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In praise of outside-the-box media business models
PLUS: How to take your subscription business to the next level
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In praise of outside-the-box media business models
It should probably surprise no one that I spend a significant amount of time each week studying media business models. It’s pretty much the bread and butter of what I do. When I’m not actually creating content, I’m either consuming news about the media industry, speaking to media operators on the phone, or tweaking my own media business.
Having spent thousands of hours doing this, I’ve found that the overwhelming majority of media business models fit into two main categories:
Selling access to content: This includes traditional paid subscriptions, ebooks, online courses, research reports, and tickets to live events.
Selling access to an audience: This includes traditional advertising, sponsored content, affiliate marketing, and live events sponsorships.
It makes sense why most media companies stick to these two models. The first involves taking something the company already excels at — creating content — and selling access to it. The second is a natural outgrowth of any business that aggregates large crowds of people in a single space.
But the reason these two business models are struggling is that the internet has made competition virtually limitless. Consumers are now bombarded with more content — both free and paid — than ever before in history, which has made it tremendously difficult to sell them access to even more content. At the same time, it’s relatively easy for even mediocre media outlets to amass large audiences, which diminishes the advertising demand for individual impressions. That’s why even super successful tech platforms like Google and Facebook have relatively low average CPMs, at least compared to print publications in the pre-internet age; their strength lies in their volume, not their revenue per consumer.
That’s why I’m most fascinated by the media businesses that engaged in outside-the-box thinking when they designed their revenue models. In most cases, these outlets launched products and services that are adjacent-but-separate to their core content offerings. In other words, they could technically spin off and operate these products as separate businesses. Let’s look at some examples:
Doug DeMuro is a 34-year-old car enthusiast who, in 2013, launched a YouTube channel where he mainly reviews cars. He eventually amassed over 4 million subscribers and 1.6 billion views on the channel.
For the first several years, he monetized the channel through traditional means, mainly advertising. But in 2020, he launched Cars & Bids, an online auction marketplace that makes it easy for people to sell their cars. Earlier this year, he announced a $37 million VC investment from the Chernin Group. By then, the platform had generated over $200 million in sales.
In a recent episode of Colin & Samir, DeMuro explained why he zigged where most other YouTubers zag:
It was constantly hitting me and weighing down on me that this YouTube thing isn’t going to work forever. Some day my audience would be like ‘we’re sick of this dude.’ And at some point the algorithm will swing a different way. You don’t have much control as a YouTuber. It hit me that I have to do something. I have to take the audience and bring them somewhere that I can monetize and turn into a real business.
Millions of people were already coming to DeMuro’s channel when they were thinking about buying a new car, so it only made sense that those same people would naturally be inclined to actually purchase that car through him. He was able to leverage his own audience and expertise to grow the platform, and he launched it by publishing a video where he auctioned off one of his very own cars. The platform was almost instantly profitable for him.
With the Chernin Group investment, he was able to hire a seasoned CEO who will continue to build Cars & Bids into its own separate company, and during the Colin & Samir interview he was already pining for the days when he’s no longer a public figure and can just benefit from the proceeds of this non-media business.
MeatEater is a media company that, according to its website, covers “hunting, fishing, wild foods, conservation and everything in between.” It produces everything from text content to YouTube videos to even a Netflix series.
Over the last few years, the company has gone on an acquisitions spree, buying up brands that cater to its audience demographics. Those companies include:
Dave Smith Decoys, an “industry leader in ultra-realistic hunting decoys and gear.”
First Lite, which “makes the best possible apparel for the hunter who demands nothing less.”
Phelps Game Calls, a “manufacturing leader in the wildlife call industry.”
According to Axios, the company is projected to generate $100 million in the next year and has been profitable since 2019. As for the companies it acquired, it’s reportedly doubled the size of their businesses, and according to Axios, “most of MeatEater's revenue comes from commerce sales via the brands it acquired, its online store and in-person retail.”
Talk about a company shielded from the vicissitudes of the media industry!
Maria Brito was a deeply unhappy corporate lawyer who started to get more and more involved in the art scene in NYC. Eventually, friends began to consult with her before purchasing art. Then in the late 2000s she quit her day job to become an art-buying consultant.
Over the next decade, she built a large online audience, first through her blog and then later on Instagram. And while she does monetize through some traditional channels like sponsorships and book sales, she mostly focuses on leveraging her following to generate new clients for her art-buying business. Here’s how she explained her logic to me in an interview:
“I get emails every day from people who want me to promote things, but I’m not interested in making $1,000 for a dress I have no interest in wearing.” … Brito makes far more money from an art consulting client than any Instagram brand deal, hence why she doesn’t take on many sponsorships. “I don’t eat off of Instagram. Although it’s funny because I may eat off of Instagram when you consider all the deals that I’ve done through the DMs.” In fact, she’s grown frustrated with the platform’s DM filters, which have made it increasingly difficult for her to receive messages from potential art buyers.
What’s so fantastic about the business is its scalability; because she takes a percentage of each art sale, she’s been able to build a 7-figure company through a relatively small number of high-wealth individuals. And because her overhead is incredibly low — she’s able to create the content and make the purchases herself — it’s pretty much all profit. She’s squeezing out more revenue per Instagram follower than virtually any other influencer on the platform.
One of my favorite media businesses of all time is Bloomberg LP, mostly because its media arm is secondary to its main revenue driver: the Bloomberg Terminal. This high-priced product is vital to price-insensitive Wall Street companies, and the media arm serves as a moat to shore up the core business and ensure that its brand remains top-of-mind.
FreightWaves is similar in that it built up an audience around an incredibly valuable industry — logistics — and then leveraged that audience to launch data products that service the industry. Its SONAR platform, for instance, serves customers “price, demand, and capacity data [that] spans across all modes to allow logistics leaders to benchmark, analyze, monitor, and forecast the global physical economy.” Not only is it extremely valuable to any company that deals in logistics, but it also appeals to Wall Street investors that want to monitor these markets in real time in order to make their investment decisions. The company reportedly charges $7,500 a year for access to the platform.
While these are amazing businesses, I should definitely acknowledge that product development isn’t simple. Part of the reason that so many media companies stick to just two business models is because those models cater to their core competencies. Most simply don’t have the capacity or skillsets needed to launch non-media verticals, even if those verticals exist within the same niches they cover.
But the companies that do figure this out are poised for huge growth over the next decade, much more so than most of the VC-funded media outlets of the 2010s. If there’s anything we’ve learned over the last several years, it’s that building a large audience is relatively easy. Creating something the audience actually values — and is willing to pay for — is the hard part.
What do you think?
Are there any creative media business models that you admire? Have you ever tried selling a product of your own to your audience? How did it go?
I actually want to read your thoughts. I’ll round up your answers in this Friday’s newsletter. Click this button to sound off in the comments:
How to take your subscription business to the next level
Of all the media revenue models, subscriptions can be the most tricky to execute well. There are just so many variables at play that impact a publisher’s ability to succeed. You have to figure out what to place both in front of and beyond your paywall, how to price your subscription, how to convert free readers into paid subscribers, and how to reduce your churn.
And that’s just scratching the surface. Getting one of these variables wrong can mean all the difference in determining whether a subscription business succeeds or fails.
That’s why I convened a panel of experts to dive into the nuances of subscription economics and identify the strategies that will increase your chances for success. They included:
Peter Ericson, CEO of the Leaky Paywall subscription platform, which helps publishers seamlessly build their audience and grow paid subscriptions
Michael Donoghue, CEO of Subtext, a platform that allows publishers to send text messages to their paid subscribers
Jane Friedman, founder of The Hot Sheet, the most successful paid newsletter that covers the book industry
Randy Cassingham, founder of This is True, possibly the world’s first paid email newsletter
You can watch our discussion in the video embedded below:
If video embeds don’t work in your inbox, go here.
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The New York Times has managed to double paid subscriptions to The Athletic since acquiring the company. Makes you wonder if it's setting its sights on acquiring more niche media companies that it can incorporate into its growth engine. [NYT]
"In the last year, Twitter made up 75% of social-media traffic to OnlyFans, according to data from SimilarWeb." [Insider]
It's great that competitive pressure is forcing all the major tech platforms to get more serious about sharing revenue with creators. That being said, it's annoying that the revenue sharing is wholly concentrated on video. Why are video creators superior to writers, photographers, or artists? [Bloomberg]
A lot of these results would be difficult to replicate since they depend on a combination of niche, timing, and luck, but it's always fascinating to read about bootstrapped media businesses that scaled up extremely quickly. [Growth in Reverse]
Speaking of outside-the-box business models, this is an interesting strategy here. It’s pretty common for B2B publishers to launch job boards, but recruiting agencies? [Matt McGary]
Brandi explained how she grew a large following on Facebook and used it as a launching pad for her independent career. She also told me about her efforts to expand beyond local news and into national politics.
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