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In 2006, Jim VandeHei left a prestigious position Washington Post in 2006 for an unknown start-up called Politico. Today, the publication is a fixture of the political reporting establishment — so much so that a reporter on House of Cards joins a fictitious start-up because: “Six months from now, Slugline will be what Politico was a year and a half ago.”
How does Politico plan to stay fresh while also making money? Executive editor VandeHei, who has an intense stare and speaks a bit like a character from a Christian Slater movie, shared some thoughts last week from the publication’s office in Arlington, Va. Here’s some highlights (our conversation has been edited for length and clarity).
Competition and staying relevant
Politico shook up the Washington media establishment when it launched in 2007. Do you feel as relevant now?
JV: We’re still in the middle of the great media disruption. Anyone who thinks that because they have success today, they’ll have success tomorrow I think is a fool.
We’re constantly evolving our content and our technology to the ways that people are actually consuming information rather than the way we wished they would consume it. One of the things that makes me most proud about Politico is that six or seven years into this, we’re as restless today as when we launched the publication. Every media executive has to think that way or you’re just going to get your clock cleaned.
Who scares you the most?
JV: Our core competition journalistically is the Washington Post, the Wall Street Journal, the New York Times. Financially, our competitive sets are different. On issue advertising, it’s everyone from the Post to the Atlantic to Roll Call. When it comes to selling high-end subscriptions our competition is Bloomberg’s BGov and, to a lesser extent, CQ and National Journal.
Who scares me the most? The entity that should worry media companies the most is Bloomberg because they have huge ambitions and huge cash reserves and they clearly have an appetite for more Washington coverage.
What about the people who say Bloomberg’s Washington strategy has fallen short?
JV: It seems BGov hasn’t been as much of a success as Bloomberg had hoped. I would like to think that we’re one of the big reasons they’ve had trouble penetrating this market. Through Pro, we produce a product for each particular vertical and we have expertise in the Washington market. What might have hurt Bloomberg when they came into this market is that their expertise is fundamentally in financial information and New York. There’s a different type of expertise and reader here.
On making money in media
What about growth? How do you grow in a small, saturated Washington market?
JV: You grow by finding new revenue streams and squeezing more money from the revenue streams you already have. This is a unique market where almost all of our advertising is advocacy advertising. Every person in this space feels Politico is the first stop they have to make to influence lawmakers. We continue to grow that slice of the pie every year. Can we grow it forever? I don’t know.
But like any media company, you don’t want to be dependent on one revenue stream so about three and a half years ago we launched Politico Pro, our high-end subscription service. We also added events and the last few weeks, we’ve been testing metered subscription in six different small states scattered across the country.
What about pricing for Pro? You guys have been a little coy about describing specifics.
JV: I don’t know if we’ve been super coy. The problem is that, when you say you have 1,000 subscribers, that includes subscribers like Microsoft that have hundreds of licenses. Subscriptions can run at the low end in the $7,000 range to, at the high end, six figures, depending on the institution. It all depends on how much content you need, how many verticals, how big your organization is.
We get 96% renewal rates and everyone pays more the second year than they did the first year. We have 230-240 employees and will have about 265 by the end of year. It’s a growing media company.
What was up with the layoffs (reported in January by the Huffington Post’s Michael Calderone?)
JV: We never had layoffs. We’ve had people that come and go — I can’t imagine a journalistic market that has more turnover than this one. We told them it was a stupid story when it was written and it’s proven itself to be.
We’re continuing to grow. And that’s why we think a lot about the business and economics of this – I don’t ever want to work for a company that has to lay people off. I’ve been at one of those and it’s not a fun thing to be part of. We think as much about the business side of journalism as we do about the journalism side of journalism. The two have to work together.
You’re experimenting with the content engine Taboola, which displays a lot of scare ads about cancer or buying gold. It’s a revenue stream, but do you ever worry about compromising the user experience?
JV: Let me put that in two categories. One, we’re lucky in that we usually sell out our Washington inventory direct, which allows us to get a pretty nice CPM. Most of our ads are premium, advocacy ads. For some of our national buys, there probably is a fair amount of network ads and we’re careful not to let them cheapen the site, though one or two might sneak through occasionally.
But as for cheapening the user experience, I worry a lot more about the design of the site than the specifics of the ad. I think that media, because it’s trying to test so many things simultaneously, has sort of created a NASCAR-effect to web design with all kinds of crap everywhere that nobody’s looking at. It’s incumbent on all of us to simplify the design.
On media stars and the future of journalism
What about the trend of star journalists becoming their own brands? Ben Smith decamped for BuzzFeed, Andrew Sullivan left the Daily Beast to start his own site and Nate Silver could leave the Times to set up shop on his own. Is that an issue for Politico?
JV: It is what it is. I think it’s fabulous for journalists. You can suddenly get in the business of journalism, create a public identity and reputation, and – if you’re so good that you can build a substantial following, you, yourself, can be a franchise. You can actually make money in journalism. Hell, you couldn’t do that five or 10 years ago.
People might bemoan what’s happening in journalism, but we don’t have time to whine. We have to deal with: what are the trends in journalism and the way people are consuming information? And then produce first-class journalism and hook it up to a first-class business model. For the rest, let the hand-wringers worry about it.
How will the impending sale of the TV stations held by Politico’s parent company, Allbritton Communications, affect operations?
JV: It should affect us in pretty big ways. Robert Allbritton’s a young guy in his 40’s who’s been a tremendous publisher and extremely supportive of this publication. He’s basically asked us to go out and find other things in media for us to invest in, inside and outside of Politico. I think the sale of the TV stations is nothing but good for Politico and nothing but good for media. The more people we have out there testing what works and what doesn’t, the better chance we collectively have as an industry to find ways to make all this work in a way that educates, informs and entertains people.
On media habits and (not) watching TV
What are your own favorite journalists and publications?
JV: I live and breathe politics so obviously, it’s Politico. I’m a sports junkie, in particular a Green Bay Packer junkie, so I spend a lot of time on Bleacher Report and the Milwaukee Journal Sentinel Packer page.
I’m a big admirer of David Carr of the New York Times and Jim Romenesko — what Niemen does and what Columbia does. All Things Digital and Kara Swisher, who is a person I deeply admire.
Foreign Policy is a fantastic site that I feel is modeled after Politico and has done a good job of dominating the specific space of the media [apparently: Politico just hired FP’s editor-in-chief]. I remain a huge fan of the Wall Street Journal, where I once worked, and the New York Times. My absolute favorite column in the Times is Corner Office, which is the first thing I’d read on a Sunday morning.
Do you have time for TV or movies?
I really don’t. We finally got out of the dark ages and got Netflix and watched House of Cards. You’d think I’d have more of a life and watch something that has nothing to do with politics, but I don’t. I have young kids so we’ve watched American Idol until this season, which sucked. But if I’m going to watch TV, 90% of the time it’s going to be news like Charlie Rose or 60 Minutes.
Anything else about Politico or about you that you want to get out there?
When people cover us and think of us, I sometime worry that people view us through the lens that we’re the New York Times in 1995, and the obligations the Times had to a broad readership and to define what people should read and not read – as opposed to what we are, which is a specialty publication for political and policy junkies.
Fundamentally, it’s just a bigger version of the beast we created in 2007.