More Pubs Should Explore Kafka-Like Deals
By: Jacob Cohen Donnelly
Last week, Peter Kafka, formerly of Recode and now at Business Insider, announced that he had gone from one job to two because he was relaunching his show, Recode Media, under a new name: Channels.
Under normal circumstances, I wouldn’t write about this. It’s a single podcast from a single journalist and we’ve only got so much bandwidth to cover things here at AMO. But the details of this are interesting and it presents opportunities for other publishers to explore.
According to the Axios story announcing the show:
Kafka will continue to write full time for Business Insider as a chief correspondent, but he’ll work with Vox Media as a production, distribution and sales partner for “Channels,” he said.
He also worked out an arrangement with Vox Media CEO Jim Bankoff where he’ll own the podcast, giving him freedom and flexibility.
Asked why he chose Vox Media over other podcast partners, Kafka said, “You really can’t undersell how important it is to have an established operation that doesn’t just tolerate podcasts, but embraces them and has figured out various ways to monetize them, distribute them and promote them.”
When it comes to Business Insider, it’s unsurprising that it never wanted to operate the podcast. It doesn’t have any active shows today, as far as I can tell, so trying to operate a podcast would be out of its scope.
And so, it makes perfect sense that it came back to—or never left—Vox. What is interesting is that Kafka will now own the show. Kafka retaining ownership matters for a multitude of reasons, which we’ll come to. But I want to touch on that final paragraph.
“You really can’t understand how important it is to have an established operation,” Kafka said.
When the pandemic was first getting started and everyone was launching newsletters, there was this discussion about everyone leaving traditional media to go out on their own. We saw some of that (we wrote about Helena Bottemiller Evich leaving Politico and launching FoodFix and Eric Newcomer left Bloomberg and stared his own publication, something he’ll talk about at the AMO Summit), but many remained within “traditional” media.
When I spoke with Jim VandeHei, co-founder & CEO of Axios, about this on the AMO podcast, he said:
If I’m the best of the best, I want to go there because I’m going to get the best of both worlds. I’m going to be able to make more money than I thought I could make. I’m going to be able to become an even bigger presence or a bigger star, but I’m also going to have the trappings of a company that cares about me and can give these other pieces of support.
That’s the flaw of Substack. Substack is, and they’re trying to remedy that a little bit, but it’s a little lonely. Most people aren’t wired that way. Very few are, actually. Some have done it exceptionally well, but I think most people in the end are going to want people in support. I hope that we are seen as a place to go if you are at the top of your game and have some dominance in a niche beat.
There’s a lot to say for infrastructure. Talent can focus on what they’re good at—creating content—and leave the rest to other people. Kafka could’ve taken his show solo, but then he’d have to sell ads. Perhaps that’s unethical due to his day job at Business Insider. He’d have to hire someone to edit the podcast. Distribution would be rough, since he’d be starting on a brand new feed.
Or, he could retain full ownership of the product and share in the upside with Vox. It checks all the boxes:
- Vox sells the ads, so not unethical.
- Vox does the editing, so Kafka can focus on the interviews.
- Vox still had the Media Recode podcast feed, so distribution is accounted for.
That’s a great deal for everyone. Vox generates revenue on a show that it hadn’t been running since Kafka left in 2023. Kafka focuses on what he wants to focus on. Everyone wins.
The risk of letting Kafka retain ownership is that the show becomes a massive success and then he leaves. I wrote about this in 2021 when Alex Cooper left Barstool Sports for her Spotify deal.
Will media companies that push a creator-first mentality simply be incubators for bigger platforms like Spotify? Cooper was on a three-year deal. During those three years, Barstool reaped the benefits. The show blew up in ways no one could have predicted (I’ll write about building an environment for this to occur in the future). Revenue was amazing. But now that contract has expired and she’s opted to go where her upside is probably greater. Will others follow that same path? Will they rely on the media company to help build the thing and, when the contract is up, leave?
There are two choices here. First, you accept that this is a possibility and benefit from the cash that you’re able to generate being the exclusive seller. Second, miss out on the ability to generate said cash and still have no upside. The issue with talent is that it can sometimes be difficult to replace. Not impossible, but difficult. So, is it better to have upside for a period of time?
I tend to think yes, but there are opportunity costs associated with this. As a publisher, you wouldn’t want to carry all of the risk without the long-term upside. You also wouldn’t want this to compete with something you do own outright. Considering Kafka is staying on salary at Business Insider, I suspect there’s very little financial risk for Vox. And so long as Vox is not having to hire additional people to support this, it allocates shared services more efficiently—a net positive for the brand.
Publishers should be comfortable working out creative deals with their top talent. This one is very talent-friendly since Kafka could very well get a big deal from a platform in a few years, but there are ways to do it without giving up the IP. But, as VandeHei said:
It’s hard, right? What you want to do is you want to, in an ideal world, you would incentivize them wholly based on the growth of their product. I don’t love that model for them, or for us, because they don’t really control the sales of the product. They don’t control the advertising buy. They don’t even control the outward selling of the individual product.
They could be punished if they might be producing an A+ product, but maybe the selling wasn’t right. The way that we try to align it is we do try to put together an aggressive package of bonuses, salary, incentives, where they’re being paid as stars, right?
You’ll figure out the right model. Step one is accepting that most publications have some talent like this. It’s time to pay them accordingly.
