This week we hear from Jasper Wang, VP of Revenue & Operations for Defector Media. Defector was formed after a mass staff exodus from former GO Media property Deadspin after an internal dispute about who knew its audience best.
Defector is now an employee-owned and operated news site that has introduced measures specifically to ensure its staff have a say in the business, even as they write for its audience. Now, on the first anniversary of its founding, we hear about the site’s ambitions, how it keeps its staff safe and happy, and what other media businesses can learn from an employee-owned outlet.
In the news roundup Chris and Peter take a look at GB News’ launch one week on, ask if there’s a future for The Athletic now that talks with the New York Times have broken down, and suggest that perhaps privatising Channel 4 in the current climate isn’t such a great idea. There’s a special appearance from a bird directly outside Chris’ window.
The full transcript is live here, or see below for some highlights:
Establishing a business model
The operating model and the business model, both of those come directly from just knowing our own audience.
So if we take the business model, first, we are subscription supported, because we knew there was a rabid group of readers, and is that millions? No. But is it tens of thousands, maybe even hundreds of thousands? Yes. And so the quickest way to get to some cash flow was to ask people to pay subscriptions directly.
And we had 10,000 paid subscriptions, within 24 hours of announcing the project. We’re at about 39,000 total paid subscribers. We’ve been able to expand the newsroom by a couple of people, we’ve been able to pay everybody a workable salary.
A unique structure
We’re entirely employee owned. I think if you looked at the the newsroom side, you would say, ‘Oh, this is actually pretty conventional.’ Tom Ley is the Editor in Chief, we have a set of editors, we have staff writers, Tom sets the editorial vision, the editors assign stories, commission freelance pieces. That’s all fairly conventional…
If you look at the operations of the business, it’s very different from other media companies or other companies in general, I guess. I’m the business leader, but I only have one full time person and one part time person on the business team. We have an array of outside partners and vendors, outside legal counsel, accounting, bookkeeping, HR partners, obviously all of our tech is outside. So I manage across all of those.
But our editorial staff – all of them – are expected to participate in the operations of the business. And so depending on the week, or the person, I’d estimate they spend somewhere from five to 20% of their time thinking about, “business decisions” that they otherwise wouldn’t in their editorial role.
Dividing up the profits
We pay ourselves a sliding scale. So everybody gets a salary that we get paid bi-weekly, like any other salaried position. But then every quarter, we look back at the last quarter and say, ‘Okay, which of this cash can we distribute as additional salary?’
It’s pretty conservative as far as cash management goes; we’re never paying out ahead of actual recognised profit. But that only works if everybody is an owner or feels that they are in control of the direction of the business in some way, that they’re not going to get screwed over by some other party.
We know every quarter, we’re going to look back, and we’re going to distribute some amount of money. And that is, for us, the mechanism to be sustainable every quarter after quarter.
Focusing on subscriptions
On the commercial side, so about 95% of our revenue right now comes from direct paid subscriptions. And the other 5% is a combination of merch sales, sponsorships on the site, podcast, ad revenue, Twitch streaming ad revenue split.
And so in terms of growing…for the subscriber base, I think we can still grow that. Every week or two, we get an email from someone who says, ‘You know, I used to love reading so much of the old site, and I didn’t know about Defector. But I’m glad I found out about it.’
And so there’s still some low hanging fruit as it were to just reach those people who are wondering where this group of writers went. But we also hope our writing can reach other populations who didn’t necessarily know the origin story, and they just, they just like the writing, and they’re willing to pay for it.
News roundup
GB News, a right-of-centre 24/7 rolling news channel launched last week. The biggest media launch in the UK for 30 years.
Its focus has been to provide an ‘anti-woke’ alternative to established news channels – specifically BBC and Sky – which are considered by some to be left leaning. It has been described as a UK Fox news although BBC media editor Amol Rajan says that’s over simplifying things.
The launch has been plagued with technical mishaps, to the point that internal reports paint a picture of chaos and overwork behind the scenes to get it fixed. It has been noted that a £25m annual budget for a rolling news channel is relatively low compared to its peers. A Twitter account cataloguing those failures rapidly gained over 70,000 followers, has 29.2 million impressions in 6 days and its founder was featured in The Telegraph.
The launch – technical issues aside – has been marred with some controversy. The pressure group Stop Funding Hate, which has been asking advertisers to reconsider placing their adspend opposite the channel’s content since before launch – has redoubled its efforts since launch.
That in turn has led to an entirely new culture war (though not of the kind Andrew Neil expected) around the rights of advertisers and brands to pull advertisements from the channel, with proponents of SFH arguing it’s ultimately about consumer choice and GB News defenders arguing mostly incoherently about it being a free speech issue.
News in brief
- The New York Times and The Athletic End Acquisition Talks because they couldn’t agree on a price. No surprise, because who knows what The Athletic is actually worth.
- Despite consolidation, ownership of the UK magazine industry remains more diverse than newspapers. 3 families own 80% of UK print newspaper circulation. Burda and Hearst only manage 33%.
- Annual revenue at ByteDance, TikTok owner, jumped to $34.3 Billion last year. That’s double, year on year, 111% to be precise. It’s profits went up 90+% but it still posted a net loss for 2020 of $45 billion.
- The Week has never really done too much on the web, but looks like things are starting to change. It has redesigned its U.S. site to ‘catch up to advertiser demand’ for more native advertising opportunities.
- Skift founder Rafat Ali says travel is back, and back it is with a vengeance in countries that are opening up post-vaccination. To prove the point Skift has bought the hotel industry newsletter the Daily Lodging Report.
- In the UK, Channel 4 is reportedly being lined up for privatisation as soon as next year – with the FT citing the rise of streaming services as commercial rivals to linear television as a reason for the change.
- A16z has entered the publishing world with ‘Future’, a tech-focused news site that will act as advocate for tech (and the VC firm’s interests), joining Coinbase’s platform as a news site that bypasses journalists entirely and defends the funding firms’ interests.
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