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The numbers behind Jill Abramson and Steven Brill’s new media venture don’t add up

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At a recent journalism conference, former New York Times executive editor Jill Abramson dropped a minor bombshell when she said she was working on a startup with veteran media entrepreneur Steven Brill that would pay journalists $100,000 to write longform investigative pieces. More details have since emerged about the project, which Brill says will be subscription based, and involve an online magazine. But it’s safe to say that many media industry observers are skeptical of the pair’s ability to turn the idea into a financial success.

According to an interview Brill gave to Capital New York magazine, the venture — which doesn’t have a name yet — will be run by Abramson and himself, and will commission articles on a variety of topics that will be longer than a typical magazine piece but shorter than a book-length manuscript usually is.

Brill said that writers will earn an average of $100,000 per piece, but suggested that they could stand to make even more than that by sharing in the revenues generated by the project’s subscription business (this sounds a little like the model that crowdfunding platform Beacon Reader uses, where revenue is pooled among all the writers, but I’m pretty sure they don’t pay $100,000 per piece). Said Brill:

“The point is that writers (or producers in the case of more video-oriented material) of serious, quality stuff will be paid really, really well — and they will also have an upside if what they produce does better than expectations. Everyone who writes something is going to have some skin in the game.”

Subscription models are challenging

The founder of CourtTV and the paywall-management company known as Press+ — which was sold to RR Donnelly in 2011 and later bought by Slovakian paywall operator Piano Media — said that he expects subscriptions will generate the majority of the company’s revenue, although both he and Abramson have said that they are also looking for venture financing or other forms of financial backing.

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Each story, Brill said, will make up a single issue of a monthly online magazine whose name hasn’t been divulged yet. As an example of what the company might produce, he cited his own 24,000-word article on American health care, which ran in Time magazine after The New Republic reportedly turned it down.

The central question for the venture — and the reason why so many are skeptical — revolves around whether there is enough revenue available from subscriptions to pay a significant number of journalists an average of $100,000 for a single longform article. For the most part, subscriptions for journalistic content are in the $10 to $20 per month range, with the exception of sites like the Financial Times or The Information, which cater to a hard-core business audience and charge upwards of $40 a month.

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If the Brill/Abramson venture charged $10 or $20 a month, it would need between 400 and 800 subscribers just to pay for a single commissioned piece at an average of $100,000 each. Even if Brill’s venture was to charge the same as The Information right out of the gate, it would still need over 200 subscribers just to pay for one article — and if it wanted to commission dozens, which it presumably does, it would need anywhere from 2,500 to 5,000 subscribers just to break even.

Running a media company is expensive

Even those numbers don’t include all of the overhead costs of setting up a company, of course, or renting office space or hiring office staff, or handling the administrative tasks of finding and paying writers to turn out these longform articles. And most subscription-based ventures — the New York Times included — see a huge amount of “churn” or turnover as subscribers leave and have to be replaced.

To get an idea of what kind of challenge Brill and Abramson are facing, we only have to consider that a well-established writer like Andrew Sullivan of The Daily Dish — who has one of the most successful personal paywalls in the industry — spent a year and barely managed to get to $1 million in revenue. Byliner, whose model was to commission longform work and then sell it on the Kindle, eventually failed and shut down, and so have other ventures aimed at the same market.

I should note that I wish both Brill and Abramson well with their venture. The media landscape needs all the ambitious journalistic projects it can get, and I’ve already said that I would prefer to see experiments like Vox and First Look Media occur — even if they ultimately fail — than see none happen at all.

Obviously, Brill and Abramson have some name recognition in the industry, and no doubt have plenty of contacts in journalistic circles. Their ability to find people who can write compelling longform journalism isn’t in question, nor is their ability to sell media outlets like Time on the value of those articles. Whether they can do all of that and be financially successful, however, is a much harder question.

Post and thumbnails courtesy of Thinkstock / Selen Sergen

2 Responses to “The numbers behind Jill Abramson and Steven Brill’s new media venture don’t add up”

  1. Joshua White

    As someone who tracks, measures and optimizes journalism economics for a living, I actually see this model working out fine. Brill and Abramson will have, in theory, a relatively low editorial budget for their monthly magazine: $1.2m. Assume that they have more than 12 stories going per year, they could actually have a budget closer to $2m per year. (Or, they might want to hire more journalists to write follow ups on the main monthly article.) Still, I would be that a lot of new journalistic enterprises have budgets bigger than $2m/year.

    • I agree that $1.2 million is not an unreasonable annual budget…but where are you going to find hundreds of people willing to cough up $120 to $240 per year for a mere 12 articles (per *year*)?

      Without knowing the subject of said articles?

      This isn’t a mass audience endeavor.

      This *is* perhaps a sandbox effort trading upon the Rolodexes of two connected players and the overstuffed wallets of their friends, acquaintances, cronies, acolytes, hangers-on, etc.

      It is midtown Manhattan, media incest Kickstarter.

      The average *free* short-form internet news item might get a couple thousand views (if packaged together/linked with hundreds/thousands of other pieces) – and there are plenty of well-deserving pieces that get absolutely no play.

      The same stats would apply to this project if freely available (a few thousand hits per average piece with perhaps one or two pieces hitting a 100k+ views…over a *year*).

      And given the collapse in CPMs due to the ubiquity of free internet content, a free version of this project would be utterly doomed.

      (12 articles a *year* doesn’t even match the *hourly* output of HuffP0…we aren’t talking quality here – but rather economic sustainability).

      And it is hard to call something “media” when it is only *maybe* addressing itself to a couple of hundred Facebook friends guilted into paying for it.

      There are tinfoil-hat newsletters that have more than a few hundred subscribers…but their proprietors aren’t midtown players.