August 21, 2020
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From Individual to Brand: Why The Transition Matters

Over the past 12 months, there has been a proliferation of tools targeted to creators looking to build their own solo media companies. Whether it’s software or communities specifically for writers, there are plenty of ways that a creator can get the help they need.

It’s a great world for those that want to venture out onto their own and it has never been easier. But as I’ve written a few times over the past year, there’s more to this business than just putting words to paper.

Another point that seems to have popped up is that this new world of solo creator operations is going to somehow destroy media—that the individual is more important than the brand.

I want to put that idea to bed for good because it’s simply not the case. Individual creators are fundamental to this business and many digital media companies have treated them like liabilities rather than the asset they are. However, it is because of the brand that the individual has clout; not the other way around.

This is why The New York Times and Barstool Sports have done an amazing job acquiring talent. On their own, these writers and creators could build a business. However, there is a leverage effect that comes from being part of a brand that can’t be found individually. But it’s more than just that…

Brands create new individual creators. They’re incubators of talent. A good example of this is Fortune’s Term Sheet newsletter.

Dan Primack was the creator of this newsletter. You said Term Sheet, you thought Dan Primack. However, on October 25, 2016, he left Fortune to join Axios and he couldn’t bring the newsletter with him. Erin Griffith took over and ran it until August 25, 2017, when she left to join The New York Times. Polina Marinova ran it then until March 20, 2020 when she left to go full time running her own project. Lucinda Shen now runs the newsletter.

There have been four separate people who have managed that newsletter, but only one constant: the newsletter. When one person leaves, Fortune just slots someone else in with very little disruption to the overall operation.

People are loyal to individuals, but they’re also loyal to brands. They can expect a certain quality. More importantly, people are already subscribed. Primack might have built the newsletter, but Griffth, Marinova and Shen each got to benefit from that because people didn’t automatically unsubscribe simply because Primack left.

In each of those situations, Fortune replaced a very talented person with another very talented person and the business continued to operate. That’s why if you asked me whether I wanted to back an individual or a media company, my money would have to be on the media company. Individual creators are important, but the media company can always create new ones.

Again, this doesn’t mean that the brand should disrespect the individual creator. If it’s a constant exercise of brands incubating new individual creators only for them to leave every time, that’s just bad business. But that’s why, by and large, The Times and Barstool continue to accumulate more and more. There’s a balance between brand and individual and for the companies that can figure that out, there are inherent benefits.

I participated in a Q&A a few days ago and one of the topics that came up was all these individual creator-driven newsletters. Did I see that as the future, someone asked.

My answer was simple: no. While this idea of the decentralization of media to the individual is a wonderful talking point, it’s not reality. What’s more likely to occur is this… Those creators that survive the next year or two will become the foundation of future media companies. Before you know it, you’ll have dozens of small operations with a few employees. The best and most forward thinking will bring additional creators into the fold.

There are two primary reasons for this.

First, like I said above, there is leverage with a team. When you’re the only creator, 1=1. However, when there are two of you, 1+1=3. The first and second creators each bring an audience to the table and then there’s an amalgamation that occurs because new people find you together.

Second, and this is critical for most creators, the brand is worth more than the individual. If you decide you ever want to stop (not possible on your own), selling your business becomes an interesting exercise. If you’re the rainmaker, the only way a buyer will pay more is if they know you’re sticking around. Let’s look at a non-media example…

When Kylie Jenner first started looking at selling some of Kylie Cosmetics, there were analysts who suggested that there was risk in acquiring her business. The reason was simple: the entire business was built on the back of her brand. Therefore, what would happen if she became irrelevant?

What if someone came along and wanted to buy A Media Operator? As I have written time and time again, it’s not just the content that keeps you reading this newsletter. There’s a relationship between you, the reader and me, the creator. If I sold and I decided to stop writing and brought someone else in to write these essays, I imagine churn would increase.

The buyer would know this, so they would pay a lower multiple than if I already had a team of writers. With a team, it’s easier to spread the value around. If I left, but there were three others, perhaps subscribers would continue paying because there’s value in the other three.

This is one of the things I don’t think a lot of individuals have put much thought into. We don’t get to stop. I don’t say that in a complaining sort of way, but it’s true. So long as I am continuing to write, A Media Operator has a business. But if I were to stop, people would start to slowly and then quickly unsubscribe.

Here’s an example as reported by Bloomberg:

Barstool Sports founder and cult retail investing figure Dave Portnoy posted a bedridden video saying he was sick — possibly with coronavirus — sending shares of backer Penn National Gaming Inc. sliding on Wednesday.

Penn National’s stock had more than doubled this year through Tuesday. The video sent the shares lower as much as 2.5% and the stock closed Wednesday down 1.2% to $54.73.

In creative-driven media, bad news for an individual can have a material impact on the valuation of a business. That’s important to understand.

Which brings me to my ultimate point with this essay…

For individuals that do decide to start pushing to become more than just a solo operation, they’re going to need to manage that transition to brand deliberately. That means elevating other people, trusting them to produce through your publication. The individual, most importantly, will have to stop thinking about “my readers” and start thinking about “our readers.”

That’s harder than it sounds. But it’s critical. If a creator can make that transition and think about the audience as a collective group of people reading everyone’s work, then suddenly, you start to gain those benefits of brand leverage. As important, you can actually take a break.

This is why I ultimately believe that we will see far more multi-creator operations be successful than solo-creator. A good example of this is the recent launch of Defector. In a story on The Times:

One of the biggest staff rebellions in online media took place last year, when all of the journalists working at the irreverent, sports-centric website Deadspin resigned in protest after clashing with their bosses.

Now Deadspin’s former writers and editors — 18 of the roughly 20 who quit last year — have reunited to start a digital media company, Defector Media, that they will own and operate themselves.

Defector Media is scheduled to start a podcast next month and roll out its website in September, its founders said. Tom Ley, a former features editor at Deadspin, will be the editor in chief. The business side will be led by Jasper Wang, a former Bain & Company employee who said he had been an avid Deadspin reader since age 19.

Defector’s founders said the company had no outside investors, and each employee has taken a stake of roughly 5 percent in the venture. Unlike Deadspin, a free site that relies on ads, Defector will offer subscriptions at $8 a month, with an annual subscription available at a discount.

Each of them has their own audience. Collectively, a reader of writer A might find they also like writer B. This creates a sticky effect where the multiple writers are now serving a reader rather than just one writer. If writer B decides to take a break for a few weeks, the business doesn’t suffer because there’s still the first writer.

This is the leverage I was talking about. While the individual creators are important, the reader is subscribing to Defector—the brand. And if an investor comes along to buy the business, they can be more comfortable knowing that they are acquiring an operating brand versus a single creator. It spreads the risk around. And it creates more opportunity.

There will always be exceptions to this rule. But by and large, brands have more leverage and can grow far faster than individuals. I anticipate many individual creators realizing this and pushing to make the transition to brand.

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