The rise of DTC media
Niche is sexy in publishing
Thanks to everyone who has subscribed. A quick favor: Please forward it to another person if you like it. This is the main growth driver for newsletters. No algorithms needed. This week, I’m examining what’s imperfectly called DTC media, some thoughts on building company culture, my take on execution always beating vision, and an homage to taking seven years to make a mole.
Media is going niche
The media business is changing. The scale-by-any-means era is now firmly in the rearview mirror. The shift from ads to subscriptions offers a sturdier business model for many media companies with real communities. New platforms like Substack, Patreon and others are a boon to a new class of solo operators. Niche is no longer a polite insult for “small and obscure.” There is similarity to what has taken place in e-commerce, where an array of niche brands have taken flight thanks to Shopify and gobs of Instagram ads. The dynamics are somewhat different in media, to be fair. But a new crop of brands could emerge that have far different characteristics than the companies like BuzzFeed, Vox, Vice and GroupNine that defined the previous era of digital media.
Here are some characteristics I see for DTC media:
A narrow focus on an area of professional interest (B2B) or passion (B2C). DTC media isn’t trying to be everything to everyone. It isn’t HuffPost.
A brand serving a defined community, not an audience rented from big tech platforms. The way to tell if you have a community or an audience is the brand can get them to actively participate. As Hunter Walk puts it, “come for the content, stay for the community.”
A business model that isn’t all ads. There is a place for advertising. One large digital media company, with a giant ads business, lamented to me the future for ads is as an “add-on” to direct revenue from the audience, often in the form of subscriptions but also through commerce.
The three DTC media lanes:
Consumer passion plays. Think Barstool (bros and gambling), Meateater (Goop for rednecks) and Complex. These are all consumer-focused media brands, but they’re centered on tightly defined communities. That’s why all of them can make money in a variety of ways outside of ads, whether that’s through gambling or branded whisky and hot sauce.
Business-focused micro media. I’ve been talking to a lot of people who are rethinking B2B media. This is obviously an area of interest to me. B2B is made for DTC media since it tends to be very community focused and has always monetized in a variety of ways. What I see happening is more micro media companies arising that are a collection of high level specialists but avoid growing into the middle class malaise companies hit when they have four people in finance and the infrastructure for a far larger company that cuts into profit margins.
Solo operators. It bears repeating: Ben Thompson is the exception. The Substack Revolution is both real and overblown. There are a small number of high level writers and creators who can break through and make enough money for going solo to make sense. What’s more, most reporters, even if they’re cranky on Twitter, like working with others. Still, we will see more big names following the Casey Newton route.
I’m going to dig into all of these types of DTC media in the weeks to come. And if you’re working on a company that fits in this area, I’d love to talk to you and learn more. Email me: email@example.com (or just hit reply to this email).
Building great teams
There is a cliche in interviews with business leaders. They’re asked their biggest mistake, and the most popular answer is around the people part. I have some sympathy to this answer, because undeniably it is the hardest thing to get right, having a culture that attracts and keeps the best people. We didn’t always get it right at Digiday, and I learned a lot over a decade about building a team. I’m proud of how Digiday editorial alumni are sprinkled around amazing brands like CNN, NPR, Business Insider, The Wall Street Journal, Adweek and more. Some lessons learned through trial and error along the way:
Don’t be a phony because people will see through it. Everyone needs to lead in their own way rather than trying to be someone they’re not. If you’re not schmaltzy, don’t try to act that way thinking it will make you seem more caring. Actions always speak louder than words.
Be open to changing your mind. Ego is a killer in business; a dose of humility mixed with pragmatism goes a long way. Companies fail when the person who is highest in the org chart coincidentally always has the best approach. I tried to frame most ideas as hypotheses to be tested out. Follow the way of the father of Singapore, Lee Kwan Yew: “Does it work? Let’s try it, and if it does work, fine, let’s continue it. If it doesn’t work, toss it out, try another one.”
Ambitious people want to be pushed to improve. The workplace is undeniably different now than when I entered it. The antics of my bosses in my early career wouldn’t fly today. And that is for the better. The trick is building a culture where improvement is everything. When we succeeded at Digiday, we helped people grow faster than they could have anywhere else.
Vision vs execution
As a journalist, I reflexively roll my eyes at wannabe Steve Jobs extolling their grand visions for media. The truth is most success boils down to execution.In fact, vision is less important than sensibility and point of view. By that I mean, there are no secrets out there about building media brands and businesses. Why did Morning Brew succeed and Mic flame out? It pretty much comes down to executing better. The Morning Brew didn’t listen to people telling them to pivot into Facebook video. They didn’t take out huge venture capital rounds to fund a splashy office in the Freedom Tower. They used growth tactics smartly and executed on building a brand and habit through direct connections.
The 7-year mole
After two weeks in Mexico, I am obsessed with moles. The sheer variety of moles is beguiling. Pujol is home to mole madre (pictured above), which was cooking for 2,325 days before I scarfed it down with a couple warm tortillas. To take seven years to make sauce requires a lot of patience and care. Pujol chef Enrique Olvera doesn’t believe in using blenders for moles, either. But the result is remarkable. Good results take time. Olivera speaks in this Washington Post interview from 2017 about how moles are special just because they take a lot of work.
Things to read, listen to, eat
I greatly enjoyed working with Steven Perlberg on several deep dive features for Digiday. He’s got another worth checking out about The Atlantic’s future. Of interest to me: How big its subscriptions numbers are (650,000 total) but even then it has real business challenges. The pivot to paid is no savior.
My wife has a great piece out for her Sociology of Business newsletter — yes, we are a newsletters couple — focused on why fashion brands need to unbundle. This fits quite well with the DTC media thesis, and I believe we’re seeing a flight to niches across businesses.
Jacob Donnelly has a great newsletter (A Media Operator) that addresses similar topics. On his podcast this week, he has a conversation with Ben Clymer, founder of watch obsessives brand Hodinkee. (I did a podcast with Ben back in August 2018 on shifting from an ads model to commerce.) Hodinkee is building an interesting brand in a focused area with a lot of passion. Since it’s a lifestyle play, subscriptions doesn’t make a lot of sense; instead Hodinkee’s DTC play is in commerce.
Beyond the Pujol mole, my favorite food in Mexico City was the chile en nogada at Nico’s. Unlike Pujol, which is in the fancy part of town that has a disturbing number of heavily armed security guards, Nico’s is in a nondescript neighborhood nearby several auto parts stores. The food is outstanding, in particularly the chile en nogoada, a stuffed pepper dish often eaten around Mexican Independence Day celebrations. Put it on your list once everyone starts to travel more often.
Just to say it, this "new" b2b media model is not new. Successful b2b publishing has always focused on affinity -- the first time around (when Norman Cahners, Bill Ziff and Pat McGovern built empires on top of the model), the foundation was qualified subscriptions -- where you had to clear a budget-authority bar in order to qualify. The best editors would tell you they ran their b2b editorial the same way the editor of Stereo Review ran his -- appealing to peoples' (professional) passions. This time, it looks like engagement is going to be the qualification (see Morning Brew's recent post) -- if you don't engage, you're dropped. That's just another measure of professional passion. The first time, ads were the primary revenue stream, but not the only one -- direct sales to subscribers of ancillary products and services were common among the successful publishers. A devastating ad recession from 1991-1994 decimated that first wave of successful b2b media -- just long enough ago to remove a generation of institutional memory about what made the model soar. There are still a few folks around who ran those editorial and sales though -- they'd be worth a conversation.
i'm down with the mole