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:

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My latest: How an interest in whiskey birthed a thriving media company

Starting in the mid-2000s, we saw a veritable explosion in craft breweries and distilleries, but there weren't many media outlets covering the industry. That provided the perfect opening for The Whiskey Wash to thrive.

An easy way for Netflix to boost its growth

2022 has been a bad year for many tech stocks, with Facebook alone losing $250 billion in value after it posted disappointing growth forecasts in its latest earnings report. Many of its woes stem from Apple’s new privacy restrictions, which made it more difficult for brands to target ads on iOS.

But it’s not just advertising-based companies that have taken a hit. Netflix’s stock also tumbled when it reported its subscriber growth had significantly slowed from its pandemic highs. “The company … forecast an increase of 2.5 million subscribers in the current quarter, compared with four million a year earlier,” The Wall Street Journal reported.  

This slowdown didn’t occur because of a lack of programming hits. After all, Netflix has produced a string of blockbusters in recent months, including Squid Game, perhaps the most successful TV show debut of all time. Instead, Netflix’s growing pains are mainly being attributed to two factors. For one, the streaming market has just gotten much more crowded, with other media juggernauts not only competing for subscribers but also driving up the price of content.

But, perhaps more important, Netflix has also simply saturated most of the major markets in which it operates. As a result, it’s focused on growing its footprint in developing nations like India, but even if it makes major gains in those regions, it still can only charge a fraction of what it does for a U.S. subscription. It takes almost six Indian subscriptions to generate the same amount of revenue as an American one.

So how can Netflix continue to find growth in both revenue and profit? Some analysts have suggested strategies like expanding merchandise sales and raising prices – the latter of which it’s done several times. The company is also investing heavily in building out a video game bundle. But I think there’s much more obvious low hanging fruit that would allow Netflix to capitalize on its already-existing assets without having to make any additional investments: advertising.

No, I’m not talking about adding commercials to Netflix’s platform. Its executives have been long adamant that advertising would never appear on Netflix, and for good reason. Part of what makes a Netflix subscription so enticing is the company’s singular devotion to creating a good user experience, and ads would ruin that experience.

Most people don’t realize this, but while Netflix was building the most successful video streaming subscription service of all time, it was also building one of the world’s largest distribution channels of free content. It currently generates billions of impressions each month on this free content but, as far as I can tell, it doesn’t do anything to monetize those impressions directly.

Let’s take a look at some of those distribution channels:

Video

It probably wouldn’t surprise you to learn that Netflix has a presence on every major social media platform. What you may be less aware of is that the company has built up nearly two dozen content verticals on those platforms, and that those verticals collectively reach tens of millions of users.

For the purposes of this piece, I’ll just focus on the Netflix-owned channels on Facebook and YouTube, since those platforms allow for the insertion of programmatic preroll and midroll ads. Here’s a list of those channels and their respective subscriber counts:

Netflix’s main YouTube and Facebook accounts, 107 million subscribers; Netflix Futures, 3.2 million subscribers; Still Watching Netflix, 2.35 million subscribers; Netflix Film Club, 1.4 million subscribers; Netflix Is A Joke, 4.78 million subscribers; Netflix Family, 1.2 million subscribers; Netflix Jr, 10 million subscribers; Netflix Geeked, 2.2 million subscribers; Netflix Korea, 1 million subscribers; Netflix España, 1.45 million subscribers; Netflix France, 1 million subscribers; Netflix Portugal, 161,000 subscribers; Netflix India, 16 million subscribers; AfricaOnNetflix, 244,000 subscribers; Strong Black Lead, 1 million subscribers.

That’s a total of 153 million subscribers just across Facebook and YouTube. There are tens of millions more subscribers on platforms like Twitter, Instagram, and TikTok. All these accounts primarily distribute Netflix film and TV clips and collectively generate billions of views per month, and yet, as far as I can tell, they’re only used as a marketing vehicle to drive paid Netflix subscriptions. 

Let’s say Netflix were to flip on programmatic ads on these channels tomorrow. It would instantly start generating tens of millions of dollars in additional revenue, all without Netflix needing to spend a single dime in new investments.

Podcasts

Netflix started dabbling in podcasts a few years ago when it commissioned companion podcasts to go along with several of its hit shows. But after seeing some initial success with this model, it launched several themed podcasts around topics like documentaries, film, and gay culture. It also started producing scripted podcasts, including a post-apocalyptic YA series and a bedtime stories podcast for kids.

Netflix’s top brass has obviously been encouraged by the success of these podcasts, because last year it announced a major hire of an Apple veteran to head up its podcast division. It also formed a major partnership to have its shows distributed on Spotify. According to Chartable, Netflix is currently producing at least 22 ongoing shows.

As with its social media channels, the podcasts mostly serve as a vehicle to promote Netflix subscriber content and aren’t monetized directly.

Text

Earlier this year, Netflix launched Tudum, a text-based website that publishes articles about Netflix shows and the stars behind them. For instance, this week it published a longform interview with Julia Garner, the star behind one of its upcoming series, as well as an article breaking down the ending of one of its Korean horror shows.

While most of the content is Netflix-focused and promotional in nature, the company brought in several heavy hitters within the journalism world to edit the site. Hires include alums from Vanity Fair, Allure, Refinery29, The Wrap, and Entertainment Weekly. It seems clear that Netflix has set its ambitions on producing some stellar storytelling, even though Tudum is basically serving as an ad for a Netflix subscription.

An untapped revenue stream

It’s pretty incredible when you think about it; Netflix not only built the world’s most successful subscription product, but its free content has a larger audience than the vast majority of web publishers on the planet.

And yet its web content production resides entirely within the marketing department. It is, in my opinion, an underleveraged asset that could significantly boost Netflix’s bottom line.

The company could start with simply flipping on programmatic advertising. Even if you factor in modest CPMs, Netflix would immediately start generating monthly ad revenue in the eight digits, all with no additional work or investment from the company.

But that would only be the beginning, since Netflix could then build out an ad sales team to secure more lucrative direct advertising campaigns. It wouldn’t take long for the company to become an advertising juggernaut.

Given the level of opportunity there, I’m amazed that I haven’t seen anybody else float this idea. Lots of Wall Street analysts have suggested that Netflix should sell ads, but those suggestions all focused on a lower-priced subscription tier, similar to the ones sold by Hulu and Peacock. The idea I outlined above would allow Netflix to generate up to nine figures in advertising revenue, all without compromising its core subscription product. If there’s a downside, I don’t know what it is.  

I’m finally launching an online course

On any given week, I usually speak to multiple media entrepreneurs, and one of the most consistent pieces of advice they give me is that I should launch an online course.

But I’ve held off on developing one, mainly because of the time commitment it would require. Between producing the newsletter and podcast, I’m stretched pretty thin, and I just didn’t have the bandwidth to develop a comprehensive course all by myself.

But then in late 2021 I received an email from Ed Madison, a journalism professor at the University of Oregon. He and his colleague Damian Radcliffe were planning to launch an entrepreneurial journalism course, and he wanted to know if I would join them.

I jumped at the chance. Over the next several months, we met each week to plot out a course that would cover every facet of building a successful content business. We used the imprimatur of the University of Oregon to recruit some of the media industry’s top practitioners in product building, subscriptions, multimedia production, and audience engagement.

Today, we’re ready to announce the course: Growing Your Content Business. It’ll span 10 weeks and feature live, interactive conversations with top executives from Google, Condé Nast, Vox Media, Quartz, GroupM, The Economist, and many more. If your career touches content in any way, then you’ll leave this course with actionable insights that you can apply to your work.

Want to learn more? We have the full list of speakers, the course description, and the registration information at the below link:

Check it out

Quick hits

This is a pretty amazing story of how a travel blog went from making $0 to $34k a month in just a little over a year. [Insider]

Snap doubled down on sharing revenue with both creators and publishers, and, lo and behold, it's seeing continued growth as a result. [WSJ]

Cameo is a brilliant business. [Bloomberg]

TikTok not only holds huge influence over the music industry, it's also become a major force in book publishing. [Forbes]

Adweek checks in with Industry Dive, a company that is slowly-but-steadily building a B2B media empire with 30% profit margins. [Adweek]

The New Yorker notes that many of the high profile local news startups are launching in more affluent, urban areas, and that lots of rural, poorer areas remain largely uncovered. [New Yorker]

This is a fascinating look at the world of esports contract negotiations. [Digiday]

ICYMI: This journalist launched a news outlet for French expats in the U.S.

Emmanuel Saint-Martin’s French Morning caters to French citizens who live in the United States.

It’s time to take our relationship to the next level

I have a private Facebook group that I only promote within this newsletter, and I love using it to interact with my audience. I spend a considerable amount of time in it each week responding to comments and curating industry news. Join here: [Facebook]