April 27, 2021

Overtime Is an Example of Building Audience Before Product

There has always been this debate about what should come first: a great product or an audience. Some argue that the product is the most important thing and then you figure out how to build an audience for it. Others argue that you won’t really know what product to build until you’ve got the right audience.

I take the audience-first approach. If you have an audience, launching new products becomes significantly easier because you’re already communicating with your target customer. Compare that to launching something fresh and then having to find people to buy it. I’d always prefer having an audience first.

Overtime is a good example of that. According to The Wall Street Journal:

Overtime Sports Inc., which targets younger fans on digital and social platforms, has raised $80 million in funding to pursue plans including the launch of its own high-school basketball league, the company said. The sports media and entertainment venture also hopes to tap the broader interest in nonfungible tokens and sports betting.

The company in September plans to introduce its basketball league featuring top male high-school players, called Overtime Elite. The league will also function as a high school for roughly 30 rising juniors and seniors, who will all live in one location and earn a minimum annual salary of $100,000 as they play and take classes toward a high school diploma, according to the company. They will also be able to earn money from their likenesses in marketing deals, and receive professional training in areas such as financial literacy and media training.

Overtime has been in business since 2016 and has been building an audience that entire time. It has started monetizing through advertising and then when the brand became sufficiently large, it spread into commerce by creating its own line of merchandise. Only after years of having a deeply engaged audience has it made this big step into launching a league.

This is the right approach. Creating and sustaining a league is going to be a lot of work. There are dozens of failed attempts at creating leagues over professional sports history. One big way of ensuring that this works out, in the long run, is to already have fans from the launch.

The league is also a smart way to create secondary content. Many people will watch the actual basketball games, but for those that don’t, all of this footage will bring Overtime right back to its roots of posting highlights.

But it’s more than that. Because Overtime is focused on high school sports, it builds a relationship with a younger audience. By solidifying that engagement today, it can build and grow over the coming years. We can see this playing out with some of its future monetization ideas.

According to WSJ, Overtime is going to be creating more content about sports betting. This has been a big growth area for all sports over the past few years with more localities in the United States legalizing it. Increasingly, leagues are going to want a cut of this revenue.

Presently, sports betting is controlled by much larger companies in the space. My suspicion is that over the next ten years, as Overtime’s audience begins to have disposable income, that the brand will take a disproportionate percentage of sports gambling revenue. It’s very simple. Because they already have this audience demographic, they’ll be in a much better place to monetize.

Irrespective of how Overtime wants to monetize—ads, merchandise, leagues, sports betting, or whatever—it’s in control of that destiny to a far greater degree than other companies. It has millions of people that are hooked on its content. As it introduces new products and features, it’ll have a customer base that is already primed to participate.

In the debate of audience vs. product and which should come first, I’d say Overtime is a classic example of building an audience first and then letting the product follow.

Creator opportunities in audio heat up

With the subscription craze becoming even hotter, it should come as no surprise that two of the largest players in podcasting are both launching features to help creators put their podcasts behind a paywall.

First up is Apple. During its big event last week, the company revealed that it was introducing the ability for partners to launch paid subscription podcasts. Creators will need to spend $19.99 per year to gain access to the feature and then give Apple 30% of revenue in year one and 15% in all subsequent years.

According to The Verge:

Podcasters will have to upload their subscription content through Apple’s backend, not through RSS and their hosting provider. Their regular feed, however, can still operate through RSS. Because the subscription content goes through Apple, podcasters also won’t receive specific data about their paying listeners, like their email, names, or contact information. Apple essentially owns the relationship.

Not to be outdone, Spotify announced today that it was introducing its own subscription platform for creators. According to Axios:

Creators using Spotify’s podcast creator platform Anchor will be able to mark episodes as subscriber-only and publish them to Spotify and other podcast listening platforms, the company said in an announcement Tuesday.

For the next two years, being a part of this podcast creator program will be free for podcasters, meaning they can pocket 100% of their subscriber revenue, excluding payment transaction fees. Starting in 2023, Spotify says it plans to introduce a 5% fee for access to the monetization tool.

To be completely honest, the operator in me feels uncomfortable giving control of subscriptions over to those companies. As The Verge said, “Apple essentially owns the relationship.” They’re not your subscribers, but rather, Apple’s. That’s fine for most creators, but I’ve obviously got strong feelings about building on rented land.

That said, this is very much not a debate about Apple vs. Spotify for the creator. This isn’t a zero sum game unlike the coming newsletter battles. With a newsletter, you’ve only got one homepage and one list. Therefore, Substack, Revue, Ghost, etc. all need to convince you to go exclusive with them. In the case of these audio apps, there is no exclusivity. For your listeners on Apple, they can subscribe on Apple. And for your listeners on Spotify, they can subscribe on Spotify.

Now… I can foresee a future where creators start coming up with incentives to move subscribers to Spotify because the revenue share is in their favor. Perhaps Spotify subscribers get different access than Apple subscribers. Or maybe the episodes are released earlier.

Suffice it to say, the multitude of options available to creators is increasing. And the smartest will figure out ways to leverage these tools to build their businesses. But I return to a point I made above. Building a business on someone else’s property can be a dangerous move long-term. Today, the platforms are fighting each other for creators’ attention, therefore creators benefit. In the future, that might not be the case.

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