Appeasement and EBITDA

The parts of journalism that you love to forget

I miss Grantland.

A quick plug for the time I wrote about the demise of Deadspin (blog version).

I wonder who leaked this:

Spotify Technology is in talks to buy sports and pop-culture outlet the Ringer, according to people familiar with the matter, a deal that would let the audio streaming giant break into broader digital media and bring a network of more than 30 podcasts under its roof. Discussions are early, these people cautioned, and may not result in a deal.

The Ringer podcasts seem like a pretty natural acquisition for Spotify, which also acquired Gimlet Media and others, to the tune of $400M in 2019. Spotify has high margins on podcasts (no recurring costs) whereas song streaming has insane recurring costs and low margins. Ben Thompson managed to call Simmon’s pivot to podcasts as a valuable revenue stream perfectly in 2015, as well as note the value of lead gen to HBO. The Ringer did publish a lot of posts about HBO series, which might have had positive ROI (I have never heard of any numbers from them), so the man was completely correct here. Good predictions!

The rest of The Ringer which isn’t a podcast probably won’t integrate well with Spotify, though. Predictably, The Ringer Union is unhappy.

I really do miss Grantland - at its best, the site was creative, funny, provoking, and inspiring with how it approached sports and pop culture. ESPN shut down the site, eventually, probably because the site was never profitable and Bill Simmons criticized NFL commissioner Roger Goodell, a person which ESPN preferred to keep happy. To expand further on them:

The site wasn’t profitable: Grantland primarily ran longform articles (and shorter blog-like things) and aimed to make money off of ads, I think? It really wasn’t ever clear how they were going to make money, let’s just put it that way. Sports content has broad appeal, pop culture, by definition, has broad appeal - all great for advertisers. But Grantland took a niche approach to that content, and while people like me, who overthink things and write newsletters for fun, loved it, the majority of Americans didn’t. Most display advertising is an eyeballs game and even if your eyeballs are rich and focused, they might not be worth enough in aggregate to make the economics work out. The Ringer has found profitability (or something close to it) by mostly avoiding longform content - it’s video (high CPM) and podcasts (surprisingly high CPM given the lack of attribution) which drive their content. I see echoes of Grantland in The Athletic, where quality sportswriters are able to create deeply researched, longform content because their readers pay them for it.

Bill Simmons annoyed ESPN because Bill Simmons annoyed Roger Goodell because Roger Goodell annoyed Bill Simmons because Bill Simmons: ok, Simmons can be an annoying dude. I say this as a Boston sports fan, and I can barely imagine what the guy is like if you didn’t grow up in Massachusetts. Also, ok, Goodell unquestionably sucks. But ESPN is a big company which depends on the goodwill of the NFL and the other leagues to operate. If ESPN criticizes the NFL (say, for overlooking domestic violence or for covering up the concussion epidemic), the NFL can give more exclusive partnerships to NBC or CBS or Fox Sports. Publications which depend on support from their readers can fund stories which advertisers or other entities might enjoy.

I think those two reasons are good segues into the other two points I have today.

Content subscriptions can be profitable.

One way to think about business is that there are only two ways to make money, bundling and unbundling. I talk a lot about companies which are successful in unbundling content, such as Patreon, Substack, and Twitch - you subscribe to individual subscribers you love rather than a platform of stuff you can tolerate. So let’s talk about the companies who are successful by bundling.

The Athletic would like you to know that they are profitable and raised $50M at $500M post-money. Additionally, The Information announced a profit, as did Business Insider and Politico, all of which get large amounts of revenue from subscribers, beyond just advertising.

Of those, The Athletic and The Information are subscription-only, while the others have non-trivial amounts of revenue from advertising.

The Outline, The Verge, The Undefeated, etc. Is the moral here, “name your subscription publication ‘The {Noun Or Adjective}’ if you want to be successful”? The Cardigan, a subscription-only fashion mag; The Converged, a machine learning publication; The Sparkling, a seltzer journal.

Anyways I do have a quibble here with the report that “80% of Athletic subscribers stay past one year.” How do you define that number? Is it conditional on having started a subscription a year ago? The Athletic has been pretty aggressive about running discounts over the last year, so I would expect that the newer cohorts are lower intent readers who will have higher churn rates after their discounted rates expire. Yeah, I’m probably being needlessly pedantic, but my job title is officially “data scientist” so it comes with the territory.

Are reporters “groomers”?

Well, I probably wouldn’t have phrased it this way:

Quibi CEO Meg Whitman lashed out against the media at an “all-hands” staff meeting last Thursday, drawing an analogy between reporters who cultivate sources and sexual predators who prey on underage victims, according to two people who heard her comments.

Whitman, a veteran tech executive who once ran for governor of California, made the comments while noting that someone had leaked an internal memo from the company’s chief financial officer about a recent fundraising. The Information reported on the memo on Jan. 10. She expressed frustration about the leak.

Ah, yes, the classic move of “you know there’s a leaker, and you get mad, and you say pretty unsavory things, and the leaker leaks it again.” Really, what more could you expect from a person who was CEO of eBay and HP and also tried to run for probably the highest profile governorship in the country.

I am told that day one of management consulting training, they tell you, “don’t put anything in writing that you don’t want to see on the front page of the New York Times.” Let’s amend that to also include, “if you know your comments are being leaked, don’t even say things out loud that you don’t want to see on the front page of the New York Times.”

Look, I, like Meg Whitman, actually dislike most tech reporters too. Mostly not on a personal level, but because the power dynamics and incentives in tech reporting push reporters towards writing puff pieces in exchange for access - to companies. This dynamic has started to change recently, but there are plenty of tech-specific outlets where it’s easy to give a reporter an “exclusive” and get a non-critical writeup. Chomsky wrote about this dynamic back in the 80’s, detailing how the US government used the news outlets as propaganda, using access as leverage over the outlets, and that same dynamic is at play here.

Axios is a good example of a very corporate-friendly outlet (as is Politico, which it grew out of), but many of the other subscription-heavy outlets are able to break really interesting news: The Information, of course, broke the Meg Whitman news, and The Athletic broke the Astros sign-stealing scandal, just to name a couple.

This dynamic is strongest when publications are doubly beholden to companies for scoops and for advertising dollars. The capability for reader-funded journalism and publications to speak truth to power without worrying about the ad sales team really excites me and I think is an opportunity to fundamentally change the public conversation in this country.