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July 19, 2016, noon
Business Models

With 11,000 subscribers, Talking Points Memo says its paid product has helped stabilize its business

“The idea of publications totally based on advertising is, I think, an illusion. Some can do it, but I don’t think it’s ever going to be a sustainable model for most publications.”

What are the benefits of paying Talking Points Memo $50 a year (or $5 a month) for a TPM Prime subscription? You get perks like a premium layout and a members-only discussion forum, but most important is probably the warm, fuzzy feeling of supporting independent journalism — and reducing its reliance on the unstable world of digital ad revenue.

Since introducing TPM Prime back in 2012, Talking Points Memo has convinced roughly 11,000 readers to deepen their relationship with the brand by opening their wallets. Many have been compelled by those perks, which TPM has slowly expanded in number, Amazon Prime-style, over the past few years. But many just want to help support the site and see in-depth longform journalism get produced — even if they don’t manage to read all of it.

The latest addition to the package is The Arch, a new magazine offered offered exclusively to TPM subscribers. Talking Points Memo is rolling out The Arch in phases, starting with an in-depth piece on the history of the AR-15. While these kind of more ambitious pieces aren’t new to TPM Prime, the success of the product over the past few years has made it possible for Talking Points Memo to pour more resources into the effort, said Josh Marshall, TPM’s founder, editor-in-chief, and publisher.

“People like to read longform writing about topics they’re interested in, but they also just like that it exists,” he said. “Readers know all of the stresses that the news and publishing industry are facing and they know how these pressures are leading publishers away from going really deep on fascinating or very important topics. So when they see it being done, they’re excited by it.”

The Arch is the first of a handful of new additions to Prime that TPM plans to add over the next few months. Marshall said that the site’s goal is to end the year with a subscriber base approaching 20,000.

I talked to Marshall about the evolution of the TPM model, the stabilizing power of subscription revenue, and why the key to running a media business today might be to embrace suffering. A lightly edited transcript of the conversation below.

Ricardo Bilton: You announced TPM Prime almost four years ago. How has it changed since then?

Josh Marshall: The broader change we’re making, which I’d say is more of an evolution, is that our whole focus as an organization now is on building a tighter connection with our core readers and creating a tighter fit between the publication those core readers. Obviously as a site, our core readership is only a small fraction of the overall readership that we have every month, but it’s particularly key to us. It’s our base.

Our whole thinking is based on the premise that scale is greatly overrated, which is not a totally unique thought these days. That premise has been the one we’ve been working on since 2012, and it’s shaped all of our business strategies. We’re finding ways to build revenue streams that are based on what’s unique about our core audience and brand and letting other publications that are focused on scale and social media propagation do their own thing. We have a very different strategy.

Bilton: You wrote last year that one of the big challenges for media companies, especially newspapers, is that they’ve gone from a model based on the competitive advantages of local monopolies to one where there is more intense competition. Differentiation and leaning in on what makes your audience and brand unique is a lot more important now. How core is that thinking to what you’re doing with TPM Prime?

Marshall: It’s is a big part of Prime, but it’s also core to our ad sales and overall editorial strategies as well. There are obviously sites like HuffPo and BuzzFeed that are doing great, but they’re also driven by huge amounts of venture capital and predicated on what may be a shaky foundation with their reliances on certain social networks and changes in the ad industry. Basically, in today’s ecosystem, uniqueness is the substitute for geographical monopolies.

Bilton: TPM Prime is a subscription product with a variety of perks, including a members-only discussion and ad-free mobile site. What is the thing that ties all of those features together?

Marshall: They are going to be deeper dives into things that are core to TPM, whether that’s longform articles, conversation areas, podcasts, stuff like that. The public TPM model is our iterative, very fast-paced running with the news through the day. That’s something we had a role in pioneering in the online space and something that is part of the basic DNA of what we do. It’s also by its nature very ephemeral, since it’s so fast-paced. Everything that is part of Prime is deeper dives into the topics were interested in and the conversations we want to be having.

Bilton: From what you can tell, which features are resonating most with subscribers?

Marshall: A big chunk of it is that people want to be connected with and support a publication they love. That is always a core part of it. Over time, fewer ads and having a cleaner, less cluttered version of the site has been a really big attraction. That’s also something that tends to hold people. For instance, once you go to your favorite site with a lot fewer ads, which is obviously something we make possible because of the membership fees, you don’t want to go back. That has been a growing part of it.

Then it’s more spread out. There’s a certain core of people for whom the whole thing is having the full-feed RSS. It’s a small portion of them, but there’s a certain number of people where that is the entire thing because they’re just RSS fanatics. For other subscribers, its all about The Hive, our community product.

Bilton: But it’s also about creating things that are unique to the paid product.

Marshall: That was for me the original premise of Prime. We have a core readership, but before Prime and other changes we made over the last few years, our business model wasn’t aligned with that core readership. So there were things we knew that our core readership might like, but they weren’t really the things we could do at scale because of the publishing economics. One of my initial thoughts for TPM Prime was that it should become a vehicle where those things became economical to create.

Bilton: So where does the core daily coverage fit within this? How do you think about pushing some of your regular readership to subscribe?

Marshall: For us, there are different parts of the model. I think its possible that we could totally paywall TPM and be a more profitable business by doing exactly what were doing right now but not let people read anything unless they’re a member. But we wouldn’t do that, even if it would make a more profitable company, because the whole reason we do this is we want to have our coverage be out there and hitting, in relative terms, a big audience and affecting news cycles.

Obviously a big part of our business model is — and we do not anticipate this ever changing — is still based on a mass audience and advertising. This allows us to do both things that are key financially and key editorially.

Bilton: When publishers talk about getting revenue directly from readers there seems to be a tendency to make the value proposition about access. As in: If you want to read this article, or have unlimited access to article archives, you’re going to have to pay for access to it. How sustainable is that approach in the long term vs. the TPM Prime strategy, which seems more built on support and deepening relationships?

Marshall: I think that for a publication like TPM, it has to be both. You have to create a strong relationship with readers, but you also need to provide additional things that would give them more reason to pay. It just depends on the things you provide.

Fundamentally, 99 percent of what people see now, the daily stuff we put out every day, we plan for that to always be available to the public. But if you are someone who comes like half a dozen times a day — and we have a lot of those people — it’s going to be a much more pleasant experience if, for example, there is only one or two ads on every page.

Bilton: Running a media company is hard today, not just because of the existing business challenges, but because it’s not clear which current business models will be sustainable in the long run. From your perspective, what’s been the hardest part?

Marshall: The newspaper industry was dynamic but fairly stable in technological and editorial terms for 60 or 70 years. Yes, it was different in the ’80s than it was in the ’30s, but fundamentally, it was the same. From the very beginning, we realized that there is no platform stability ever in this business and that being in it requires a comfort with constant change on every front. It’s like the Buddhist thing: Once you realize that life is suffering, you achieve transcendence. And once you realize and accept that there is constant change and no stability in the news publishing industry, you realize that there is a better way to go about things.

Bilton: Yeah, change is constant, but I’d imagine you’d also need some stability as well.

Marshall: Having a mission helps with that. TPM is fundamentally an editorial publication. It didn’t come into existence as an investment. It’s a for-profit company — it makes money — but that’s not its reason to exist. We have a certain set of values and approaches that we take with stories we’re interested in and people we want to work with. And that has anchored us over time in a way that has been very powerful for us as an organization. It keeps us focused. We’ve looked for an evolving set of ways to allow us to do what we want to do. Our mission has been a lodestar for us, even as everything around us has changed.

Bilton: Subscriptions help with that as well, right? Beyond revenue, having that kind of model also stabilizes you because it gives you a general idea of what your revenue will look like next year.

Marshall: That’s exactly right. Again, our ad sales model is a mirror of TPM Prime in that it is very focused on a particular audience we have and selling in a space where we know there is a certain kind of a demand for a certain kind of unique audience. All of that creates stability. If Facebook changes some algorithm, or suddenly everyone is interested in this new kind of bell and whistle, that’s not going to throw us as much as it’s going to throw others.

Bilton: The advertising climate right now makes that even harder.

Marshall: A huge amount of what we’ve worked on in recent years is creating not just a more profitable business but a more stable one. So we really know where revenue is coming from. We always wanted TPM Prime to be a bigger part of our revenue base. We love our advertisers, but fundamentally our readers have a real commitment to our continued existence, whereas our relationships with advertisers are, by definition, purely transitional. That’s the nature of it. You really want a strong foothold of your business to be anchored in people who are really committed to you sticking around.

The idea of publications totally based on advertising is, I think, an illusion. Some can do it, but I don’t think it’s ever going to be a sustainable model for most publications. There something great and special about any publication that people think is valuable enough that they’re willing to pay for something for it.

Photo by Gretchen Caserotti used under a Creative Commons license.

POSTED     July 19, 2016, noon
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