Welcome! I'm Simon Owens and this is my media industry newsletter. If you've received it, then you either subscribed or someone forwarded it to you. If you fit into the latter camp and want to subscribe, then you can click on this handy little button:
Let’s jump right into it…
David Kushner's Masters of Doom is considered one of the most influential books about the gaming industry, and now he's using a Substack newsletter to publish its sequel.
But is there a viable business model for this type of serialized publishing?
Media companies are pivoting back to free content
As someone who writes a lot about digital subscriptions, I sometimes go back and read the early media coverage of The New York Times’s digital paywall. Launched in March 2011, it served as the catalyst that kicked off a veritable subscription boom among news publishers. Before then, people seriously wondered whether consumers would pay for digital news, but it didn’t take long for the entire publishing industry to change its tune once the Grey Lady announced several subsequent quarters of impressive subscription growth. Within a few years, nearly every newspaper — both national and local — was operating its own metered paywall.
When I reread the Times’s 2011 paywall announcement, the thing that jumped out to me the most was the number of free articles readers could access before triggering the paywall: 20. That number just seems so insane to me now, given that no current-day paywall is that generous.
In fact, paywalls got considerably more restrictive over the next decade. Publishers started by reducing the number of free articles, to the point that it’s now common for a paywall message to pop up after only three visits to a news website. They also cracked down on users who tried to dodge the paywall, first by blocking use of Chrome’s incognito mode and then by rolling out strict registration walls that required readers to be logged in to access their allotted free content. By the turn of the decade, it was extremely difficult to navigate the web without hitting some kind of barrier to the content you were trying to access.
But the longer you spend in publishing, the more you realize everything is cyclical, and over the past few months we’ve started to see signs that media companies are rethinking their paywall strategies, and in many cases are giving users access to much more free content than was previously available. Here’s a sampling of how this “pivot to free” is manifesting:
Quartz announced several weeks ago that it was doing away with its website paywall entirely, and is instead focused on building its membership base through a small number of member-only newsletters.
The Independent, a newspaper located in the UK, just launched a new update to its app that makes it available to nonpaying users. “We need to make sure that we’ve shored up the ad generation aspect of our business but also diversified commercially to lessen the risk to the business,” its CMO told Press Gazette.
The LA Times published a big piece recently about the rise of free, advertising-supported streaming apps like Tubi, Pluto TV, and FreeVee. Their growth is apparently outpacing more established brands, and their increasing popularity comes as Netflix’s subscription growth is stalling out.
When NBC News built its own streaming service, it eschewed a subscription model and is reportedly profitable from its ad sales alone.
More and more publishers are installing “dynamic” paywalls that allow them to establish rules that apply to different kinds of content. The Globe & Mail’s paywall, for instance, designates certain kinds of content as permanently free, no matter how many times a user has visited the site. Outlets like Insider and The Washington Post place large swaths of articles in front of their paywalls.
So what’s driving this sudden excitement for free content? I think there are two factors at play here:
As I detailed in my piece titled “an industry-wide slowdown in subscription growth,” I think many publishers’ subscription products have reached a maturation point at which it’s becoming extremely difficult to convert newer readers into paying subscribers. They’ve restricted their paywalls so much that it shrunk their sales funnel, and users are hitting paywalls long before they’re ready to convert. By loosening their paywalls, publishers are hoping to establish daily habits with their more casual readers, which will then hopefully lead to more paid subscriptions further down the line.
I also think publishers are realizing that they were too quick to write off advertising as a source of growth. At a certain point in the mid 2010s, resignation set in that the Facebook/Google duopoly was unbeatable and the only path toward publisher sustainability was to double down on reader revenue. Flash forward to today, and Facebook is severely damaged by Apple’s privacy policies and suffering from stalled user growth. Meanwhile, the pandemic-era shift to ecommerce has led to record advertising sales for many publishers. As it turns out, there are still plenty of brand marketing dollars up for grabs, especially for publishers that have prioritized the capture of first party data. That’s why Dotdash has been one of the most profitable digital media businesses to emerge in recent years.
At the end of the day, paid subscription models were never a silver bullet, and the most successful media businesses are those that prioritized diversification. Even The New York Times, arguably the world’s most successful digital subscription publisher, has invested heavily in models ranging from ecommerce to live events to podcasts. Reader revenue plays an important role to any media outlet’s business strategy, but it should rarely be the only one.
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Quick hits
Bloomberg reports on white noise podcasts that are hugely popular. [Bloomberg] I'm someone who listens to 8 hours of rain noise a day on YouTube to drown out the sound of my wife's work phone calls, so I certainly see why there's a market for this.
Apparently some small publishers are having success leveraging Australia's new bargaining law to extract revenue from Google and Facebook. I'm still hugely skeptical of these laws and what they mean for both creators and fair use. [Press Gazette]
"White’s research kept bringing her back to one conclusion: Web3 was filled with a litany of scams, failures and frauds meant to separate regular people from their money." [Washington Post]
"As local news media has disappeared 'pink slime' outlets ... have taken their place, relying on low-cost or automated content repeated across sites, and eschewing basic journalistic practices." [Can We Still Govern?]
The Economist made an early bet on podcasting, and its shows are now being listened to by 3 million people per month. "The publication now employs approximately 30 staff exclusively on its podcast work" [Press Gazette]
Ross Douglas launched a newsletter about urban mobility and then was able to leverage its audience when he pivoted to virtual tradeshows.
New benefits coming for paid subscribers
Over the past few months, I’ve been trying to create community benefits for my paying subscribers. I started by launching a regular Q&A series that allowed subscribers to basically serve up writing prompts for the newsletter. I feel like that’s been generally well received, and I’ve had a fun time answering subscribers’ questions.
But there are certainly limits to this approach. For instance, it doesn’t scale very well. So far, I’ve managed to answer at least one question from every subscriber, but that’s only because I haven’t yet been inundated with too many questions. As my subscriber base gets bigger and bigger, I’ll have to pick and choose which questions I answer.
The Q&As also only allow for a two-way relationship between me and the subscriber. It doesn’t provide much opportunity for subscribers to interact with each other, which sucks since many of my subscribers are some of the most successful people working in the media industry. I want to foster some of the same kind of synergies you get from attending a large industry conference or networking happy hour.
So starting this month, I’m going to be hosting pre-scheduled “office hours.” These will be Zoom/Google Meet hangouts that happen live, and they’ll allow subscribers to chat with both me and each other. Eventually, I plan to use these office hours to feature really successful media entrepreneurs who will take questions from the audience.
Anyway, if this seems at all interesting to you, or if you just want to support all of the work that I put into producing my newsletter and podcast each week, please consider becoming a paid subscriber. The cost for an entire year’s subscription is literally less than what you’d pay for dinner at a semi-decent restaurant. Use the link below and get 10% off for your first year.
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