December 12, 2023

Pivot to Subscriptions Is a Pivot to Being Smaller

Today’s a fun issue for me to write because I have quite a bit of AMO-specific news to share with you. But as the great song states, “if you don’t eat your meat, how can you have any pudding?” So, without further ado, let’s jump right in…

With the phase-out of 3rd-party cookies in mid-2024, research by Google Ad Manager suggests that the top 500 publishers could see a 52% drop in their programmatic ad revenue when that happens. 

And that doesn’t even take into consideration the fact that we are still dealing with economic uncertainty. To say there are headwinds in the ad markets would be an understatement. 

That’s why it’s so important for publishers to figure out how they can diversify their revenue and put in place a robust 1st-party data strategy. 

Omeda has a new white paper out, The Publisher’s Roadmap to Revenue in 2024, which digs into various ways publishers can get prepared and maximize revenue in an otherwise uncertain year. Download the report today and then set up a demo to learn how Omeda can help your business thrive.

Daily Mail to launch freemium

The clearest sign that we are moving into a new era in media is when one of the most aggressive advertising-driven media companies announces that it’s going to start experimenting with subscriptions. According to The Telegraph, The Daily Mail is going to start gating some of its content.

While most articles will remain free to read, a selected 10 to 15 each day will be available only to those who pay. The overhaul is expected in January.

The model is said to be based on ­German tabloid Bild, which introduced a partial paywall on its website a decade ago. DMGT executives have travelled to Germany to discuss the plans.

This is particularly interesting because MailOnline (Daily Mail’s online site) is an example of advertising gone horribly wrong. If you visit the site, you are bombarded with outstream and instream video, wallpaper ads, and assorted placements up and down the right rail—and that’s before you get to the perpetually scrolling Outbrain unit.

This monetization strategy demands pure scale. In a 2019 story, Wikipedia’s founder Jimmy Wales had some unkind words to say about The Daily Mail:

“I think what they’ve done brilliantly in this ad funded world (is) they’ve mastered the art of click bait, they’ve mastered the art of hyped up headlines, they’ve also mastered the art of, I’m sad to say, of running stories that simply aren’t true,” Wales told CNBC in a TV interview.

But it is obvious that this sort of monetization is going to prove harder to pull off as fewer users hit the site. One line in the original Telegraph story worth calling out is this one: “Changes to Facebook and Google algorithms have hit revenues across the media market.” In other words, as platforms begin to pull back on the amount of traffic that they send to publishers, monetization is going to get harder.

And so, the natural inclination will be to try and start charging for the content. However, throwing up a paywall isn’t just a flip-of-the-switch. Editorial strategy is intimately linked with business strategy. When the strategy was to get as many people as possible to click an article for ad impressions, you create content a certain way. But when the strategy is to prove enough value that people feel the desire to pay for the content, your editorial strategy has to be different.

Expanding on that, I am not that bullish on the micro-freemium model unless it is tied to a specific topic. In other words, for MailOnline to see sufficient growth in paid subscriptions, all 10-15 daily stories need to be related in some way to provide a sufficient quantity of content to the subscriber. For example, it could be a paid subscription tied to everything royalty. And so, die hard royalty fans would get everything they want for a small subscription. But if it’s just a random collection of stories, I can’t imagine it working.

More than this, though, is the fact that it requires a change in mindset. When you start throwing up gates in front of content, you are pivoting to running a smaller publication. It certainly doesn’t mean that it’ll be a less profitable business, but you are accepting that fewer people are going to hit your content. And I suspect that’s going to be hard for the Daily Mail, which has a certain culture and DNA.

Take The Information, for example. Vanity Fair did a great story on The Information last week celebrating the company’s great success after turning ten years old. According to the story:

Today, per Lessin, The Information has 475,000 active readers (i.e., paid subscribers and unpaid newsletter subscribers). According to Lessin, they expect to be profitable this year. The company will grow its overall revenue by 30% year over year in 2023. They’ve been disciplined when it comes to growth, with only 65 full-time employees working across offices in San Francisco, New York, and Hong Kong, as well as remotely.

In August 2022, Vanity Fair also wrote a story about The Information where it reported:

In the absence of cold, hard numbers, Lessin said revenues are up 35% year-over-year and that The Information has more than 360,000 “active readers,” meaning only a certain slice of them are paying readers. (Others get free newsletters and comped articles and such.) The company’s headcount is now north of 50—about two-thirds of those in the newsroom—and Lessin said she thinks they could “easily double” that within the next couple of years.

While I really don’t like the metric “active readers,” it’s a clear indication of the kind of growth that The Information has had over the past 16 months. Could The Information have had far more “active readers” if more of its content was open to the world? Absolutely. But the amount of money it would generate from those active readers would likely be less than what it makes from subscriptions. And so, it gives up the ability to reach more people to build a sustainable business. Editorial strategy and business strategy are linked.

And as we continue to move farther away from the gluttony of free traffic, more publications will have no choice but to make this pivot. They will have to accept that they’re going to reach fewer readers. And they will have to accept that the content strategy they executed when they were chasing millions of users might no longer work. Delivering enough value to get a subscription is about so much more than vanity metrics like pageviews. Those numbers may look good for ads—especially programmatic ads—but they will provide little help for those trying to build a subscription business.

If I have to make a prediction, in two years, we’ll be looking at MailOnline’s attempt at introducing a subscription business as a failure. I don’t believe the editorial strategy is linked to the business model.

Going full time on AMO

We announced yesterday to the full company that at the end of the year, I will no longer be Publisher of the Professional Division at Morning Brew. I am unbelievably excited to announce that I am going all in on building A Media Operator.

I found my way to Morning Brew because of AMO. Founders Austin Rief and Alex Lieberman were both early readers and they invited me to come join the team in late 2020. But not before I sold them an ad (that I don’t think I ever invoiced) promoting the job to my audience. You can see it here if you scroll halfway down, where I call it my “dream job.” I don’t want anyone to ever say that my ads don’t work.

And over these last three years, we grew the business from under $5 million to over $20 million. We experimented with our first live events. We expanded the editorial team from four people to dozens of reporters and editors. We launched four new publications. We figured out a 1st-party data strategy (and sell against it). And every day, we put out great work for an unbelievably engaged audience.

For three years, I got to do my dream job. And now I get to one up that. Now I get to build the company that I own. AMO has been a side hustle since August 2019 and as of January 2024, it’s my only hustle.

So, what comes next?

For the last four years, AMO has been a twice weekly newsletter. That is going to continue written from my perspective. However, for A Media Operator to truly become a great brand, it’s going to need more than just my perspectives. And so, I have a few plans editorially.

First, after talking about it a number of times, the AMO podcast is 100% coming back early next year. I want to hear from other operators on how they are building their media companies. If there are people you want to hear from or you think you’re building a cool media company, hit reply and let me know.

Second, I am going to bring on other writers (contributor and freelance to start) to expand the different stories that get published. I want to explore how other media companies are doing audience development, how they structure their sales teams, how they price their ads and subscriptions, and so many other angles. In other words, I want to really understand how other media companies work because that’ll help AMO’s readers continue to build their businesses. If you want to write for AMO, hit reply and let me know.

Third, I am going to lean into tracking data for operators to help them make better decisions in building their companies. For lack of a better word, these databases will be a good place to aggregate information so that we’re not all making decisions blindly. I’m not entirely sure what this will look like, but I realize that the combined AMO community has so much information, figuring out how to anonymize and distribute it seems like a way to help everyone.

I touched on the community above, but I think that this is an integral part to AMO. And so, 2024 is going to be about figuring out how to activate the community. I have plans to make the Slack more insightful and helpful to members. I am also thinking about how to convene people in smaller, intimate groups. I come back to this concept of the 10×10 in communities where we find 10 people of the same role to meet with each other and then do that 10 times. And so, I am considering holding dinners in New York and when I’m traveling at events to have great conversations.

Speaking of events… the AMO Summit is definitely coming back next year. I am starting the venue search in January and I am aiming for Q4. Ideally, it’ll be late October like it was this year, but dates can’t be confirmed until I know that the venue is available. If you’re going to want to sponsor this, hit reply.

Much of this will only be made available to AMO Pro members. That means, if you want to attend the events, get access to the in-depth content and data, and everything else I described, you will need to sign up. I guarantee you will see value.

If you are a service or software provider and are looking to get in front of the 5,200 AMO readers—45% of whom are C-level—let me know. We’re going to be expanding the types of packages we can create so that it’s not simply newsletter ads.

Now that I’ve made a long pitch, I will close with this… I believe there is an opportunity in the market for a publication that serves the legitimate media operator who is trying to create great content to serve a valuable audience. And I fully intend on making A Media Operator that publication.

I am unbelievably excited about what’s in store for A Media Operator. I get to spend all of my time and focus on building this into the type of company I know it can become. And I am thrilled to have each and every one of you reading it. Thank you. Truly. Thank you. Have a great rest of your week and see you on Tuesday.