A Media Operator is a media company for those building digital media companies.

The Atlantic Attempts to Expand ROI of Its Reporting With Books

Many excellent books have been published over the past few years about some of the most prominent tech startups. Super Pumped by Mike Isaac, which was then adapted into a TV show on Showtime. Bad Blood by John Carreyrou, which then inspired podcasts and apparently a movie by The Big Short’s Adam McKay. 

Before we talk about this... A message about our sponsor, House of Kaizen.

There’s a real chance that we’re going to have a recession. Compared to the past couple of years, which have seen big jumps in subscriptions, now audience development and consumer revenue teams are developing tactics to retain their newest subscribers. 

When these economic situations happen, the strategy has to change. House of Kaizen believes that the focus should be on high-frequency, low-risk experiments. Sustainable, recession-proof subscriber revenue comes from a culture of continuous optimization. 

Karl Wells, Chief Subscriptions Officer at Dow Jones, will join House of Kaizen’s SubscriptionWorks community for an AMA about building a culture of optimization. 

Want the same subscriber growth framework that WSJ used while working with House of Kaizen? You can get it when you sign up for House of Kaizen. Tell them you’re from AMO.

Now let's jump in...

***

What do both of those and so many other books have in common? 

The media companies that funded the investigative reporting that led to the books that then led to the shows saw no money from any of the ancillary work. I don’t fault the reporters for that; on the contrary, good for them for doing such a great job that tons of people wanted to buy books that went even deeper. 

But despite investing in what turned out to be a great foundation for both these projects, the return on investment ended with the stories published on the publication’s website and in the newspapers. That has never felt right to me. In the case of The New York Times, it at least makes sense: they don’t have a book publishing asset, so Isaac had to go elsewhere. But The Wall Street Journal’s parent company, Newscorp, owns HarpersCollins.

That’s why I was so intrigued when I saw that The Atlantic was moving into book publishing. According to Publishers Weekly, The Atlantic partnered with Zando to create a new imprint:

Atlantic Editions will publish between six and 12 nonfiction titles per year, all trade paperbacks, sold for $12.85. Peter Mendelsund, creative director of the Atlantic, described each book as “a single-author collection of essays from the Atlantic’s pages, focused on a single topic.” Page counts will differ by book, Mendelsund added, “but we are aiming for ‘short and definitive.’”

The Atlantic will promote Atlantic Editions books to subscribers and audiences across its platforms. Stern also detailed plans for “national media and social media pushes at on-sale, co-branded event series in partnership with retailers, ongoing promotion pegged to seasonal and cultural moments, creative advertising, as well as retailing through special sales channels, [and] course adoption opportunities.”

This makes so much sense for a couple of reasons.

First, The Atlantic knows what resonates with its audience. It can look at its analytics and see what they're reading, what has them engaged the most, and what they're most likely to want more of. That gives it a unique angle to pick what kind of books it should be creating.

Second, because it will likely pick topics based on what its audience likes, promoting said books across its ecosystem is likely to be more successful. An author who writes a book through Atlantic Editions is therefore getting marketing support from a large institution.

Compare that to other book publishers that don't have a media asset behind them. First, they don't actually know what will resonate with audiences. Editors have to make educated guesses and then hope that it works. Second, publishers don't actually provide much marketing support for authors. One of the first questions asked of an author is, "how will you market your book?"

This, of course, is not the first time media companies have tried to do this. The New York Times, for a long time, had a policy (decades ago) where "reporters must submit their book proposals to Times Books for first-right-of-refusal if the books step from reporting originally done for the newspaper." Then, of course, The Wall Street Journal tried to take it one step farther. According to the IAPE Union, in mid-2021:

Dow Jones announced a new policy Friday for WSJ news personnel in which the company claimed new and potentially expansive rights over employees’ efforts to write books or pursue other external projects. We have several concerns about the policy, which appears to depart from industry standards, and believe the company cannot lawfully impose it on its own.

Felix Salmon reported that "writers must get the eic's permission before talking to agents or publishers" and "journalists can't use their reporting in their book unless they've licensed it from Dow Jones, presumably for $$$."

I guess there's a right way and a wrong way to do this.

Technically, WSJ probably has a leg to stand on. It paid for the reporting and it owns the rights to the work; however, all this does is turn things into a retention issue. If a reporter becomes big enough to warrant getting book deals, will they stay at WSJ?

But why not change the conversation from one of antagonism and, instead, treat it like a business relationship? I've long said that the newsroom is your greatest asset. And if a particular story becomes a big hit and people will want to buy a book on it, why not try and find a situation where both parties can benefit from it?

One simple problem is that we're dealing with massive, corporations where one department likely doesn't speak to the other. And so, it's just easier for the reporter to go off and get a competitive bid from whichever publishing house will work with them.

But that's why I am intrigued with what The Atlantic is doing. Because it will co-own its own imprint, it can control the book selection and directly benefit from marketing.

Compare that to WSJ. It saw no money from promoting Carreyrou's book, so it had no reason to promote it. Imagine if it had a stake in its success, though. Could WSJ have sent a marketing email to everyone that read Carreyrou's original reporting? Or, could WSJ have identified people in its database that are particularly interested in health startups? No traditional publisher could do that.

There doesn't have to be an adversarial relationship between a media company and a content creator. On the contrary, it should be one where both parties win. Whether it works for The Atlantic remains to be seen, but this is an example of both parties benefiting. I find that compelling.

If you thought that a recession might make some of these media roll up ventures slow down, think again. According to The Wall Street Journal:

The owner of publications such as Popular Science and Outdoor Life said it has raised $300 million in a round of funding led by private-equity firm Blackstone Inc., marking one of the biggest investments in online publishing in recent years.

Recurrent Ventures, whose 24 publishing brands also include home-design specialist Domino and culinary publisher Saveur, said it plans on using the funding to buy additional media properties. Having more scale will help Recurrent’s pitch to advertisers, and could appeal to investors as the company explores an initial public offering of stock or a possible sale to a larger media company, said Chief Executive Lance Johnson.

...

Mr. Johnson declined to discuss Recurrent’s detailed financials. The company said its operating-profit margin—on the basis of earnings before interest, taxes, depreciation and amortization—was over 20% in 2021. It hopes to increase that margin to more than 30% in the next few years.

I think this could be very smart for Recurrent. If we are going into a recession, it's possible that certain publications might start struggling. Having significant cash on the balance sheet to make acquisitions, especially in these times, would make a lot of sense.

This model works so well because it is a true house of brands. Each publication has its own editorial and audience development team. Since each publication is different, you want there to be some subject matter expertise. But then it has centralized shared services. You only need one events team across the entire portfolio. With HR, you don't need it to be publication-specific.

And so, Recurrent can continue to grow aggressively, but not hire people in proportion to those acquisitions. However, you do actually have to pay attention to these shared services and find where there are redundancies. Sometimes, companies forget.

According to the Denver Business Journal:

Since mid-2020, the company [Outside] that began as the four-publication Pocket Outdoor Media has added numerous publications, including outdoor-industry standard bearer Outside Magazine, as well as technologies like GPS apps, outdoor-events companies and multimedia firms like Warren Miller Entertainment. In the process of acquiring 20 new companies, it also launched a new membership model in which subscribers can receive access to content and to apps plus discounts for entering athletic events. Its number of members now stands at 800,000.

But the company had not stopped to rationalize its size or examine the redundancies created by all its acquisitions until the past few months, CEO Robin Thurston said in an interview Friday. That process has led to the latest changes, which were outlined to staff over the past few days.

Outside Inc. will lay off about 15% of its roughly 580 employees — a number that comes out to about 85 to 90 job cuts, Thurston confirmed.

This should not come as a surprise to anyone. Outside is a house of brands just the same as Recurrent. However, it seems that Outside forgot to really do an audit of its teams to make sure that there weren't redundancies. With the concern of recession approaching, it makes sense that Outside would tighten the operation.

Integration is the most important part of an acquisition and a component of that is making sure the shared services understand how to work on the new brands. And that's what makes this risky for these companies. It might find assets it likes, but if it's slow to integrate—keeping redundant teams operating—it could come back to bite the company.

But while Outside works through those issues, Recurrent will be waiting with $300 million.

Earlier this month, Tim Hartman, CEO of GovExec, and I took the stage at Omeda’s Idea Exchange to do an on-stage recording of the podcast. We talked about what it was like closing on the GovExec deal only days after the Covid-19 lockdowns had taken place. We also talked about how the company has acquired and integrated various other companies. Finally, we dug into the different aspects of GovExec’s business model.

Be sure to give it a list on your podcast player of choice:

• Apple
• Spotify
• Google Podcasts

Thanks for reading today's newsletter. Become a premium member to receive AMO on Fridays. Plus, you'll get invited to the AMO Slack channel. Have a great week!