April 14, 2020

When Bundling Leads to a Greater Audience and the Birth of New Media Companies

It’s never been easier for an entrepreneurial writer to decide to go out on her own and own the means of her production.

This started back in the 2000s when blogging was taking off, but appears to be picking up steam with the rise of platforms like Substack. Journalists who originally worked at traditional publications are bailing so that they can launch their own paid newsletters, believing the grass is greener on the other side.

None of this should surprise anyone, of course. For years, media companies have viewed writers as liabilities. It’s a cost center on the budget that, with some fancy financial machinations, maybe you can trim a little here or there. I’m not talking about COVID-19 here and the fact that revenue is drying up. I’m talking about the fact that those that are producing the content the audience consumes are always thought of as an expense worth cutting.

Let’s compare this to tech companies. The people who create the goods—the engineers, designers, product managers, etc.—typically are incredibly highly paid and have a stake in the business. At a media company, the journalists are the lowest paid people even though they create the goods.

Nevertheless, we are seeing a rise in these independent, writer-owner publications that are not only gaining a following, but are also earning quite a pretty penny. And to be clear, it’s not hard for one of these writer-owners to make a living when you consider that they were originally earning anywhere from $30-40k a year working for a publisher.

However, there are trade offs to going on your own. In my piece about the benefit of a media company, I wrote:

Let’s not forget the value of an editor. I’m fortunate my girlfriend is, for some reason, willing to edit each and every one of these pieces. Imagine what the copy looked like before she got her hands on it. As a solo writer, though, you’re the editor.

It doesn’t stop there. As the owner of a solo newsletter, you have to do everything. You’re writing, doing audience development, sales, finance and the list goes on. But at a media company, you get to focus on one thing specifically.

Not to mention, you also have to be responsible for consistent production. At a company with a larger team, a journalist can take some time to dig into a story. Here at A Media Operator, I have a few deep-dives I would love to write, but they take time and I’ve got a production schedule that says I need to publish twice a week.

One part that I didn’t really spend much time discussing, but I want to dive into here, is audience development. When you’re a solo writer, you’re doing it all on your own. Your growth is dependent entirely on you. If you write a good piece, then you’ll grow. If you flub on a piece, you probably won’t grow that week. It happens.

Another issue, and we don’t yet know what this looks like, is that people will reach a point of not wanting to pay for another subscription. I’ve now subscribed to three newsletters here on Substack. How many more subscriptions before I decide I am spending too much? It’s probably not a concrete number and, if the multitude of streaming platforms have taught us anything, people will pay for content. But it’s still something to consider.

Dan Shipper and Nathan Baschez authors of separate Substack newsletters, are trying to solve for that problem by launching a Superorganizers & Divinations hacked together bundle. In the about page, they wrote:

Pulling off a bundle on Substack is somewhat clunky, because it’s not technically supported yet. But we’ve hacked together a solution that we’re pretty happy with.

We created a new Substack publication (you’re looking at it) that has copies of all Divinations and Superorganizers posts. Any time we create a new post, we’ll post a copy of it there.

At the end of each week, we’ll send a digest email to all subscribers of everything.substack.com. It’ll link to all the posts we published that week. 

If you had signed up for each newsletter separately, you’d have paid $28.40 a month (and Divinations increases to $20 a month from $13.40 in year two). By signing up for both newsletters, you can get a single subscriptions for $20 a month. Same great content, but as a user, you’re saving $8.40-$15.

They believe that they will be able to get far more subscribers together than they would separately. The argument does make sense. How many people that currently subscribe to Divinations would be willing to spend $6.60 more to get Superorganizers as well?

On a per-subscriber basis, they’re both earning less money. There’s no denying that. However, their theory is that 1+1=3 when it comes to getting subscribers. More content means more opportunity for people to be enticed to sign up. Using real numbers, separately they might have two newsletters that earn $100,000 each, but together, could they have one that earns $125,000?

What if five writers teamed up? They don’t cover the exact same thing, but each one is tangentially related to the other, providing a broader ecosystem of content than any one of them could write. Could five six figure writers turn into a million dollar publication? I believe this is an exercise of the sum being far greater than the parts simply because there is more value for the reader, so they’re more willing to pay.

They’re early numbers, but the merit of a bundle is interesting:

But if you ask me, the bundle is really just the beginning of something like this. For companies that want to stick to just subscriptions, a bundle makes sense. What happens when they decide they want to be fully diversified like every other media company?

Suddenly, the bundle morphs into a new media company, which we will call Everything Media Inc. I could see a future where Dan and Nathan launch events (perhaps virtual to start). If they spin up podcasts, would those get sponsored? This will require staff. Editors, designers, operations, sales and various other roles are hired and, suddenly, you’ve got a new media company.

This time, though, the writer is the owner.

I’ve argued before that incentives are misaligned in media and that needs to be rectified. The people that are producing the goods that audience wants can’t receive the least amount of reward. The best producers are going to realize their value.

So what do you do if one of your all-star reporters decides they want to leave? I would encourage flexibility and partnership. In my 2020 predictions, I wrote:

The second path, which I would love to see, is established publishers starting to incubate these newsletters. If your top journalist comes to you and says she’s going to leave because she want to launch a paid newsletter on Substack, wouldn’t it be better to try and keep her and her newsletter?

Essentially, you’d be going into business with an employee. The newsletter becomes almost co-owned by the media company and the journalist. The journalist provides the expertise and the writing; the publisher provides the operational support and a far larger audience. You split the revenue.

It’s not guaranteed that this would keep that all-star reporter at the company, but a media brand has a much larger audience aggregated across the entire team of journalists than the individual. Therefore, launching a paid newsletter within the company could be a faster path to profitability for everyone than going solo.

I believe there are two probable outcomes over the next few years.

  1. The smartest publications will become a bit more flexible and partner with their best employees to create premium products where incentives are aligned across the board.
  2. Multiple solo writers will realize there is merit in media companies and will band together with other producers to create new companies.

I find #2 to be very appealing because you’re bringing two bootstrapped writers together, so these media companies will be built on a strong foundation versus a lot of last decade’s digital media VC companies.

Anyone want to bundle with A Media Operator?

People say they want to pay

To support this overall claim that bundling is a positive, we need to actually know that people are going to continue paying for content. The World Economic Forum released an interesting report a couple weeks ago. One part jumped out to me:


In the United States, according to consumers, only 12% currently pay, but upwards of 45% say they’re willing to pay for news content. From the report:

Furthermore, in all six countries, the proportion of people saying they would be willing to pay for media in the future is greater than the proportion of people who currently pay. For news, 53% would be willing to pay in the future – a significant leap from the 16% who pay today. In China, 87% of consumers say they would be willing to pay for entertainment in the future, and 79% say they would pay for news. Meanwhile in India, 87% would pay for entertainment and 67% for news, up from about a quarter for each today.

This raises the question of what it will take to convince users to start making payments. One factor may be trust: The greater willingness to pay in India and China goes hand in hand with data showing that these consumers trust content from paid sources to be of higher quality compared to free media.

One possibility to explain China, in particular, is how easy it is to pay for things there. The ease in which someone can open WeChat (or one of the other platforms) to pay for something is unprecedented. Now compare that to paying for something in the United States. It takes far longer and we ask erroneous questions on sign up pages.

Nevertheless, we are seeing a resurgence in media trust. Subscriptions are up. According to a report from Sara Fischer at Axios, the types of publications that are getting the bulk of the traffic during COVID-19 are those that we would expect:

Consumers are looking to local and national outlets with authority to understand the impact of the virus on their health, the economy and their communities. This is different from the past few years, when hyper-partisan publishers dominated engagement on Facebook.


Ultimately, it’s only one report from the WEF and dollars speak louder than words, but I remain convinced that people are going to learn the importance of paying for news because of this crisis. If that’s one silver lining, I’ll take it.

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