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How stealable is Politico’s success? Not very

Fishbowl DC has obtained an in-house Politico memo about the web site’s post-election future. Lots of interesting stuff, but I want to highlight a few points and what they tell us about their business model. (Politico is privately held, so hard numbers are hard to come by.)

In our first 21 months, Politico has frequently achieved profitability as measured on a monthly scale. (When Congress is in session, our ad revenue is higher.) Our goal for 2009 — one we fully expect to achieve — is profitability on an annual basis.

An important point: Politico actually has two different cyclical advertising sources: campaign advertising and lobbyist/political influence advertising. While the first has just vanished, the second is about to ramp us, as a new set of political players arrive in Washington.

Our average monthly revenue in 2008 grew by 105 percent over 2007 — an increase powered heavily by our print edition, which has become a must-buy for any advertiser trying to sway opinion on Capitol Hill.

That’s a reminder that while 95+ percent of its readers get Politico online, the vast majority of its revenue still comes from its thrice-weekly print newspaper, which is free in sidewalk boxes around D.C. With millions of readers online and only 23,000 in print, Politico still generates 60 percent of revenues from the print product.

For all our satisfaction with these numbers, is important to be realistic about traffic. We have no doubt that traffic will dip — how much, we don’t know — following the election. When it does, this won’t be cause for alarm. The reason is that Politico’s business success — what will sustain our editorial success over the long haul — is not primarily dependent on a mass audience. The main part of our revenue, in print and online, comes from advertisers who want to reach our audience of Washington influentials — and know that the best way to do it is to buy space next to coverage that has impact and that people are actually reading.

This, I think, is why Politico’s apparent success is less useful as a direct model for other publications that one might hope. They have a very unique readership that lobbyists and interest groups will pay top dollar to reach. That’s great for them — I’m just saying it’s not an easy model to duplicate in Scranton, or even Chicago.

                                   
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Mark Coddington    April 18, 2014
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