Jan 29, 2019

The future of media is niche, and beware raising too much from VCs

Illustration: Axios Visuals

The future of publishing belongs to those that focus on niche areas partly because the internet has reduced distribution costs to zero, according to Ben Thompson, author of the daily tech and media analysis note, The Stratechery.

Why it matters: We're seeing examples of that play out in real time, with niche publications touting success stories based on the loyalty of hyper-fans.

What's happening: Thompson argues in his email to subscribers that the recent layoffs at BuzzFeed underscore this point...

"Success used to come from being broad-based with a geographic monopoly. The content of the vast majority of newspapers was largely duplicative (as the success of the wire services proved). On the Internet, though, success comes from being narrow while reaching the whole world. It is the exact opposite."
  • The Ringer, for example, announced in a WSJ interview Monday that it has $15 million per year from podcasts, accounting for most of its revenue.
  • Politico recently announced that it has more than doubled in size over the last 5 years, growing revenue from $52 million to $113 million in 2018, much of which is subscription driven.
  • The Athletic, which was recently valued at over $200 million, has well over over 100,000 paid subscribers.
  • Other publishers are focusing on creating networks of smaller, niche brands that can leverage the resources of holding companies, but still command their own audiences, like The Cut and Vulture at New York Media, or Eater and The Verge at Vox Media.

Yes, but: For all the success stories, there are plenty of other failures. Not all niche publications get it right, but for those that do, audience development, especially through subscriptions, is more consistent and stable.

Thompson argues that the internet economy puts broad-based, commoditized media companies at odds with tech platforms that are astronomically bigger — a losing strategy.

  • He says that some large digital media companies, like the New York Times, are a rarity because they have 150 years of branding to garner broad-based commercial support.

Between the lines: Thompson notes that being narrow does not usually equate to driving high return rates expected by venture capital backings. (Many media companies are backed by venture capital.)

  • He therefore says that being niche is at odds with raising venture capital money.
  • BuzzFeed raised an unusually high amount of money for a digital publisher, $500 million.

Our thought bubble: Just don't raise too much.

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Coronavirus dashboard

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  1. Global: Total confirmed cases as of 10 a.m. ET: 618,043 — Total deaths: 28,823 — Total recoveries: 135,736.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 10 a.m. ET: 104,865 — Total deaths: 1,709 — Total recoveries: 894.
  3. Federal government latest: President Trump signed the $2 trillion coronavirus stimulus bill to provide businesses and U.S. workers economic relief.
  4. State updates: A group of Midwestern swing voters that supported President Trump's handling of the coronavirus less than two weeks ago is balking at his call for the U.S. to be "opened up" by Easter. Alaska is latest state to issue stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month.
  5. World updates: Italy reported 969 coronavirus deaths on Friday, the country's deadliest day.
  6. Business latest: President Trump authorized the use of the Defense Production Act to direct General Motors to build ventilators for those affected by COVID-19. White House trade adviser Peter Navarro has been appointed to enforce the act.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancing.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Coronavirus updates: World case count tops 600,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

Japanese Prime Minister Shinzo Abe warned that the novel coronavirus pandemic could worsen if people fail to take the appropriate containment measures, at a news conference in Tokyo.

The big picture: The U.S. leads the world in confirmed coronavirus cases, as the number of global cases nears 615,519. Governments around the world are trying to curb the medical and financial fallout of COVID-19, as infections surge across Europe and the U.S.

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