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.

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Is the Morning Brew model crumbling?

I’ve interviewed hundreds of media entrepreneurs for my podcast and newsletter over the years, and I can’t tell you how many of them cited Morning Brew as their inspiration for launching a media outlet. I would go so far as to say that “Morning Brew for X” is just as ubiquitous in media startups today as “Uber for X” was for Silicon Valley startups 10 years ago.

Why? Because the format that Morning Brew — and other similar companies like The Hustle and TheSkimm — pioneered is so easy to replicate across just about every industry niche. It requires very few writers — usually only one or two to start out — and can provide tremendous value to time-strapped executives within that particular industry. It’s also a great vehicle for native advertising, since sponsored content is so easily inserted in between news items.

The model scales so well, in fact, that by 2020 Morning Brew had managed to grow to 2.5 million email subscribers and $20 million in revenue (and $6 million in profit) without raising much in outside capital. That year, it sold for $75 million to Axel Springer-owned Insider, and from there it doubled down on growth by expanding its B2B verticals and video operations. It even began publishing original reporting. In an era of constant industry turmoil, Morning Brew was a rare media success story.

But recently, that story hasn’t been so rosy. In November, Morning Brew announced it was laying off 15% of its staff, with “fear and uncertainty” in the economy cited as the main culprit. Then last week, it laid off 40 more people, again citing a “volatile advertising market.” While I don’t have any insider knowledge of the company’s finances, it seems clear that the growth engine that allowed Morning Brew to grow its business so quickly is now showing some signs of strain.

So what’s happening here? Well, it’s obvious that Morning Brew hasn’t been able to avoid the industry-wide downturn that’s affected nearly every media company, but I also think this points to the difficulties that aggregation-heavy media outlets experience once they reach a certain level of scale.

A decade ago, these types of outlets were widely regarded as the future of media. A 2015 GigaOm article, for instance, contained this extraordinary sentence: “Whether the [New York Times] likes it or not, it and BuzzFeed are in the same business, and at this point BuzzFeed is winning.” Companies like BuzzFeed and HuffPost were highly regarded not only because they were great at attracting online audiences, but also because they did so largely by curating content from outside sources. Outlets built on that lightweight model — BuzzFeed, Upworthy, Mic — collectively raised over a billion dollars in VC capital.

We all know what happened next: revenue growth plateaued, even as their reach remained high. Even though global digital ad spending quadrupled in size over the last eight years, these aggregators struggled to effectively monetize their huge audiences.

Part of it has to do with the fact that these businesses tend to be largely dependent on advertising and therefore are vulnerable to the vicissitudes of that market. But it also likely has something to do with the diminishing returns of aggregated content; at some point an outlet reaches such a scale that it begins competing for ad budgets with the super aggregators like Instagram, TikTok, and Google. And when it comes to efficiencies of scale, no media company can compete with those platforms. There’s a reason that the most successful news outlet of the modern era — The New York Times — saw most of its revenue growth over the last decade on the subscription side, not advertising. Competing with the super aggregators is a losing proposition.

In the alternate reality where Morning Brew remained an independent, bootstrapped business, it probably could have maintained a healthy profit, but my guess is that post-acquisition it was under tremendous pressure to throw gasoline on the fire and scale up more quickly, and that’s how it ended up getting out over its skis. (Yes, I realize I used a mixed metaphor there). It used past success to predict future growth, and those projections didn’t account for the diminished returns that every media aggregator eventually hits once it reaches a certain size.

We saw the same thing happen with TheSkimm, the women-focused newsletter that had its own Morning Brew-like approach to content aggregation. It raised over $28 million in VC investment and used it to expand into new mediums and even launch a mobile app. But the revenue to maintain these new ventures never materialized, and by 2020 its founders were desperately trying to sell it to a larger company.

So what are the lessons to be learned here? First, that aggregating content can be a great way to scale up a bootstrapped outlet, but that it’s incredibly difficult to then grow it into a large media company that brings in north of $50 million.

And second, that reader revenue is incredibly important in terms of shielding outlets from advertising downturns. Companies largely built around aggregation struggle to introduce subscription offerings, mostly because they trained their audiences to expect free content. It’s not a coincidence that the institutions that built the best subscription models — The New York Times, The New Yorker, The Information, etc… — did so on a strong foundation of original reporting. Aggregators are great at delivering convenience, but the largest media companies will always be those that hoard the most IP.

What do you think?

I want to get smarter about ad sales

Longtime readers of this newsletter know that I introduced paid sponsorships about a year ago, and it’s since played an important role in building my business.

Up until now, I haven’t sent out a single cold email to a potential sponsor; instead I’ve relied entirely on my public sponsorships page to bring in advertisers. While it’s incredibly cool to have generated so much business simply via my own audience, I’ve come to recognize that I need to be more proactive if I want to grow that side of the business.

But here’s the thing: I know very little about ad sales. I only have the faintest understanding of how to identify potential sponsors, find the right people to speak to, and pitch them. I’d love to speak to someone who has experience with this stuff and wouldn’t mind giving me a half hour to pick their brain.

If you’re up for it, I’d be incredibly grateful. You can find my contact info over here.

How to build a career as a professional ghostwriter

We live in an era where every company is expected to operate as a media company and every business executive is expected to produce thought leadership content. Newsletters and blogs have become crucial mediums for establishing longterm relationships with customers, and you’ve probably noticed that your LinkedIn feed has been flooded with posts from CEOs and startup founders who want to share their expertise.

But what happens when those CEOs don’t have the time or the writing expertise needed to produce compelling content? They often turn to ghostwriters: trained journalists who are able to quickly distill executives’ thoughts into shareable copy. These ghostwriters often work behind the scenes — in fact most people barely know they exist — and they can often make much more money than your average journalist.

But how do you break into ghostwriting when they’re effectively invisible, and what’s the best way to work with clients? To answer this question, I assembled a panel of ghostwriting experts to share their experience from building their businesses.

You can watch our conversation in the video embedded below:

If video embeds don’t work in your inbox, you can find it over here.

Quick hits

Pressuring reporters to boost their content volume can often deliver more web traffic, but it also leads to a decrease in quality, which then dilutes the media brand. All in all, it's not a great strategy. [WSJ]

I continue to find it incredible that Google and Facebook once had a digital advertising duopoly, and then one day Amazon just flipped a switch and quickly became the third biggest advertising company in the world. [Ben Evans]

Jason Kottke, one of the earliest professional bloggers, writes about his 25-year anniversary of launching his blog. [Kottke.org]

You can no longer use the age-old excuse that you subscribe to Playboy just to read the articles. [NY Post]

The benefits of video are too great for most serious podcasters to ignore. It's low-hanging fruit and video platforms like YouTube, Instagram, and TikTok have huge reach. [Digiday]

ICYMI: How a former Cosmo editor built Australia's largest women-focused media company

Mia Freedman started Mamamia as a one-person blog and bootstrapped it into a multi-media outlet that reaches 7 million people.

What access to my daily curation of media industry news?

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