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Yes, I know this is coming to you a day early, but I wanted to jump on the Axios acquisition news before it grew stale. Let’s jump into it…

4 things Axios did right

When Axios launched in 2017, it was met with some ambivalence, mostly due to the fact that its founders touted plans for it to sell a $10,000 annual subscription product. It’s hard to get excited about a Politico Pro clone that gates off its content and serves up news scoops exclusively to wealthy enterprise clients.

But that’s not what Axios ended up being. Instead, it used its considerable VC war chest to hire top journalistic talent, and then it leveraged that talent to launch several niche verticals that centered around (mostly free) newsletters. I personally subscribe to both Axios’s media industry and DC newsletters, and they’re excellent.

The reason I’m bringing this up, of course, is because Axios just announced it’s been acquired by Cox Enterprises for $525 Million. That’s a considerable payout for a five-year-old digital media company; to give you a sense of perspective, BuzzFeed is currently valued at $268 million and raised 10X as much in VC funding.

I don’t have much to say about the potential synergies between Axios and its new owner — other than to point out that mergers between telecom/cable behemoths and media companies have a mixed track record — nor do I have any insights into how this will affect Axios going forward.

Instead, I want to focus on what Axios did right. Why didn’t it suffer the same fate as many other digital media startups, including BuzzFeed, Vice, Mashable, and Mic? I can point to a few smart strategies:

It held off on expensive subscriptions

Remember that $10,000 annual subscription its founders touted when it first launched? It never came about. Instead, Axios focused on building out its free verticals, first with industry niches and then local newsletters. This allowed it to grow its brand more quickly, and it became a regular habit for millions of email subscribers.

When Axios did introduce subscriptions, it was at a more reasonable price — around $600 annually for each vertical. And rather than taking its free content and placing it behind a paywall, it created a differentiated service for the subscriber-only content. Here’s how I described it a few months back:

Let’s focus specifically on its media industry newsletter. For the last several years it’s been helmed by Sara Fischer, who’s done an excellent job of publishing weekly scoops that I often link to within this newsletter. 

But when it came time to launch a paid product, Axios didn’t simply ask Fischer to start producing extra newsletters. Instead, it hired Kerry Flynn, a Digiday and CNN alum, to write a daily “deals” newsletter …

… Flynn’s focus is much more… finance focused. The two newsletters compliment each other, but Flynn’s reporting appeals more to high level executives who are less likely to blink at a high sticker price. While Fischer’s newsletter gets read by anyone who’s even mildly interested in the media industry, Flynn’s is geared toward a more niche audience. Ultimately, Flynn’s target audience is much smaller, but that doesn’t matter, since it’s monetized through high-priced subscriptions. 

As a news consumer, nothing’s worse than being denied access to content that you previously read for free, so this was a great strategy for introducing a paid product without alienating the core audience. 

It adopted a newsletter-first strategy while still optimizing for the web

If there’s one thing Axios is known for, it’s for its “smart brevity” format that’s heavy on bullet points and light on expository padding. It’s perfectly designed for email consumption, but Axios also prioritized web optimization for each of its scooplets so that they could be easily shared on social media. 

This allowed it to have its cake and eat it too. Whereas sites like BuzzFeed became overly reliant on Facebook, Axios was able to benefit from social media virality while simultaneously focusing on capturing as many email addresses as possible. This allowed it to have more ownership over its audience and protected it from the vicissitudes of social media algorithms. 

Its approach to niches was great for collecting first-party data and delivering native ads

Given the number of verticals that Axios launched, it’s essentially a general interest news outlet at this point — no different from a New York Times or USA Today — but its emphasis on niche newsletters allowed it to generate great first party data that made it the perfect vehicle for native ads.

And its expansion into local news enriched that first party data collection further, since now Axios is able to ascertain not only what industry you work in, but also where you live. So if you have an advertiser who wants to target tech employees who work in, say, Chicago, Axios can deliver on that demographic with a precision that few other outlets can match.

It made great strategic hires

Digital media startups like BuzzFeed, Vice, and Mic all had a similar playbook: raise a massive amount of VC cash and then use it to hire hundreds of 20-somethings that could work for cheap. This created unsustainable burn rates, and these publishers were then forced into substantial layoffs once the VC spigots were turned off.

Axios instead devoted a substantial portion of its hiring to mid-career journalists with already-existing brands. While the average salary was likely higher, these journalists were able to scale up their niche verticals more quickly and efficiently than they otherwise would have if they were hired right out of college. Many of its verticals feature just one or two writers, and yet Axios punches well above its weight against its much larger competitors. Its masthead only lists 155 editorial staffers; compare that to the 1,000 newsroom staffers at The Washington Post or 1,800 at The New York Times.

***

Axios succeeded because it stayed disciplined in defining its product, hired highly competent journalists, and prioritized ownership of its audience. Not only did it create great content, but it packaged it in such a way that maximized ROI, both in terms of building an audience and then monetizing it. I have no idea if it’ll continue to thrive under Cox’s ownership, but it certainly created a playbook that future media startups — no matter the niche or medium — can’t ignore.

What do you think?

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Quick hits

Audible is trying to build up its podcast slate faster than Spotify can build up its audiobook slate. [Variety]

Luminary, which launched several years ago as the “Netflix for podcasts,” is still alive and kicking, and it's even taking on new investors. No updates at all though on how many subscribers it has or the audience sizes for its shows. [Variety]

"2022 has been a brutal year for media that cover esports." [Sports Business Journal]

CNN is moving most of its programming onto Discovery+ [Deadline] This is a much better use of CNN's IP than CNN+. It was always more valuable as part of a much larger content bundle. REMINDER: I predicted CNN+’s demise several months before its new CEO pulled the plug.

The Substack newsletter with the most paid subscribers doesn't lock any content behind a paywall. [Substack] From the piece: "The ability to comment on posts is the only feature that is exclusive to paid subscribers there, ensuring high-signal discussion and fostering a strong sense of connection … Some of the most successful Substack writers—including Patti Smith, Michael Moore, and Dan Rather—have thriving subscriber bases and yet paywall hardly any of their content."

Be careful what images you post. Copyright trolls are proliferating, and they're targeting creators — most of whom don't have their own lawyers — with scary looking legal correspondence in search of a quick payday. [Midrange]

What do all these companies have in common?

NFL, HBO, Cadence13, NBC, Warner Media, WHYY, SmartNews, Netflix, Axel Springer, The Telegraph, Google, Hello Sunshine, eMarketer, Nielsen, Jellysmack, Pinterest, Sony Pictures, Conde Nast, Discovery, Imagine Entertainment, The Guardian, Disney, Cisco, Amazon, 6AM City, Amazon Studios, Dotdash Meredith, Patch, United Talent, Hearst, The Business of Fashion, National Geographic, Anonymous Content, Lionsgate, Dow Jones, Financial Times, Wall Street Journal, Warner Bros, Paramount, Industry Dive, Electronic Arts, Bloomberg, Politico, Digiday, Creative Artist Agency, Forbes, Higher Ground Productions, Foreign Affairs, DreamWorks, ABC, TED, San Francisco Chronicle, Facebook, New York Times, Washington Post, NPR, LA Times, CBS.

Give up? They all have employees who subscribe to my newsletter. If you want to reach the top echelons of tech, media, and marketing, then consider buying a sponsorship. You can find all the relevant details over here. I actually have some slots opening up later this month.