December 20, 2022

Crypto Media Can’t Beat Its Built-In Cycles

Any media company focused on a specific topic or industry can find itself at the whims of cycles. Few industries are as aggressively cyclical as crypto, which we can see playing out now.

But first… A message about our sponsor, Omeda.

As we wrap up the year and prepare for 2023, it’s worth looking back on some of the year’s big topics. That’s why Omeda has collected its top resources for 2022.

In this piece, you’ll see topics ranging from:

  • Increasing auto-renewals
  • A deep guide on first-party data (if all my writing isn’t enough)
  • The impact of Apple’s Mail Privacy Protection

And so much more. Not everything worked this year. But the best way to maximize next year’s success is to learn from this year’s ups and downs.

Check out the full guide here.

Now let’s jump in…

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The last couple of months have been some of the most spectacular for crypto media. As a former CoinDesk employee, I feel immense pride seeing what that editorial team has accomplished. For background, CoinDesk published the leaked documents that showed that crypto-exchange FTX was a complete sham.

But as the industry continues to suffer through its cyclical downturn, CoinDesk is missing out on monetizing the largest surge in traffic it has ever experienced. According to Adweek:

Like many trade publications, the health of these publishers is inextricably tied to that of the industry they cover—a downturn in promotional spend from one can mean a downturn in advertising revenue for the other. And in the third quarter of this year, the top cryptocurrency advertisers spent just $35 million on ads—an 80% decline from the first quarter, according to MediaRadar.

For CoinDesk, which broke the story of the disgraced Bankman-Fried, the exposé shattered its traffic records, reaching 17 million readers in November—a 96% month-over-month increase and the highest month of traffic in its nine-year history, according to chief content officer Michael Casey.

This is nothing new because all crypto media depends on the market to generate revenue. And this is especially true for CoinDesk because so much of its revenue is tied to marketing demand. When prices are up, there is a ton of marketing demand, and crypto media is there to gobble it up. When prices are down, that demand disappears hard.

In many respects, it has become a dependable cycle. In late 2016, I joined CoinDesk when we were doing sub-1 million monthly unique visitors. Our ad business was nascent; sometimes, we sold sub-$1,000 advertising deals. By the end of 2017, we had hit over 10 million unique visitors, generating hundreds of thousands in ad revenue per month.

And then it all went away. Traffic plummeted over the year back down to a couple of million monthly uniques. Ad revenue was in lockstep. It became so insignificant that we decided to get rid of ads on the site when we did a relaunch. This was before Covid, of course.

But something interesting started to happen in 2020. After a couple of years of depressing lows, traffic increased with the price of bitcoin. So we began to reintroduce advertising. And then, I left to join Morning Brew, so I obviously lost access to the analytics. That said, it should be no surprise that 2021 was an unbelievable year from an advertising perspective. CoinDesk crushed it.

And now it’s disappearing again. So despite this beautiful traffic rush from an incredibly well-reported story, I would wager that CoinDesk’s advertising revenue will look rough in 2023. Not because the team doesn’t try but because the cycle is taking over again.

By mid-2024, things will start to warm up. 2025 should be a good year. And here’s why. Crypto media operates on a four-year cycle that, historically, is linked to the bitcoin halving. In essence, every four years, bitcoin’s algorithm halves the reward to miners. This tends to impact the price.

Bitcoin last halved in May 2020. Look at the price movement. By the end of the year, bitcoin was at all-time highs. Traffic was also very high. By the end of 2021, the highs were behind us, and things were starting to weaken. Traffic was also dropping. The cycle was starting all over again.

So, why will 2023 and 2024 be so rough? The halving doesn’t occur until April 2024, so prices will likely remain depressed. Until the price starts appreciating, many companies won’t have the budget to spend. But by the second half of 2024 and into 2025, advertising demand will return if the cycle repeats.

None of this is guaranteed, of course. Maybe the markets will turn earlier; maybe they never turn again, and many people will be left holding the bag. But if history does look to repeat itself, the company is going to be in a rougher place financially.

This is why developing a diversified revenue strategy is essential. CoinDesk generates a significant percentage of its revenue from the marketing side. That could be sponsors for events or on-site advertising. Fortunately, it also sells tickets, which provides a different revenue source than centralized marketing budgets. That said, even this is going to experience a major pullback. It did during the last cycle as well.

There’s no beating the macro trends for a market as intensely cyclical as crypto. While CoinDesk should absolutely lean into some sort of a subscription product—something more focused on the more prominent players and investors rather than the individual—as interest wanes, so too will the money following it. And as that happens, all spending will drop.

The higher your highs, the lower your lows. Crypto is exciting, but it’s nauseatingly cyclical. I don’t see that ending in the near term.

Rented land is not where you build a business

The past week has been a true spectacle over in Twitter-land. First, the company started banning journalists because they were sharing links to a site that tracks where all planes are at all times—including Elon Musk’s. Second, it banned accounts for sharing links to other social media platforms. It has pulled back that second controversial decision but is a good reminder of smart business practice.

These platforms are rented land. You are borrowing their audience. You may profit from that audience for a long time, but it is not your audience. You do not own it. You are renting it. The audience belongs to the platform. And that is dangerous.

The most important thing we operators can do is move users from rented land to things we own. This is why I am so passionate about newsletters. Twitter has been a great driver of subscribers to AMO. However, if my Twitter went away tomorrow, I’d still have a six-figure media company and audience that I could communicate with.

It’s not so cut and dry, though. You have to build on YouTube if you’re a video creator. There’s no way around it. Publishers that attempt to build video destinations on their site will likely lose compared to those that distribute on YouTube. But that doesn’t mean you shouldn’t be trying to build the audience off of YouTube as well, even if it’s just an email list. What happens if YouTube goes away? What will you do?

Our strategy with platforms should be to move those people into our owned ecosystem. That’s how you ensure that your business doesn’t die overnight. I’ve seen too many independent creators lose access to their accounts and, in turn, lose access to the people who follow them. Why risk it?

Thanks for reading. If you have thoughts, hit reply. Become a premium member to receive even more AMO on Fridays; plus, you’ll get an invite to the AMO Slack. Have a great week and holiday!

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