Why I’m betting against CNN+

It was a huge strategic blunder to not roll CNN up into HBO Max.

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Why I’m betting against CNN+

The first question comes from Sonya Mann:

Whose current strategy would you bet against right now? Or, to soften it a bit, whose strategy seems inexplicable or bizarre from the outside. Broad question, could be a type of company or a specific example

Ooh, this is a good question. I’m going to keep it interesting by betting against a media platform that hasn’t launched yet: CNN+.

First let’s start with some quick background: CNN announced its upcoming streaming app back in July of last year. Though the initial plan was to incorporate CNN programming into HBO Max, the powers that be – i.e., Jeff Zucker – decided that the CNN brand was strong enough to prop up its own subscription service. CNN+ is likely to launch in March and be priced at $5.99 per month. It will carry exclusive shows hosted by broadcast news stars like Chris Wallace, Anderson Cooper, and NPR’s Audie Cornish. Insider reported that it plans to hire over 450 people to staff the service.

So why am I betting against CNN+?

First, I think it’s a huge strategic blunder to separate it out from the main HBO Max app. If there’s anything we’ve learned in the Streaming Wars thus far, it’s that the size of the video library matters, both in terms of attracting and retaining subscribers. That’s the reason why Netflix spends billions every year commissioning new shows/movies and also why Apple+ has struggled to gain market share.

HBO Max already has a great mixture of highbrow and lowbrow scripted content, and CNN would have injected a nice dose of reality programming to round out the bundle. The coming integration with Discovery+ —once the merger closes — would only improve the library further.

Instead, I think Zucker seriously overestimated the general public’s brand affinity toward CNN. In the announcement, he predicted that CNN+ would appeal to “CNN superfans, news junkies and fans of quality non-fiction programming.” But over the past decade it’s become clear that CNN generates the most appeal during huge breaking news events. Those are the only times that it consistently outperforms competitors like MSNBC and Fox News in the ratings.

But huge breaking news events are few and far between. Most nights, CNN features a series of talking head panels that sift through the boring political news that emanates out of Washington. In other words, it’s not very differentiated from what appears on other cable news programs, not to mention thousands of podcasts and YouTube channels. CNN’s success is tied to its inclusion in the cable bundle, where it can be easily turned to when someone is waiting for a favorite show to start. It serves as a sort of ambient music that plays in the background at doctors’ offices and airports.

It’s for that reason that I don’t think that it will succeed in a crowded streaming market. Reality TV programming doesn’t attract paying subscribers, at least not by itself. That’s why Discovery+ has posted disappointing subscriber numbers. While Netflix has invested heavily in reality TV and docuseries in recent years, they mainly serve as low-cost video inventory that increases the stickiness of the entire bundle.

Also, CNN doesn’t have a great track record when it comes to web-native video content. It received a lot of early praise for its Great Big Story studio, which produced some stellar documentary videos on YouTube, only to shutter it in late 2020 after failing to find a viable business model. The same thing happened with Beme, the video startup CNN acquired from Casey Neistat for $25 million.

Don’t get me wrong; I think CNN has a good brand, and its digital news site regularly pulls in huge traffic numbers. But that’s for free content that’s accessible on the open web. I remain extremely skeptical that millions of people will pony up $60 a year in exchange for political opinion shows.

How small publishers adapted during COVID

From Shane Greer:

I'd love to know more about how small publishers/media businesses are adapting the changing ad market/event operating environment. To put that into a question, maybe 'How have small publishers adapted during COVID?'

There's a lot of info about how large media businesses are pivoting/investing etc. But it's very difficult to find out what small companies, without deep pockets or access to cheap capital, are doing.

As you’re probably aware, I interview a lot of media entrepreneurs for my newsletter and podcast, and the vast majority of them run bootstrapped businesses. Many of those interviews focused on this very topic. Let’s run through a few of them.

WhereByUs

WhereByUs operates daily newsletters across several cities, and pre-pandemic the business relied heavily on sponsored, in-person events. Founder Christopher Sopher told me that the business adapted by turning to the community for support. Here’s what he had to say:

We do a freemium model. We have the daily newsletter that is free for everybody, and then if you become a member, we do a special content section in each newsletter that's just for members. And then we do different kinds of virtual events and giveaways and programming for members. There was, frankly, a lot more happening around the membership program before COVID, and we're excited to get back to that. But we used to do a lot of events, a lot of meetup tours. A lot of it was about helping the local community explore the city. We had to move a lot of that virtual, but we actually saw our membership more than triple in 2020, because we went out to the community and said, ‘Hey, this membership program is really important right now, given COVID and the state of the advertising market.’ We saw a ton of growth and support from our readers through that membership program.

Check out the entire interview here: How WhereByUs scaled its local newsletters to multiple cities

Daily Detroit

Daily Detroit is a podcast helmed by local journalist Jer Staes. Pre-pandemic, he relied almost entirely on local advertising. Here’s how that changed:

After the pandemic shutdowns, Daily Detroit’s advertising revenue cratered. It didn’t take Staes long to launch a Patreon account and turn to his audience for help. “I explained that the podcast is supported by members, and that local content requires local funding,” he said. Though he offered some rewards for subscribing — branded stickers and glasses, mostly — he kept nearly all the content free. “People were insanely generous. Like we had people who started becoming members at like a hundred dollars a month.”  

With the economy coming back to life, advertisers have started to return … The memberships, though, are here to stay, because Staes likes having the direct connection to the community. “One of the guys who became a member, we actually helped him reunite with his long lost father. He was a guest on the show and his father found him because of it, and they reunited for the first time in like two decades.”

I also think Staes benefited from the intimacy of podcasting, which helped him establish a strong brand affinity with his audience. My suggestion would be to lean into podcasts as a way of converting your audience into paid members.

Check out the entire case study over here: Daily Detroit is proving there’s a market for local podcasts

Autonomy & the Urban Mobility Summit

Ross Douglas runs one of the biggest European trade shows for the urban mobility industry, and the pandemic basically destroyed his entire business overnight. “It was fucking dark,” he told me. “It was really, really hard.”

Luckily, he had been running a weekly newsletter for several years, and he used it as a launching pad for a virtual events business. Here’s how he leveraged it:

Douglas never monetized the newsletter directly, and for most of its existence it didn’t tie in much to the business. That all changed in the age of Covid. After he canceled the November trade show in March 2020, he immediately set about pulling together a digital counterpart, one that he could market to his ever-expanding online audience …

… Douglas is the first to admit that this digital trade show is nowhere near as alluring a physical one. One of the main draws of in-person trade shows is that you get to travel to a fun city and eat out at restaurants and charge your bar tab to your company. He didn’t know if there was much of a market out there for what was essentially a much less exciting Zoom-a-thon.

But that’s where he benefited from having an intensely loyal newsletter audience; he had direct access to the people who were most passionate about urban mobility — the very people who were still eager to attend a less sexy virtual event. The newsletter was, by far, the most effective marketing channel for driving signups.

So what results did Douglas see? Well, the November trade show drove around €300,000 in revenue — much less than the €1.5 million from the year before, but he had much lower costs. For next year’s trade show he’s already on track to generate €450,000. He also drove upwards of €50,000 in revenue by producing sponsored webinars and white papers throughout the year.

Check out the interview over here: How a trade show’s newsletter saved the company during Covid

LendIt Fintech

LendIt Fintech was another events-based company that was caught flat-footed by the pandemic shutdowns. It immediately shifted from putting on only one or two physical events a year to hosting multiple webinars per month. Here’s how co-founder Bo Brustkern described the strategy:

By the time Covid hit, LendIt Fintech had built up an email list of 35,000 industry players, and it had a deep back bench of contacts with leaders in the space. So Brustkern’s team began pulling together regular Zoom panels with subject matter experts, promoting the panels via the list. “We’d assembled a panel, we’d find a sponsor for it and charge the sponsor between $10,000 and $15,000 for the leads.” Attending the event was free as long as attendees handed over their contact information, which LendIt Fintech would give to the sponsor (lead generation is a common media business model).

Though the panels are available for watching on-demand, the vast majority of viewership is live. “All the things that you would normally expect from a normal conference, we did our best to reproduce that experience and do it completely virtually,” said Brustkern. “You join them, you interact, you ask questions of the experts during the Q&A, you chat with other attendees in the Zoom.”

Since launching their first virtual event in April 2020, LendIt Fintech has hosted over 100 of them. Their most popular webinars are attended by a few hundred people, which might not sound like many, but the narrow industry niche makes that audience size extremely valuable to sponsors. “The next step for us, I think, is to just dial up the frequency and amount of original content, and dial up the production quality,” said Brustkern. “And all of a sudden we're going to look like, you know, Fintech TV.”   

The company also launched a paid subscription product that costs $595 a year (or $65/mo) and had converted about 1,000 subscribers by the time I spoke to Brustkern early last year. “Subscribers get access to virtual panels that are unsponsored and dreamed up by our content team,” he explained. “Let's say there's some sort of breaking news within our industry. We won’t just write a blog post about it. We'll get the subjects of the news on a 45-minute interactive, virtual panel and ask them about the real impacts of the news and tear into it a little bit deeper.”

Check out the full case study over here: How a leading fintech events company pivoted to virtual events.

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Quick hits

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It's good to see that Tumblr is experiencing a bit of a renaissance now that it's been unshackled from its Verizon overlords. [New Yorker]

A fascinating story of how a group of UK teenagers created a viral news Twitter account that eventually got banned. [Vice] From the article: "This was a group of teenagers with too much time on their collective hands; of course they couldn’t be entirely trusted."

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Netflix has long avoided competing for expensive sports streaming rights, but it's started to invest heavily in sports docuseries, which are much less expensive to produce. [Bloomberg]