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Business models often lag audience growth

A few weeks ago I had a long conversation with a media entrepreneur named Philip Ideson. After 15 years spent working as a procurement specialist — which involved making all the purchasing decisions for large companies — Ideson quit his job and launched a podcast called Art of Procurement.

Today, Art of Procurement is a tremendously successful B2B media company that produces white papers, articles, podcasts, and live events, but what amazed me most during my talk with Ideson was when he revealed it took him five years of producing the podcast before he found a viable business model. In fact, he kept blowing through deadline after deadline he set for himself for generating a livable wage. As each deadline passed, he would renege on his promise to go back into the traditional workforce. Each passing year put increased financial pressure on him and his family.

What kept him going? A number of things:

1. He had a lot of outside validation from people telling him they loved the podcast. That led him to believe that he was putting out a quality product and he really just needed to land the right business model.

2. He succumbed somewhat to a sunk cost fallacy; once he’d already put three years of his life into building the company, he didn’t want to abandon all that work to just return to a standard 9-to-5 job.

Eventually he landed on a key revelation: that his business model was too focused on the wrong audience. Because most of his listeners consisted of procurement specialists, he originally designed consulting services aimed at those people. But after five years he finally figured out that it was the companies that sell products and services to procurement specialists who were his true customers. 

Why did I like this story so much? It’s because Ideson’s experience provides three lessons:

1. Business models often lag audience growth: To borrow a phrase, building a media company is like building a plane while you’re still flying it. Just because you’re figured out how to make compelling content doesn’t mean you’ve figured out what your audience will pay for.

2. Your core customers will often be a subset of your larger audience: Whatever your content niche is, your audience is probably segmented into a wide range of roles within that niche. The best media companies diversify by creating multiple products that they sell to various audience segments depending on their needs. Don’t assume that the largest segment will produce the most revenue. Bloomberg LP, for instance, has a huge audience, but its most profitable product, the Bloomberg Terminal, caters to the tiny number of companies that can afford $24,000 annual subscriptions.

3. Use audience validation as a motivator: I’m not going to sugarcoat it; there have been times over the last 3.5 years where I’ve been seriously discouraged about the viability of my business. Times when I’ve wondered if I would ever eke out a middle class income through my newsletter and podcast. During the darkest of times, it was the feedback I kept getting from my audience that kept me going. Whether it was a prominent journalist recommending my newsletter on Twitter or a fan email from a successful media executive, these external validators kept me confident that I was doing something right. 

Anyway, it was inspiring to hear about Ideson’s journey as he figured all of this stuff out. You can watch the entirety of our conversation in the video embedded below:

If video embeds don’t work in your inbox, go here.

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Quick hits

I’m hosting a live Zoom call on Thursday with four really successful media entrepreneurs. Want to join? [Simon Owens]

Ira Glass pioneered many of the storytelling techniques that are now ubiquitous in narrative podcasts, so it's interesting to read his take on the current state of the industry. [Vulture]

Time's pivot from paid subscriptions to events seems to be a recognition that its brand is more valuable than its actual journalism. [Digiday]

Most of the media outlets that dove head first into publishing AI-generated content now have egg on their face. [The Verge]

TikTok's been criticized for years for its paltry payouts to creators. It looks like its new revenue sharing policies are doing a much better job of generating meaningful payouts. [Fortune]

There was a time when a lot of larger media companies were attempting to expand into tech by licensing out their CMS platforms, but the strategy isn't really panning out for most of them. [Axios]

There’s a lot more where that came from

I only send this newsletter out twice a week, but I actually spend multiple hours a day curating media industry news on my social media channels. Here’s where you can follow me:

1. Substack Notes

2. My handle on Threads is @simondowens

3. My private Facebook group

4. LinkedIn