Quartz Is Right To Get Rid of Its Paywall
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It’s pretty rare for a media company with a paywall to decide to remove it. This is because it’s too difficult to admit that it’s the wrong strategy, even if it’s not growing as fast as a publisher might have thought. But Quartz has made the somewhat controversial but, I believe, correct decision to get rid of its paywall.
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Now let’s jump in…
In a post published on Quartz, CEO Zach Seward said:
Starting today, you won’t encounter any paywalls on QZ.com articles, though we may ask you to register for free with an email address after repeated use.
Our 25,000 paying members will continue to receive exclusive access to two premium emails: the Quartz Weekend Brief, which sums up the past week, and The Forecast, which looks far ahead to emerging trends and industries. It’s a great way to augment your experience of Quartz and to fund high-quality business journalism with an important mission.
Adweek spoke with Seward, and there was a two-fold rationale for removing the paywall:
First, in line with its mission to make business better, the publisher has concluded that it can more effectively disseminate vital information by eliminating its paywall, especially as it seeks to grow its international audience.
Citing internal data, Quartz has also found that 75% of its members prefer to consume their content via newsletter. In the last quarter of 2021, email became its largest platform for traffic, with email opens surpassing pageviews. The publisher attracted an average of 4.6 million readers to its website in January and February, according to measurement firm Comscore, though those figures are an approximation.
It’s a controversial move, but I think it’s the right approach for Quartz, as I said in my headline. There are a few reasons for this.
First, Quartz could never support a traditional paywall with its editorial strategy. As Seward wrote in his blog post, it was a generalist business publication with a spin on “making capitalism more fair and businesses more sustainable and inclusive.” That mission is so broad, and we can see that with the multitude of “obsessions” its focused on, including supply chain, consumer spending, China, fixing capitalism, etc.
I wrote about Quartz back in 2020, offering a similar opinion about the publication then as I am now.
I just don’t understand what Quartz is trying to do. It’s stuck in this weird middle ground where it’s trying to be everything for everyone, so it’s not focusing on any one audience. Let’s look at a few of its obsessions as examples.
Another example is called Space Business, which is pretty self explanatory. In April and May, Quartz has produced six pieces of content. SpaceNews.com produced a few pieces of content today alone. Again, why wouldn’t I go there?
Quartz is trying to manage a huge number of niches, but is offering no clear cut support for any of them. Effectively, it’s stuck in the middle, trying to compete with mainstream business publications; however, it’s not providing the same value that I can get there. Why pay Quartz $100 when $290 gets me all of Bloomberg News?
These broad business topics are significant from a traffic perspective, but none of the obsessions go deep enough to justify any subscription.
Now, people might say that this is the wrong way to think about it, and no one will justify a subscription if there is no paywall. And that’s correct in the traditional logic of driving more eyeballs to paywalls to get conversions.
However, Quartz wasn’t getting subscriptions. It has 25,000 paying members. At $100 a year, that’s equal to about $2.5 million in revenue. In August 2020, when former owner, Uzabase, reported Q2 2020 earnings, it said that Quartz had $146,000 in subscription MRR. That’s about $1.75 million. Assuming a $100 per user subscription, it went from 17,500 members in Q2 2020 to 25,000 members in Q1 2022. That growth does not suggest product-market fit.
But that’s okay. Because now, at least, it can start to focus on alternative monetization methods.
This brings me to the second reason this is the smart move: advertising. I suspect that the people reading Quartz are desirable from an advertising perspective. Therefore, Quartz is in a good place to start selling high-quality advertising again.
At one point in time, Quartz was the leading provider of beautiful advertising. Its high-impact advertising was hugely desirable to marketers. I remember trying to sponsor its newsletter in 2016, and it was impossible to get a date because it was selling like crazy.
Unfortunately, competitors started to offer the same product, and Quartz began chasing high-growth pageviews like many publishers in those years.
But that’s precisely why this move makes sense from an advertising perspective for Quartz. Locking the site down in a quest to get subscriptions seriously interfered with its ability to grow its audience. This is the catch-22 of a paywall. On the one hand, you might generate subscriber dollars. But, on the other, some of your best content (aka, your best marketing) can’t be seen by readers.
Now, visitors can read everything. This provides ample opportunity to generate advertising revenue. But I would encourage Quartz not to chase low-priced, high-volume programmatic advertising. Instead, it should sell the narrative about its audience and take the less-is-more approach. Then, if my suspicion is right about the audience quality, advertisers will follow.
It is already taking the necessary first step by introducing the free membership. This will begin to give Quartz an email-first foundation for 1st-party data collection. If it continues leaning into this, it’ll know soon enough if its audience is highly sought after. If so, it should start to see revenue growth.
Is this ideal? No, I don’t think so. Many media companies would like to find a path to subscriptions. The recurring revenue is appealing for any operator. However, Quartz didn’t have a choice. Its core revenue business wasn’t growing. But, that doesn’t mean this business has to shrink. If its data is honest, it has a foundation of 25,000 who are paying for more than just the content. That might grow over time as it expands the top of the funnel. Only time will tell.
Pubs continue to struggle with programmatic
Marketing Brew (disclosure: I manage this) wrote a story about new research published by Adalytics, which found that “fees collected by intermediaries in the programmatic supply chain can vary widely.”
A “significant” amount of spend is going to vendors, not publishers. For a $10 ad bid, Adalytics found that, on average, up to 35% goes to the DSP and SSP.
In some instances, ad-tech companies received up to 98% (!) of an ad buyer’s bid, while the publisher—you know, the one that made the content and has the audience—only received about 2%.
In fact, the opacity of the industry makes it difficult for publishers to even check whether their own contracts with third-parties are actually being upheld, Franaszek told Marketing Brew.
The programmatic ad stack is truly opaque. This is why I increasingly suggest publishers move hard toward a directly sold ad business. But I think this also demonstrates why advertisers should be looking to move hard toward a directly bought ad practice.
Giving a DSP and SSP 35% of the CPM (not to mention all the other vendors) is unbelievably expensive. That 35% is money that brands could allocate to more advertising. Think about it this way: the advertiser pays $10 to get $6.50 worth of advertising on a publisher’s site. What if it cut out the 35% and paid $8 to get that same amount of advertising? Yes, the publisher is making $1.50 more for the same advertising, but the brand saves $2.
When spread out over billions of dollars, this sort of savings can positively impact a business’ bottom line. Paying ad tech vendors such a large cut is just bad business for advertisers. And that’s who is paying. Publishers will benefit from this sort of deal, but the real winner will be advertisers who have more buying power.
Now, I’m not naive. I recognize that there is a significant scale achieved by using programmatic pipes. However, this brings me back to my advice to Quartz in the previous section: sell direct. While it might be easier to use programmatic pipes, it’s okay to make the advertisers work a little harder if the audience quality is good enough.
AMO Podcast: Dan Runcie from Trapital
The latest episode of the AMO podcast is out, sponsored by Omeda! I speak with Dan Runcie, founder of Trapital, which covers the business of hip hop. Like Quartz, he made the controversial decision to get rid of his paywall and go completely free. We talked about why this was the right move, the types of ad products he offers, and how he as a solo-creator can push the business to evolve beyond just him.
Be sure to give it a listen on your podcast player of choice:
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