Gannett Tries for Local Sports Bundle
I wanted to thank everyone for responding to last week’s newsletter about Vice. I always want to hear from readers, so don’t hesitate to hit reply.
Before we jump in, a note from our sponsor, Omeda.
If my girlfriend hears about 1st party data one more time, she might kill me.
But that doesn’t change the fact that having a smart data strategy is absolutely necessary. A big part of that is figuring out the tools to use to actually achieve that.
Do I need a CRM? Or is it a DMP? I know, it’s a CDP, right? The acronyms can be hard to understand. (The answer is a CDP, by the way.)
Fortunately, the team at Omeda has put together an in-depth guide on what steps to take to build your strategy, find the right player to partner with, and actually deploy that data in smart, personalized campaigns.
Now let’s jump in…
Over the past couple of years and with how quickly The Athletic rose to prominence, there has been a reckoning at local newspapers. How did the ultimate purveyors of local sports news get so cataclysmically disrupted by a media upstart that gloated about putting them out of business?
This was different than the platforms coming along and stealing ad marketing share, which newspapers only had a monopoly over because of technology and geographic protection. This was sports reporting. This was the true bread and butter of the newspaper.
The Athletic just came in, hired every great sports reporter that was out there, and grew to 1 million paying subs in a matter of 4-5 years. Yes, they had venture money and yes, they probably still aren’t profitable. But the reality is, The Athletic built something that a niche audience really wanted (geographically-agnostic sports content) and they were willing to pay.
It should come as no surprise that the local papers are fighting back. Or, at the very least, attempting to. According to The Wrap:
USA Today is launching a sports-only subscription product called Sports+ that will ostensibly compete with the likes of The Athletic.
Sports+ launches in seven markets today — Arizona, Cincinnati, Cleveland, Indiana, Michigan, Tennessee, and Wisconsin — all of which have an NFL team. The launch of Sports+ is to coincide with the start of the 2021 NFL season, which kicks off Thursday night on NBC.
Sports+ is free for existing digital subscribers of certain Gannett properties in launch markets, including The Indianapolis Star, Detroit Free Press and The Enquirer. For others, it will cost $4.99 a month, with a discount of $2.99 a month for those that sign up for the whole year.
This breaks down rather simply. If you are already a subscriber to one of Gannett’s network of newspapers, you don’t have to pay for USA Today Sports+. If you are not a subscriber, you have to pay $4.99 a month.
But this isn’t the first time that local newspapers have tried to push back against The Athletic. In July 2020, the Local Media Consortium announced The Matchup, which was a shared content initiative for sports content. As the LMC said when it launched:
Initially, when reading about an upcoming game on your hometown news site, you will read stories from the opposing team’s local site too. If you want to read stories from the opposing team’s site, you won’t have to subscribe to their local news outlet to do so. We’re achieving this by using AMP, along with a framework from our friends at Distributed Media Lab.
Soon, while continuing the content share, we will also launch a destination site specifically for The Matchup, which will showcase local sports news and columns covering all major pro and college teams in the United States and Canada. The site will be free to anyone with a subscription to a participating local news site—and that will be the only way to access the wealth of information at The Matchup. You’ll be able to follow specific teams, leagues and players with a customized daily dashboard.
Essentially, all of these local newspapers across ownership groups were going to share their content with each other. If you subscribed to one local paper, you’d gain access to the sports content across the rest of the network. It was an interesting idea because the messaging for users became very clear. By signing up for your local paper, you’d get local news + national sports.
Unfortunately, a source tells me that The Matchup as an idea was shut down. Although a reason wasn’t shared, my guess is it boils down to a simple reason.
How do you get various independently owned media companies to agree to something? The amount of hand-holding, cajoling, and convincing would make a day in Congress look like a cakewalk. There are simply too many competing interests.
Theoretically, Sports+ won’t have this problem. Because it’s all owned by Gannett, management can make a clear-cut decision on how this promotion works. If the goal is to see subscription revenue grow at the organization, whether that happens at the individual local publication or at the sports level shouldn’t matter as much.
But that doesn’t mean this idea is a good one. One thing The Athletic figured out very quickly is that to charge for sports content, you’ve got to create a product that is both really great as well as expansive. That’s why it touches so many sports across so many geographies.
Look at what Sports+ will offer. Although there is some coverage for other teams, the bulk of the focus is on those seven markets listed in the above quote.
For $4.99, I get seven markets plus some coverage of the rest of the leagues. Compare that to The Athletic, which gives you cross-country (and international) coverage for $7.99. If you’re a user that is willing to pay for sports content, which option are you likely to pick?
For subscribers that are price conscious and that only care about one team, they’re likely going to choose Sports+. But if you’re a general sports lover, a $3/month difference is unlikely to deter you from subscribing. The value is just so much better with The Athletic. In the market of people willing to pay for sports content, my suspicion is most people will just pick The Athletic.
This leads me to believe that Sports+ is less about getting net new subscribers to the sports subscription offering and more to get users to realize the value of a local newspaper subscription. This reminds me of how The Times is thinking about Wirecutter, which I wrote about on Friday for premium members.
Essentially, Gannett needs to assign value to its sports content so it can use that in marketing when promoting its main subscription. USA Today costs $9.99 a month; therefore, if you subscribe to that, you also get Sports+ for free, a value of $4.99. That sort of logic actually works on potential subscribers.
It’ll be interesting to see how it plays out. The Athletic had a long time to get their product going, but now local papers are responding.
The struggle over podcast ads
Advertising on the internet used to be a very simple proposition. You bought an ad directly from a publisher, it ran, and then you hopefully benefited from it. Then it became more complicated with ad networks, programmatic, header bidding, and the list goes on.
Podcasts have enjoyed the simple life of advertising for a while now; however, we’re starting to see some struggles appear. According to Digiday:
Advertisers feel the limits of host-read ads and are trying to expand contextual ad targeting capabilities, as well as the technology to support programmatic buying.
Fragmentation is still an issue for podcast advertisers, who want to measure listeners across devices.
People are listening to podcasts on smartphones, smart speakers and even “connected cars” (cars that can get 5G and have audio streaming apps built into their infrastructure), said Andre Swanston, svp of media and entertainment vertical at TransUnion. It’s a persistent challenge for advertisers in the audio space to be able to measure listeners across those devices. Multiple audio streaming platforms “makes things quite difficult,” Diamond said.
This is code for “we want to be able to programmatically buy across various formats and target our audience more specifically.” It’s the same thing that happened to digital advertising.
We can see this frustration manifested lower in the Digiday story where the pitch for programmatic is that it provides “flexibility, control and speed of execution.” It also disconnects the listener from the content and starts a race to the bottom.
Publishers should be resistant to this. Yes, it would be great for the advertiser to be able to buy across various podcasts in a simpler fashion. But if we fast-forward 5 years, we’ll be lamenting how podcasters are earning less and less revenue. As more technology companies sprout up, they’ll start taking a greater cut of the pie.
I suspect publishers will acquiesce because short-term incentives tend to override long-term, but it is very important to retain ownership of the audience/content connection. Otherwise, we’re just trading commodities and there’s little profit in that.
Thanks for reading today’s newsletter. If you have thoughts, please feel free to hit reply. If you want to access the AMO Slack channel and receive Friday’s newsletters, become a premium member. Thanks and have a great week!