Sprouts of hope in a gloomy media landscape
This year looks bleak for the news business.
Facing a series of harsh financial realities – due to a mix of news fatigue, an unstable advertising market and a steep decline in traffic from tech giants – many outlets have been forced to close down operations or make significant cuts in recent months.
But there are some signs of hope. A small group of for-profit digital media companies that emerged during the pandemic have found success — at least for now — by taking the opposite approach of many predecessors, like BuzzFeed and Vice, which were fatefully dependent on huge amounts of investor money. to prioritize growth.
The new class of news startups – Puk, Punchbowl News, The ankle boot And Semafor are among the most prominent – have kept expenses low and hired carefully. They all focus on newsletters about specific niches with broad appeal. They have attracted top journalists by placing them at the heart of the company, sometimes as co-owners of the companies.
“There may have been a mismatch between financing structures and media companies ten to fifteen years ago,” says Jon Kelly, co-founder and editor-in-chief of Puck, whose fourteen reporters write on topics such as politics, finance and media. “And I think the entire sector has learned from that.”
These startups exemplify a shift in the conventional wisdom about how to make money through digital publishing. About a decade ago, many venture capitalists and top media executives believed that the then emerging class of digital startups could eventually dominate the sector. The large influx of investor money was deployed to pursue the largest possible audience.
But traffic from social media giants like Facebook and Twitter dropped, and the economic benefits of digital advertising didn’t add up. Predictions about the replacement of traditional TV networks or sprawling print empires have never come true. The most recent outlet to try out this playbook, The Messenger, shut down in January, less than nine months after launch.
The formula embraced by the new startups is instead sustainable growth, based on a mix of revenue sources including advertising, paid subscriptions and sponsored events. Rather than trying to reach everyone on the Internet, they have kept a narrower coverage line and focused on high-income readers, following a path more akin to the decade-old tech website The Information or the political outlet Politico.
“What they all have in common is this intense need to serve a specific audience rather than serve everyone,” says Jacob Cohen Donnelly, the founder of A media operatora newsletter about the media company.
Some of the other new companies gaining an early foothold include publications on the newsletter platform Substack, such as The free press And The stronghold, which has attracted tens of thousands of paying subscribers. Several employee-owned publications such as Defector And Hell Gate, show promise. And some older digital outlets, such as Vox mediahave survived by expanding into businesses like podcasting and cutting costs.
Founded in 2021 by three former Politico reporters, Punchbowl News aggressively covers Congress and has “in many ways become the home newspaper of Capitol Hill,” said Anna Palmer, a founding editor and chief executive. Now with 30 employees, Punchbowl publishes three newsletters a day and has extensively promoted the financial services industry. It wants to expand into other policy areas.
“What we’ve really focused on is not something that people might find interesting, but that they actually need to be able to do their work,” she said.
Punchbowl offers its morning newsletter for free, while a subscription to the other newsletters costs $350 per year. Access to Punchbowl’s policy reporting starts at $1,200 per year. The model is similar to Politico Pro (which starts in the low five figures per year), Axios Pro ($599 per year) and The Information Pro ($999 per year), those websites’ premium offerings.
Ms. Palmer said Punchbowl has been profitable since its first year, generating $20 million in revenue by 2023, although she declined to discuss subscription figures. A person with knowledge of Punchbowl’s finances said the company had already achieved 90 percent of its annual newsletter sponsorship goal in the first two months of this year.
The Ankler, a paid newsletter focused on Hollywood, is hosted by Richard Rushfield, an entertainment journalist who has emerged as Hollywood’s ruthless hordefly, chronicling the industry’s endless chaos and the actors, agents and executives responsible for creating it. examines it.
Ankler Media has raised $1.3 million at a $20 million valuation and has been profitable for more than a year, said Janice Min, the company’s CEO and founder, who previously led The Hollywood Reporter and Us Weekly. The Ankler now has seven employees and publishes several newsletters, including Wake Up, a Hollywood news roundup.
“If we want to make a Hollywood analogy, it’s like these growing franchises are multiverses,” Ms. Min said. “People like what we do and see our newsletters as an extension of the voice that may have attracted them in the beginning.”
Semafor is the largest of the group, with approximately 75 employees and ambitions to provide global news. But the company is treading a cautious path, says Justin Smith, one of the founders and CEO.
Semafor launched in late 2022, with 30 to 40 percent fewer employees than the original business plan called for, Mr. Smith said. The company decided to start smaller as interest rates rose and the economic outlook became bleaker.
“The pandemic really marked the transition from the social media era to what we call the post-social media era,” Mr. Smith said, noting that media outlets must now focus on direct relationships with their audiences.
For Semafor, this meant committing to newsletters that focused on a handful of topics, as well as the geographic areas of the United States and sub-Saharan Africa. Semafor now has more than 650,000 unpaid newsletter subscriptions, according to a spokeswoman. The outlet is hiring an editor in the Middle East and plans to add a newsletter focused on the region.
The company generates revenue from advertising and events and has a sponsorship deal with Microsoft for a global election tracker and news feed powered by generative artificial intelligence. Mr Smith declined to share specific financial figures for the company, but said it had a few profitable months in the last six months of 2023.
Of course, nothing in media lasts forever, especially in the rapidly changing digital world. So there is no guarantee that the early success of these companies will translate into sustainable growth.
Many of these startups are also taking a somewhat risky gamble on talent.
At Puck, the startup that covers topics like entertainment and finance, early hires include Matt Belloni, a definitive chronicler of modern Hollywood, and Julia Ioffe, who has established herself as a must-read on Russian politics , “founding partners.” In addition to a salary, they receive bonuses based on the number of people who subscribe to their email newsletters and how many of them stick around. New employees also receive a small ownership stake in the company.
Puck, which has approximately 40 employees, now has approximately 40,000 paying subscribers. Shortly after the company’s launch, Mr. Belloni accounted for about 30 percent of paid subscribers, according to a person with knowledge of the figures.
If one or more of the star journalists left the publication, would Puck’s subscribers follow?
Mr Kelly said he “didn’t even want to think about a world” in which one of Puck’s journalists left.
“We made a promise to everyone: You will do the best work of your career here, and we will find a way to make sure you are appreciated for it,” Mr. Kelly said. “And I really think that our model is actually becoming one of the moats of our company.”