Is There an Opportunity to Build New Digital First Latinx Media Companies?
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Media companies are beginning to see that they have been incredibly blind to the lack of diversity in their organizations. Multiple newsrooms have seen top leadership leave due to complaints on how they treated employees of color or because of poor judgement in published columns.
It’s clear that many media companies carry biases on the types of people they put on the covers of magazines or the journalists that are put on camera.
I was lucky to happen upon a story recently published on Emperifollá titled This Is What Latinx Media Could Actually Look Like. In it, editor in chief Frances Solá-Santiago touched on a few points that are worth looking at.
Latinx media has largely stayed the same for decades – both in the US and in Latin America – often promoting a monolithic perspective of what Latinidad means. The models and celebrities covered are mostly white, while inclusion and diversity are paraded as a trendy term that promotes a “we are all a human race” kind of approach instead of deconstructing the colorist and racist narratives that permeate our communities.
At Emperifollá, our goal has always been to highlight and celebrate the multiplicity of Latinx communities (yes, in plural). We are always conscious of our blindspots as a team of non-Black, white-passing Latinx – something we are aiming to change.
Anytime a market hasn’t changed much in decades, I can’t help but feel that there’s an opportunity to start from scratch. As one person I was talking to said, legacy media is lazy and ready for disruption. I believe there’s an opportunity for entrepreneurial operators to launch digital-first media brands, like Emperifollá, but across multiple different Latinx verticals.
Before I dive deeper into that, let’s look at what the Latinx market looks like today.
The Craig Newmark Graduate School of Journalism at CUNY published a report in June 2019 diving into the state of the Latinx media. A couple points jump out to me:
– The outlets’ predominant language is Spanish, and the audience, at least as perceived by media practitioners, consists mainly of immigrant Latinxs, despite the fact that a majority of U.S. Latinxs are U.S. born and prefer to get their news in English.
– Two giant competing corporations, Univision and Telemundo, dominate the market. The rest of the industry is made up of myriad medium-size and (mostly) small outlets.
According to the CUNY report, there are only “624 Latinos news media outlets in the U.S., including Puerto Rico.” Of that, the CUNY team found that only 87 are digital-only publications, most of which don’t even have a newsroom.
Additionally, the report touches on the size of the audience: 59 million Latinxs in the U.S. What’s unique about this audience is that two thirds are U.S. born, bilingual and the majority are millennials or younger. That’s a large audience that doesn’t have great options for digital content.
But a large audience isn’t enough. We also want to know whether there’s commercial opportunity.
From an economic perspective, GDP is on the rise quite significantly. The LDC U.S. Latino GDP Report was published in September 2019 with the following statistics:
The total economic output (or GDP) of Latinos in the United States was $2.3 trillion in 2017, up from $2.1 trillion in 2015 and $1.7 trillion in 2010.
The new 2017 Latino GDP estimates show significantly rising Latino shares of GDP and personal consumption. The 2017 Latino GDP share has increased to 11.8 percent, compared with 11.4 for 2010. The 2017 Latino personal consumption share is 11.6 percent, up considerably from 10.6 percent in 2010.
If it were an independent country, the U.S. Latino GDP would be the eight largest in the world, larger even than the GDPs of Brazil, Italy or Canada. U.S. Latino GDP is currently more than 45 percent larger than the GDP of Russia. At current growth rates, the U.S. Latino GDP will move from eight largest GDP to seventh, growing to exceed the size of France’s GDP within the next 10 years.
According to that same report, from 2007 to 2012, U.S. Latinx accounted for 86% of total net new business formations in America.
Let’s break this down:
- There are few digital-only publications that serve the English speaking Latinx community
- The English-speaking Latinx community is very large (close to 40 million perhaps) and incredibly young (mostly millennial)
- The GDP of the community is rapidly rising and personal consumption is also increasing
- The vast majority of new businesses in America are from this community.
Those four points lead me to believe that there is a tremendous opportunity to launch digital media publications serving these communities. Whether it’s style and culture like Emperifollá or a publication targeting business owners, having that Latinx lens would provide something to an under-served audience.
What’s interesting is that this is a scenario playing out in other communities. The Juggernaut is media company that refers to itself as “Smart journalism on South Asia and South Asians around the world.” It’s a subscription-only publication, but it’s not hard to imagine a future where it expands into new content types that are supported by advertising and commerce.
If someone were to launch this Latinx publication, I would encourage them to emulate the style that The Juggernaut has. A subscription first publication that has a business slant and serves the entrepreneurial community would be very exciting to be part of.
Here’s the thing… I do not delude myself into thinking that no one is working on this. But like I wrote a few weeks ago:
We are all responsible for hiring people and investing money. As you think about how you help in the weeks, months and years ahead, follow Web’s advice. Hire or wire.
It is likely that investors have ignored their calls for investment or legacy publications have ignored bright operators. Let’s fix that.
I am very interested in media companies that are targeting these large, ethnically diverse communities—that’s not limited to Latinx. If you are working on one or know of one, I would love to hear from you. I think over the coming years, I am going to be writing about many of them launching publications.
Moving right along…
Churn is going to be a problem
It didn’t make it into last week’s piece, but I thought this piece by Digiday story about how publishers are choosing top line subscription numbers versus immediate revenue was worth a visit. Two parts jumped out to me:
Between March and May this year, the growth of revenue per subscriber slowed by 59% between compared with the 12 months prior, according to subscription platform Zuora. Publishers piled on to offering free or cheap trials, like $12 for 12 months. The subscription growth rate for digital news subscriptions grew 110%, Zuora found.
“But there will be a huge retention issue in between six and 12 months. When acquisition is a bit lazy or it’s a non-nuance product, you can churn and burn. It’s a legacy, media-wide problem.”
I understand the rationale, even though I think it’s a horrible decision… Publishers believe that getting people subscribed is more important than maximizing revenue, so $1/month offers make sense. Get them paid and then you can spend all year trying to convert them to renew.
The problem is two-fold.
First, why are they signing up? If it was for coronavirus coverage, you have to question whether this will be a hot issue by this time next year. We are already beginning to see interest in coronavirus coverage die down. Will they be interested in whatever your major topic is next year?
Second, this devalues the brand considerably and presents an interesting situation. What if your subscription is normally $10/month? Can you suddenly 10x your subscription in the second year to make up for the fact that you likely didn’t make any money on that first year subscription?
Nevertheless, the most important thing that these publishers can do is focus on keeping these subscribers engaged. Lindsay Horrigan, global head of subscriptions & consumer marketing at Bloomberg Media, explained Bloomberg’s approach in a Digiday+ Talks:
She said, however, that one recurring theme regardless of the individual is that engagement is of the utmost importance. “If you haven’t been engaging with us recently, your likelihood to subscribe is going to be lower and your likelihood to churn is going to be higher.”
In your analytics, it is important that you track all subscribers—but most specifically, these high volume, low priced subscribers. You want to see how they’re engaging with your content and how often they are returning. Based on that, you need to introduce them to products that will continue reminding them about you.
A month ago, I wrote about what I was calling a “revenue server,” which would basically allow you to track specific cohorts of your audience based on their likelihood to subscribe, view ads or engage with your commerce section. I explained:
Rather than promoting everything to everyone, we start to get a bit smarter about promoting the right things to the right people. We try to force too much on our users. On a single page, there might be banner ads, commerce promotions, subscription CTAs and various other opportunities. Digital media sites are typically very messy.
Instead, we can create a more efficient page that is focused on what the individual is most likely to engage with, providing us the opportunity to maximize our revenue down to the user level.
Now, let’s say we have this system in place. Here is where things get a bit interesting.
When a user does log in, you’ll call the revenue server to see what the user classification is. The revenue server’s data will dictate what the monetization layout is. It’s similar to how an ad server works to deliver the right ads based on targeting, frequency caps, etc., but instead, it’s pulling in all your monetization methods.
In the case of these high volume, low priced subscribers, I would spend the majority of your energy trying to get them signed up newsletters versus incrementally monetizing them. The most important thing you can do is get them back to your site on a regular basis. The newsletter is one of the few tactics a publisher has to push information to a consumer.
I’ll be honest… I struggle with discounting. I’ve done it a little here at A Media Operator, but I’ve come to believe that all discounting does is get a user comfortable with the lower price. If I ever want to increase the price, I have to be comfortable with churn. Therefore, I’d rather minimize the likelihood of that and get people in at the price that I believe a subscription is worth.
It’s easy to say you’ve got a growing subscription business when you’re employing aggressive growth hacking tactics like $12 for 12 months. However, when your retention team has to try and get them engaged long-term, it can quickly backfire.