One of the nice things about niche media is the ability to use a trusted playbook to expand into new verticals. If done correctly, a lean company can expand into new verticals without having to grow headcount linearly.
They’ve been teasing it for a while now, but the team at HousingWire recently launched FinLedger, a publication for those working in financial services. In a sneak peak email, managing editor Mary Ann Azevedo said:
I’m so excited about FinLedger, which comes at a time when the intersection of financial services and technology is at a crucial crossroads. As evidence of that, check out this article from FinLedger contributing writer John Egan which cites the results of a recent Forrester Research report that asserts that banks must break away from established business models in order to succeed in the fintech era.
This type of strategy plays right into the playbook I was alluding to above and is an approach that many other companies have taken over the years. Let’s walk through this to better understand. To better understand the strategy, it helps to understand the goal.
When launching and growing a media company, there are specific responsibilities that just have to be there: editorial, sales, audience development, design, marketing, operations, human resources, finance and the list goes on. You’re not going to be able to get past that. It’s the cost of doing business.
I’m sure HousingWire has many of those same roles on staff as well. However, when launching the second publication, FinLedger, there isn’t a need to add all those same roles. Human resources? The company already has it. Design? Again, it’s already there. Finance and operations? I think you get my point.
When I launch the first site, I need at least one person in each of those roles likely. However, when the second site comes, the primary team that is necessary is the editorial since it’s a different beat. The systems and operations have already been built and perfected with the first site, so adding a second site doesn’t result in linear growth to the costs of running the business.
There are some additional requirements, though, that can help this work even more.
First, the second site needs to be adjacent to the first one. We can see that with HousingWire, which covers real estate, and FinLedger, which is for financial services. Banking is immediately central to both of these industries since most people take out mortgages to buy a home. This is important because you may have some crossover in audience, but also there’s the possibility to sell advertising to some of the same companies across the two verticals.
Second, the sites should share a similar design and technological architecture. The reason here is two-fold. The designer for the first site should be able to deliver similar types of design work for the second. Additionally, if it’s the same tech stack, it’s not hard to maintain the second site.
Third, there should be similar products for sale, whether that’s subscriptions or advertising. This benefits the sales team, which is used to selling similar products. It also benefits the operations team, which is used to supporting those same products.
This is what this looks like in practice:
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That back office can support multiple, independent publications. With Sites 1-4 each having similar designs, tech stacks, products for sale, etc., the back office doesn’t have to grow linearly with the number of new sites that are launched. To be clear, there will be hiring needs. You can’t depend on the same people to support four sites as they would one. But if you’ve got two sales people covering site 1, maybe a third can sufficiently cover two sites?
There are, of course, exceptions to the requirements I spelled out above. Industry Dive, for example, doesn’t do much with adjacent topics. But the design/tech stacks are identical and the media kits for each publication offer very similar products, which means that the business can scale non-linearly.
Ultimately, the only team you have to definitely hire from scratch each time is the editorial team because the beats are different. But compare that to the staff needs for the first site and it becomes clear that this growth strategy for niche media companies is quite beneficial.
While I focus on B2B here, this doesn’t just have to be a B2B strategy. If you’re in one particular consumer vertical and there are related ones, a similar playbook is possible. If you can create that hub and spoke approach to building your sites, you can actually start to achieve some scale. Niche is the new scale.
Apple’s rev share irritating everyone
Apple seems to be spending a lot more time thinking about its services business as an opportunity for growth, resulting in it getting more aggressive with the collection of the App Store’s revenue cut. It’s creating a ton of noise with various app developers, but for us publishers, it’s something we’ve dealt with for a while.
When a user subscribes through an iOS device, the publisher pays Apple 30%. In each subsequent year, the publisher pays 15% to Apple. This has been an arrangement that publishers have dealt with for years.
However, on July 29th, Rep. Hank Johnson brought up that Amazon negotiated a reduced commission and Apple’s CEO, Tim Cook, replied that “it’s available to anyone meeting the conditions.”
So, publishers want to know what those conditions are. In a letter sent to Cook, Digital Content Next’s Jason Kint said:
Nearly all of DCN’s members offer apps in the Apple App Store and, as noted above, many offer subscription-based access to a wide variety of content. The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firms. In keeping with your statement to the Committee, I ask that you clearly define the conditions that Amazon satisfied for its arrangement so that DCN’s member companies meeting those conditions can be offered the same agreement.
I have conflicting thoughts on the App Store’s revenue share. On the one hand, I believe Apple should be allowed to generate revenue on goods sold through that store. Some like to call it a tax, but at the end of the day, Apple built an audience and is rightfully monetizing it. No one faults us for doing that.
On the other hand, one of the main reasons Apple was able to build this audience is because of all the apps that were submitted through the store. This ecosystem was built on the backs of developers that created exciting applications. It should be a symbiotic relationship.
Wherever you come down on the issue, publishers should be pushing back on Apple’s revenue share. If there are clearly defined guidelines that allow companies to negotiate for different shares, publishers should be pushing for that.
Here’s the real problem… Publishers are stuck with Apple’s business because mobile web still sucks for subscription businesses. Subscribers, by and large, want to use their apps because it’s easier. But that doesn’t mean they’re specifically seeking out that app. Let me explain.
When I go to Twitter and I see a story for The New York Times, I click the link. I’m a paid subscriber. The Times throws up a paywall against me. But at the top of the screen, it says “Open App.” So, I open it. There’s no paywall anymore, so I can read the article.
However, I never seek out The Times’ app, open it and start perusing it like it’s a newspaper. I spend my time on Twitter, I find an article I want to read and then click.
Nieman Lab wrote a piece about a study from the Reuters Institute for the Study of Journalism. In it, Nieman summarized:
On those 20 young people’s phones, Instagram was the primary app: Every one of the 20 had it and spent the most time on it daily. News apps, by comparison, received much less usage. Apple News is pre-installed on iPhones, which helps account for its relative prominence here — but “no news app (with the exception of Reddit) was within the top 25 apps used by respondents…For two of the four individuals who had the BBC news app on their phone during the two-week tracking period; the app represented less than 1 percent of usage time for both.
Until such a time as someone figures out how to fix mobile web for subscription businesses, we’re going to be reliant on our apps to keep our current subscribers engaged. Therefore, we’re going to need to keep the apps listed in Apple’s ecosystem, which means we’re stuck with the tax. Maybe Digital Content Next can force better terms, but I wouldn’t be expecting much.
Before it’s even suggested… One tactic that Apple could take in negotiations could be tied to Apple News+. In essence, if a publisher agrees to be included in Apple News+, Apple will then agree to cut the revenue share to something more amenable to publishers. Do not agree to these terms. Apple News+ is a cannibalistic product that will take money from publishers even if they’re getting a better revenue share in the App Store. This hasn’t been broached yet, but we know that News+ is a core initiative for Apple going forward.
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