are focusing, initially, on professionals in the information economy who are really busy and just want to get dinner-party smart on what’s going on in politics. The key audience we’re going after is very, very large and very underserved.

Recount is right that young people are looking for new formats to consume content. And it’s true that there might be 150 million people who seek out news, but none of them are seeking it out in a new app they have to download.

Nieman Lab wrote a piece about a study from the Reuters Institute for the Study of Journalism. In it, Nieman summarized:

On those 20 young people’s phones, Instagram was the primary app: Every one of the 20 had it and spent the most time on it daily. News apps, by comparison, received much less usage. Apple News is pre-installed on iPhones, which helps account for its relative prominence here — but “no news app (with the exception of Reddit) was within the top 25 apps used by respondents…For two of the four individuals who had the BBC news app on their phone during the two-week tracking period; the app represented less than 1 percent of usage time for both.

Although there are likely some people that will use the app, the vast majority are unlikely to stay loyal to it. The report found that Instagram is the favorite for people, but for heavy news users, it’s actually Twitter and Reddit that are the go-to platforms. People can curate what they see that way.

This doesn’t help Recount because it’s unable to generate revenue from the video plays there. We’ve seen so many media companies try to do social distribution as a business and it’s failed miserably.

It’s possible that I am coming to this conclusion too soon. The report does say that news media needs to make apps easier to use so that it’s more enjoyable to consume news. More interactive storytelling, which this is, can certainly help. And I’ll be honest, I find it difficult to bet against Battelle since he has had a lot of successes over the years.

Unfortunately, a product that requires me to download an app is just not something that I think will work. I will find similar news in Twitter.

Sound on Ads & The Death of Deadspin

Being on the business side of a media company—and more specifically, the ad part—I’ve had my fair share of debates about ads on the site with editorial.

We’ve debated banner ads, in-content units, the chum boxes at the end, and sponsored content. Sometimes I was right. Sometimes I was wrong (yes, I advocated for chum boxes at one time).

I can tell you there’s one thing I’ve never considered even once: sound on, auto-play video ads.

Sound on, auto-play ads are never acceptable. I don’t care if you’re CNN, ESPN, or whatever other name you want to drop—sound on, auto-play ads are never acceptable.

G/O Media didn’t get the memo. In an article on The Wall Street Journal, the author summed up the problem:

The Farmers deal, which began last month and is worth $1 million, required G/O Media to deliver nearly 43.5 million ad impressions through September 2020, according to internal G/O Media emails reviewed by The Wall Street Journal.

The publisher’s media and ad operations teams believed it was unlikely G/O Media could deliver that many, according to the emails.

After failing to hit ad impression targets within the first few weeks of the campaign, G/O Media decided to start playing videos with the sound on as soon as pages loaded, according to people familiar with the matter. That included stand-alone video ads for Farmers inside article pages as well as preroll ads before editorial videos.

We’ve all been there. You really want the deal to be successful, but you realize the numbers just aren’t there. But the quickest way to piss off your audience is to run these types of ads.

According to the Journal’s article:

Auto-playing video ads with sound are especially disruptive because they surprise web users and often compel them to quickly close the window, according to the Coalition for Better Ads, an industry group formed to improve the online experience.

If you’re trying to deliver a specific number of impressions, an auto-playing video with sound is the quickest way to get a user to close the page. If the advertiser is expecting a certain completion rate on the video ad, it’s unlikely the publisher is getting the results they want—and the advertiser definitely isn’t.

I probably wouldn’t give this story space in the newsletter if it was only about auto-playing, sound on videos. It gets worse. The management team of G/O Media, which has not garnered much trust from the editorial team, mandated that Deadspin reporters “stick to sports.”

I’ll be honest… I’m not a Deadspin reader. It’s just not my cup of tea. However, the audience that they do have loves them. They love Deadspin because of how bizarre and humorous the content is.

To come in and mandate that coverage change—without offering a specific reason—is just a dumb move.

I think this tweet sums up what’s going on here:

Why did the management team buy G/O if they knew this was what they were getting? The value is in the audience, which comes from the writers, right? If that’s the case, why screw it up?

But G/O management sure did screw it up. They fired Barry Petchesky, deputy editor, and over the next 24 hours, nearly the entire team left. G/O then issued some bizarre statement that at first glance sounds like a super valid reason.

Until you look at the public analytics on Deadspin and realize it’s one big lie. Read the entire thread from Joshua.

It just doesn’t make sense. You’re getting more traffic from the non-sports stories and you have a team of writers that are beloved by their audience.

This is a classic case of the management team trying to do things because they feel like they should rather than getting the hell out of the way.

Maybe there’s a good reason. Perhaps they were getting serious push back from advertisers that the content was not considered brand safe—What Did We Get Stuck In Our Rectums Last Year? is one possible offender—so there was a need to refocus the site.

I’m going to guess that simply wasn’t true, though. If they were able to close Farmers Insurance on a $1 million deal, brand safety wasn’t a problem.

But let’s say that it was the case. Have a conversation. Don’t issue mandates, especially if you’ve not exactly had a great relationship with the team thus far.

Alas, Deadspin now has very little content being published. Oh, and Farmers decided that it wasn’t going to advertise after all. A stupid tactic turned into a missed opportunity for any revenue.

This is likely to have collateral damage too. Are other advertisers going to want to risk being included in negative stories about media failures because of G/O management’s incompetence? If I’m an advertiser, I put a pause on any media deals. This is only going to get worse.

B2B Media Does Hold Its Industry Accountable

Changing pace from consumer, I want to dive into my favorite topic: B2B media.

Stories like this one in The Washington Post about how it was a trade publication that broke the Keating Five scandal always make me happy to read.

The Keating Five story was actually broken by the National Thrift News, a small mortgage industry newspaper, not one of the major national newspapers such as The Washington Post, the New York Times or the Wall Street Journal.

Nearly a year and a half before the collapse of Lincoln S&L, the National Thrift News had spelled out the story of Keating’s political pressure campaign. National Thrift News editor Stan Strachan had gotten wind of the meeting between the Keating Five and regulators in the summer of 1987 and eventually obtained a transcript.

But while leading media outlets hesitated, the National Thrift News had the guts to publish the Keating Five story just two months after Keating sued freelance journalist Michael Binstein for libel. For its coverage of the savings and loan crisis, the National Thrift News won a George Polk Award in 1987.

It’s just a fun story to read about. A publication that, for so many people would be considered boring, revealed a huge scandal. That’s why journalists are so important and seeing it in action, even 32 years later, is always exciting.

But it’s more than that.

It’s a reminder that industries need these independent publishers to report on what’s happening, especially when it’s not good. But there’s a reputation about B2B media that this doesn’t actually happen.

Its courageous reporting reveals a misconception about trade journalism. For years, trade publications have been criticized as being captives of the industries they cover. A closer look into this little-noticed corner of journalism, however, tells a more intriguing story.

Every industry deserves to have a publisher, not to act as an evangelist, but to hold the industry accountable. It’s true, though, that many of the more traditional trade publications have become captive of the industries they cover. Fortunately, there are many newer, digital-first ones that have not.

I look at Aging Media, Skift, Front Office Sports, Industry Dive, Housing Wire, and so many others. Their journalists report on the industry—the good and the bad. They hold their industries accountable.

To do this type of work as an operator, though, requires a specific understanding that it’s not going to be easy. You will have advertisers calling up, demanding that stories get taken down or they’re going to “pull their ads.” I guarantee many of the CEOs of the above firms have dealt with that. Weaker executives—I won’t refer you to the previous section of this newsletter—might allow that. But when you’re running a true B2B investigative news organization, you have to be willing to see money walk away.

You can no longer say that you hold the industry accountable when you cave to the industry. When that happens, the audience will no longer trust you and that is the true death knell.

I keep coming back to this, but there is so much opportunity in B2B. Traditional trade publications have left huge voids in massive industries just waiting to be covered. If they’re not going to do it, entrepreneurial journalists and operators can team up and build legitimate news organizations that treat their journalists fairly, cover industries, and build sustainable businesses.

The topics may sound boring, but the deeper you go into an industry, the more fascinating it becomes.

Find your niche. Partner with a great journalist. And then report the hell out of whatever that industry is. You’ll be able to build a business.


Thanks for reading everyone! This was a bit on the long side, but sometimes there’s just a lot to say. If you have thoughts, please hit reply. I make sure to reply to everyone. If you have colleagues that would enjoy this, please hit the share button below. Finally, if you’re new here, be sure to hit subscribe. Have a great Friday and weekend and I’ll see you next week! Take care.

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Your Newsroom Is Your Biggest Asset

Many replied to last Friday’s email about media entitlement. The feedback was, overall, quite positive. Everyone who replied wants to see media succeed and agreed that as an industry, we need to evolve our way of thinking.

One comment in particular jumped out from a woman with initials DC that summed up my thoughts perfectly:

There was inability to realize that Facebook and Google had built a better product to reach audiences! And that one of the main reasons revenue was declining wasn’t that digital channels were “taking” audience, but that their media was not adapted to the needs of today’s audience.

DC is 100% right here. She went on to say that media “becomes this echo chamber of complaint rather than ideation to better meet the needs of the audiences they serve.”

I honestly couldn’t agree more. All we hear is that media is failing. Articles include pictures of Mark Zuckerberg or the Google logo to hit home how media is failing. Naturally, we focus our anger on the platforms, blame them for our failings, and feel entitled about the audience and revenue we once had. We start to believe that all media companies are failing.

But there are so many that aren’t. Last night, I met with the CEO of a niche B2B media company and they’re wonderfully profitable. He pays his journalists above market rate, they’re happy, and he owns a business that is profitable covering a niche that bores me to tears. Why was he able to do this during media Armageddon? Because he built something that his audiences really needed.

One thing I said was:

Making a profitable niche publication isn’t complicated. The script is very straight forward. It’s hard as hell and a lot of work, but the steps that you take are predictable.

I thought about that for most of the night. Was launching a profitable niche publication really not that complicated? As operators, we make it complicated. We think up expensive, exciting ideas that we want to see done—pivot to video anyone?—and then staff up to support those ideas.

But if we step back and really think about it, the script is not that hard. I’m working on a piece about what the script looks like, but I want to focus in on the most important part that so many media companies forget about.

Your Newsroom.

When media companies get bought or they hit financial difficulty, the finance departments look at balance sheets, see the large expense in staff next to editorial, and start paring things back. I can see the conversation going like this:

Editor: We have 5 journalists.

Finance : That’s too much. Can we cut back? Maybe only have 4?

Editor: We’ll see a reduction in the types and number of stories we can do then.

CEO: Oh no, we can’t have any reductions in content. But we need to save money. Let’s make the 4 journalists write more to make up for it.

**Six Months Later**

Finance: Revenue is down. It appears audience numbers of lagging, our retention is weakening, this is bad.

Editor: Correct. The team is getting burnt out because they’re being forced to write more stories and I’m worried about quality.

CEO: This is not good. If revenue is down, we need to cut costs. Let’s go from 4 to 3 journalists.

It’s a vicious cycle. It’s also a boneheaded, downright stupid cycle. Your newsroom is not a liability. It is the biggest asset of your business; the fuel of the entire operation No other department matters as much as the newsroom.

Think about it this way…

If you’re trying to save money, do you stop buying gas for the car you need to get to your job? Of course not. You would then lose your job and have even less money.

And yet in media, so many operators look at the newsroom and go, “yeah… I don’t need this fuel…”

Naturally, it’s easy to say this from my comfortable office seat versus having the balance sheet in front of me and negative cash flow. I understand that. But not all fixed costs are created equal. The removal of one can actually exacerbate the problem rather than make it better, and sometimes it’s not so clear.

Let’s use a hypothetical local media company as an example that does advertising and subscription revenue. The CEO sees that revenue is down a bit and they need to keep a certain level of margin, so he let’s go of one of the journalists like in the example above.

Rather than telling the editor to write more stories, all the CEO mandates is that the amount of traffic doesn’t drop. To ensure traffic stays up, the editor assigns one of the journalists to write national news. Those types of stories get more traffic, and since there’s going to be fewer stories published, they need to write stories the audience wants.

Over the next six months, subscriber churn begins to increase. Rather than five journalists covering the local beat, there are now only three, with one covering national news that everyone else is also covering. Before you know it, revenue it down and the CEO is back trying to figure out what other cuts can be made—with a focus on the newsroom.

The data points to this. According to the Shorenstein Center and Lenfest Institute’s whitepaper “Digital Pay-Meter Playbook,” people will pay for local news:

According to publishers surveyed, users who view local news appear to be 2-5 times more likely to subscribe than those who view national and wire-sourced stories. Of news organizations studied, publishers that produce more local (and non-wire-sourced) stories tended to generate greater subscription sales.

The type of content that an audience will read is not always the same type of content that an audience will pay for.

With that in mind, let’s circle back to the script of making a profitable niche publication. What’s not included in that script is a bloated business department. It’s true, we need sales, marketing, ops, and various other departments.

No one seeks out our properties because of the great work that these departments do. Instead, they seek us out because of the great work the journalists do. People want to read what they’re reporting on and everything we operators do is in the background, hidden, and not relevant to the audience.

I like to think about it this way… Sales and marketing ensures there’s money to afford paint and canvas; the product and technology team stretch the canvas into the proper size and shape; and then the journalists paint on that canvas. If you want a painting, you don’t get rid of the painter before finding every other way to save money.

Sadly, it seems that most media companies don’t understand this. Rather than investing in their businesses, they look to grow through austerity. It doesn’t work.

Despite this reality in media, more and more students graduate from journalism school and go on to work for these failing media brands that don’t invest in their core asset. Why? There’s a better option.

I mentioned above a very profitable media company that pays it journalists above market rate and yet he still struggles to find journalists. Yes, his industry is boring. But it’s consistent, growing, and secure.

There are fixes to this problem from top to bottom. Media CEOs can start looking at their newsrooms as assets rather than liabilities. We can focus on creating content that people want to pay for. And journalism schools can teach business reporting.

One idea that came out of my meeting last night was for every journalism school to have an “Intro to B2B Media” class. Introduce this opportunity to prospective journalists. And explain how these media companies are growing, albeit in a slow and steady way. Explain that boring can be interesting. The deeper you go, the more you find out about that industry, and that is interesting.

There is opportunity in media. The ones that realize that their newsroom is an asset rather than a liability are the ones most likely to succeed.

So here’s the first part of the script:

Hire great reporters, give them the resources they need to succeed, and then have them report the hell out of that industry.

That’s it. That’s step one in building a profitable niche media business. If that industry is large, there are likely enough people working in it to make it a profitable media business. We’re in the audience business, but the product isn’t our website, business teams or any of that. Our product is our journalism. We have to grow that for everything to rise.


Thanks for reading this issue of A Media Operator. Over the past five days, I’ve met three different subscribers of this newsletter for drinks and coffee. It’s been amazing getting to know everyone, so if you’re ever in New York, let me know.

The general feedback that I’ve gotten is that I’m touching on things people want to read. The opens in the newsletter prove that to me as well. And most importantly, so do the many email replies I get, which I appreciate immensely.

One of the people I met asked me what my end goal is for A Media Operator. And I’ll be honest, I’m still trying to figure that out. I’m built on Substack, which built a paid newsletter product. I had one person question why I encouraged other media companies to make money on their content, but then not do it myself. So maybe I will.

But if I’m going to, I want to add even more value. If there are questions you have or thoughts on how to make this a better community, let me know. I’ve got ideas on some other things we could do, so I’ll continue working through that. Hit reply, let me know what you’re thinking, and as always, thanks for reading. See you on Friday!

When Will Media Entitlement Go Away?

Happy Friday, everyone! I’m sensing a trend in the pieces that I write. When I write about potential or real acquisitions, people flock to read, subscribe and share their thoughts. So many of you replied to the last issue about the Verizon looking at selling HuffPost and I really appreciate all of the feedback. I’ll share some of what was said in the next issue, but I want to talk about something that has always irritated me about media and apologies ahead of time, this essay is a bit more on the ranty side.

Before I do, though, if you’re new here, be sure to subscribe so you can get an email every Tuesday and Friday with the latest issue. Thanks!

Local media is struggling. It has been for a long time now. Once dependent on print, many local media companies never figured out how to monetize their digital properties and their revenues cratered.

There are a lot of reasons for this. These brands didn’t understand how to build digital first publications, management was afraid to invest the necessary resources, they sacrificed user experience for additional revenue—I’m talking about the chumbox—and so much more.

But rather than discuss their own failings, people like to entirely pass the buck and blame the platforms for all their problems. Google and Facebook, people say, are all the problem. If only we got rid of them, media companies would suddenly be fantastically profitable.

How convenient…

Last week, The New York Times published an op-ed by Matt Stoller, a fellow at the anti-monopoly organization, Open Markets Institute, and the author of an upcoming book all about monopolies. His basic argument was that if we broke up Google and Facebook, everything would be fine.

He starts by talking about these low-quality Facebook pages that publish fake news and make money from advertising. He says:

Advertising revenue that used to go to quality journalism is now captured by big tech intermediaries, and some of that money now goes to dishonest, low-quality and fraudulent content.

This is the first presidential election happening after the business model for journalism collapsed. Advertising revenue for print newspapers has fallen by two-thirds since 2006. From 2008 to 2018, the number of newspaper reporters dropped 47 percent. Two-thirds of counties in America now have no daily newspaper, and 1,300 communities have lost all local coverage. Even outlets native to the web, like BuzzFeed and HuffPost, have laid off reporters. This problem is a global one; for example, in Australia from 2014 to 2018, the number of journalists in traditional print publications fell by 20 percent.

The business model for journalism collapsed during the last Financial Crisis. We’ve already had a few elections since then. Last election, you could argue, was the first one where fake news was as prevalent in the campaigns as ever before, but this is definitely not the first election post the collapse of journalism’s business model.

The above chart shows that. Revenue grew aggressively from the 80s to the mid 2000s, and then the collapse occurred right when the crisis happened.

Not to mention, fake news has always been a thing in this country. In the 1890s, Joseph Pulitzer’s New York World and William Randolph Hearst’s New York Journal were in a circulation war and the term “yellow journalism” came to be known for what they put out. Fake news. Sensationalist headlines with very little research.

But it’s more than just fake news. Before Facebook and Google, advertising was a lazy business. Ask a media sales executive what it was like to sell print advertising. These guys sold a piece of paper, made a boat load of money, and there was no accountability. There was no reporting required. Maybe the advertiser would do a brand study to see if there was any lift in awareness, but by and large, the business was so simple. An advertiser never knew how many people saw their ad.

Facebook and Google changed that. They said to advertisers, “we can tell you how many people saw it.” Google helped advertisers get in front of the person based on their intent to purchase with AdWords. And Facebook helped target to specific people based on hundreds of various data points.

Is it creepy? Yes. But it’s also a better product for marketers.

It doesn’t stop there, though. The way media people talk about this revenue, it’s so possessive. They call it “their” money that Google and Facebook stole. No. Wrong. It’s not their money. It was and always will be the brand’s money. This level of entitlement around a brand’s dollars is insane to me.

He then goes on to explain that all the acquisitions were unfair and made it uncompetitive for newspapers.

Enabled by a loose merger policy, there was a roll-up of the internet space. From 2004 to 2014, Google spent at least $23 billion buying 145 companies, including the advertising giant DoubleClick. And since 2004, Facebook has spent a similar amount buying 66 companies, including key acquisitions allowing it to attain dominance in mobile social networking. None of these acquisitions were blocked as anti-competitive.

Data is now the key input into advertising: If you know who is looking at an ad, that ad space becomes much more valuable. Google and Facebook now know who is looking at every ad, and their competitors for ad dollars — newspapers — do not.

Except, newspapers could have bought the technology if they wanted. DoubleClick was bought in 2007 for $3.1 billion. USA Today was the first national newspaper to go online in 1995. CNN followed soon after that year. If these news organizations wanted to be in a stronger ad business, they could have acted—they had 12 years between their launch and DoubleClick’s acquisition

But they didn’t. Google did. Why? Senior management at these newspapers were old print guys, so they were slow to change. It’s taken decades for those people to move out of senior positions and for digital-first media operators to step in, assess the landscape, and try to make changes.

There is no denying that Google and Facebook have taken an outsized portion of the revenue. They built a better product for marketers. They also built a lot of tools that we use in our businesses.

  • Google Ad Server: Many pubs power their ad business with this

  • Google Analytics: The level of data is incredible and it’s free

  • Facebook Ads: I see The New York Times driving users to sponsored content and reengaging subscribers users all the time with this

And the list goes on…

The entitlement doesn’t stop at revenue, though. It’s also about audience. A classic example of this is what’s going on in France between French publishers and Google. According to copyright law, if Google includes a snippet of the article and an image in the results, French publishers can require payment. Google says it won’t pay. Instead, Google says it’ll remove the snippet and image and simplify what the results look like.

Google shared this possible outcome with Search Engine Land:

I can tell you right now, it is highly unlikely I will click any of those…

Pierre Louette, CEO of Les Echos-Le Parisien media group, accused Google of trying to get around the law. He said:

Google is offering us a choice between amputating our (internet) traffic, which will prevent readers from finding us or accessing our sites via its search engine, and amputating our rights.

The entitlement in that statement is astounding. Our traffic is people who type our sites in directly or subscribe to our newsletters. Our traffic is not the people who exist on the internet that might find their ways to our sites through various channels If a user is on Google, that is Google’s traffic.

If someone shares this article on Twitter and that user clicks over to my site, is that my traffic? I’m borrowing it at best. Until the user subscribes and comes because of my relationship with them, it’s not my traffic.

Google drives free traffic to publishers. All it asks for is an image and a snippet of text to help its users determine if they want to click over. French publishers want to have their cake and eat it too; they want free traffic from Google AND they want Google to pay them for the right to send them that free traffic.

There’s no denying that Google is doing some questionable things around displaying increasing amounts of data to users. As publishers, we should push back on some of that. The knowledge box, for example, is pretty bad. But we have to accept a clear reality:

A user is not ours just because they came to our site once. If the user is coming to us from Google, that is Google’s user.

Why am I writing this today of all days?

Facebook News was officially announced today. None of us are surprised about this launch—and I’ve written a lot about it—but it’s now officially here.

The launch is giving me a little hope that the entitlement might be waning a bit. Digiday wrote a piece about how the same publishers who have been screwed over by Facebook in the past—damn the pivot to video—are part of this once again.

But this time, conversation with five different publishers reveal, publishers are going in with eyes wide open. Nobody is expecting a game changer or a silver bullet. This time, they’ll settle for the symbolic import of a platform paying them for their journalism and the hope that Facebook News can deliver an incremental benefit — provided Facebook sticks with it.

That’s the right way to think about it. If you can get incremental benefit, great. But the users on Facebook are Facebook’s users. If you can convert them, great. That doesn’t mean you’re entitled to them.

The difference now is publishers are really focused on building their businesses to be sustainable. I like that. We’re building OUR audiences through newsletters, registration and ultimately, monetizing with subscriptions. We’re realizing that our product is our great journalism. I’ve talked with many people since launching this newsletter and everyone is hunkering down to build profitable media businesses.

Yes, the arrival of Google and Facebook fundamentally changed how we do business as an industry. But publishers have to get over their entitlement to both the revenue and the audience. It was never ours to own; we were simply the beneficiaries. To think otherwise is entitled. We have to compete again and we can already see that working.

The Washington Post’s software team is introducing an ad network called Zeus that will give marketers brand-safe, high quality “programmatic” advertising. Concert from Vox does that too. These are media companies that are competing. They’re building products that marketers will want to use. They’re still working out the scale issue, but all these acquisitions theoretically help with that.

Facebook may be detrimental to our democracy, but let’s not try to connect that to the plight of legacy media brands. Fake news comes in all shapes and sizes. Today it’s on Facebook. In the 1890s, Pulitzer and Hearst, newspaper owners that we idolize, published so much fake news, it resulted in the Spanish-American War.

Let’s focus on building our businesses and use the platforms where it makes sense, but understand the only way we will survive is if we have our own audience that comes to us without needing the platforms.


Thanks for reading this issue. Again, apologies for it being a bit ranty. I believe digital media can thrive, but we have to understand some basic realities. If you have thoughts, hit reply. If I’m wrong somewhere, I want to know. If you’re new here, be sure to subscribe so you can get updates on future issues. Have a great weekend and see you on Tuesday!

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