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Summary:

Blogging superstar Andrew Sullivan dropped a bombshell on Wednesday by saying he is leaving The Daily Beast and setting up his own subscription-based website. Can he become the first prominent success story in what some have called the move towards “post-industrial” journalism?

We’re only a couple of days into the new year, and already we have a defining media moment: Andrew Sullivan, the star blogger who built a huge following at The New Republic and Time magazine and later moved to Tina Brown’s new-media platform The Daily Beast, announced that he is splitting with the Beast and going solo — or rather, taking his small team and setting up his own media entity. Sullivan says he is not taking any outside investment and won’t rely on advertising to pay the way: instead, he is offering an annual subscription, and relying on the goodwill he has generated with readers over the years. Despite his following, however, it is far from clear that Sullivan will be able to make the transition work — yet if he does, he could become the first real success story of the post-industrial journalism era.

As my GigaOM colleague Laura Owen notes in her post on the announcement, Sullivan has been hosting an ongoing discussion on his blog about the changing economics of content, including the influence of tablets and the decline of traditional models based on advertising revenue (we are going to be talking with Sullivan about these and other topics — including his latest move — at our paidContent Live media conference in New York on April 17). And his former employer has been a perfect symbol of the kind of destruction these forces can create, having just shut down Newsweek magazine, which the Beast merged with two years ago.

In his blog post announcing the move, Sullivan makes it clear that his decision is about more than just his own welfare: he said he is trying to prove that a new-media model based on direct reader funding — something he tried for several years before allying himself with Time and then The Atlantic — can work for others as well:

“If this model works, we’ll have proof of principle that a small group of writers and editors can be paid directly by readers, and that an independent site, if tended to diligently, can grow an audience large enough to sustain it indefinitely.”

Can Sullivan survive on reader subscriptions alone?

New York Times

In a sense, this is the same kind of transition the New York Times and other media entities are trying to engineer, where reader subscriptions become the primary method of monetization rather than advertising. But while the NYT has been having some success in that department, the jury is still out on whether that model will work for others — or whether, as the authors of the recent Tow Center report on “post-industrial journalism” argued, the Times is such a unique proposition that it can’t be imitated by more than a select few (and at least one observer has said that Sullivan himself is the blogging equivalent of this problem).

The state of journalism as described by the Tow authors — media theorist Clay Shirky, journalism professor Chris Anderson and Tow Center head Emily Bell — is a landscape where the major media entities in virtually every field are being disrupted and unbundled, and where smaller players targeted at specific niches stand the best odds of success. It’s an almost Darwinian view of the industry, with slow-moving giants who are gradually replaced by more nimble and flexible species. And it’s also a more personal and human-sized approach, one that Sullivan clearly sympathizes with:

“We believe in a bottom-up Internet, which allows a thousand flowers to bloom, rather than a corporate-dominated web where the promise of a free space becomes co-opted by large and powerful institutions and intrusive advertising algorithms.”

The model Sullivan is banking on — which features a $19.99-per-year subscription, free incoming links from blogs and social media, as well as a “pay whatever you want” donation option — is similar in many ways to the freemium or membership models other sites have staked their future on, including Mike Masnick’s tech-opinion and analysis site Techdirt and Josh Marshall’s political news and opinion network Talking Points Memo. But while those sites are offering extra features for members (such as member-only discussion forums and access to extra content, etc.) Sullivan says non-paying readers who merely follow links to his content will get exactly the same thing paying readers do.

Do paywalls work better when they are for individuals?

In other words, Sullivan is betting that his personal brand and goodwill with his readers is enough to convince a substantial proportion of them to fund his writing — a more sophisticated version of the “tip jar” model. And within minutes of his announcement, dozens of prominent Twitter users and other Sullivan fans had announced that they had already signed up. As Laura Owen notes in her post, this could have a potential impact on The Daily Beast’s attempts to launch its own subscription model: what proportion of its readers would rather donate directly to support an individual writer, rather than have a blanket paywall around all the magazine’s content?

In a sense, Sullivan’s approach — if it works — poses a potential threat to traditional media entities that have built their businesses on strong personal brands: there has already been speculation that statistics superstar Nate Silver of the 538 blog might quit the New York Times to go it alone, and other name-brands at that newspaper and others might decide to take a similar route. Just as a growing number of authors have been cutting out the middleman by self-publishing their books, a membership model could mean independence for columnists who have traditionally been shackled to a large media entity (although some skeptics believe Sullivan’s move is more about self-interest than about a principle).

Even that model contains its own problems, however. How many individually paywalled or subscription-based sites will readers want to sign up for? Every Sullivan-like success story could make it increasingly difficult for others to follow in his footsteps. But for now at least, the Daily Dish blogger’s move is a very prominent thumb in the eye for traditional media players — and a flag of hope for every writer who has dreamed of building his own mini media empire.

Post and thumbnail images courtesy of Shutterstock/Africa Studio and Flickr user jphilipg

  1. This is a battle of followers vs. page views.

    Elephant in the room is who owns the followers: your employer or you, the personality.

    This is a significant development in publishing.

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  2. Greg Golebiewski Thursday, January 3, 2013

    Mathew, what is crucial here is that despite the (press) emphasis on the annual subscription part of Sullivan’s model, it consist of other monetization options as well.

    As Znak it! and I argued (and show data to prove it; http://bit.ly/MpKXY2), the mixed model works much better. If subscription can convert 1% to 2% of a site’s casual readers into paying one, then the pay-as-you-go (or wish) feature can increase this conversion rate to 9%, without cannibalizing subs. By adding other options, such as opt-in advertising, micro-syndication, and P2P distribution, publishers can reach even a 20% conversion rate.

    Perhaps the Dish experiment will be for the mixed model what the NYT was for the subscription-based paywall. Publishers and journalists like yourself, will finally move on and start considering options other than the metered paywall.

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    1. I agree, Greg — it will be interesting to see how it plays out.

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  3. Greg Golebiewski Thursday, January 3, 2013

    It already does, Mathew. The number of online publishers considering the mixed or — as we call it — integrated model grows. Integrated, because it offers several monetization options that can be used at the same time to reach the optimal conversion.

    Interesting enough, Znak it! has received lately several inquiries from publishers who want to switch form the Press+ powered paywalls to the integrated, multipronged solutions like ours. Or, in other words, they are not happy with the so-far results of their paywalls. They have enough data and experience to see now that the NYT model, however great for some, might not work well with many other publications — a message the payment professionals have been trying to convey for years now with little success. The online subscription economy is very demanding.

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  4. This is just another ala carte scenario that incumbent business models resist clawing tooth and nail, because they believe their marginal middleman contribution negates the ‘need’ for an individual tip jar.

    Well I hate to tell you guys, your perceived value is far higher than real world valuation. Have you ever stopped to think why Twitter is the juggernaut it is? It already delivers the ala carte and as narrow as you want it!

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