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Nov. 14, 2023, 12:49 p.m.
Business Models
LINK:  ➚   |   Posted by: Laura Hazard Owen   |   November 14, 2023

Defector Media published its third admirably transparent annual report on Tuesday, and said it’ll keep doing so “until the structures and dynamics of a business like ours (i.e., a subscription-first, worker-owned and -operated media company) feel so conventional as to be boring to our subscribers, interested media parties, and ourselves.” Count us among the interested media parties — here are a few bits from the report.

Defector has around 40,000 paying subscribers (starting at $8/month or $79/year).

The company earned about $4.5 million in revenue from September 2022 to August 2023, up from $3.8 million the previous year. The vast majority of that, 85%, came from subscriptions ($3.75 million).

The gross number of people who have ever held a paid subscription to is 57k. Net of churned subscribers (i.e., people who once held a paid subscription, but no longer do), we reached a high-water mark of 42.1k net active subscribers in late August 2023. In September 2023, roughly half of our subscribers faced an annual renewal decision. Slightly more than 90% of that cohort successfully renewed, meaning that we exited September with just over 40k active subscribers.

Approximately 60% of subscribers are Readers, our base tier; 30% are Pals, the next tier up; and 10% are subscribed via our Normal Gossip podcast products (Friend and Friend-of-a-Friend). We currently have about 80 subscribers at the $1,000/year or $100/month Accomplice level. More than 75% of our subscribers are on annual plans rather than monthly ones. Over the full period of Year 3 (September 2022-August 2023), the rate of retention for annual subscribers averaged out to 87%, with earlier subscriber cohorts generally retaining better than later ones and Pals generally retaining better than Readers. For those on monthly subscriptions, our average churn rate from September 2022-August 2023 was 4% per month, though that number varied meaningfully by cohort.

“The path that Normal Gossip has taken remains preposterous.”

Revenue from non-subscription sources — podcast advertising, events, merchandise, and so on — was up by more than half a million dollars, to $750,000 from $200,000 the previous year, thanks in part to the success of Normal Gossip, which is now in its fifth season. It undertook its first live tour last December and joined PRX’s Radiotopia network (for ad sales, marketing, and distribution) in February.

The path that Normal Gossip has taken remains preposterous. Millions of downloads, sold-out shows, things of that nature. In 2021, no podcast network wanted to underwrite the early episodes of a new concept; Alex [Sujong Laughlin] and Kelsey [McKinney] invited personal friends and called in favors to book Season 1 guests; Jasper [Wang] had to enter a lottery to earn the right to buy tickets for a podcasting business conference (reviewing his notes from the conference, he circled “upload episodes to YouTube?” as the big takeaway). By 2023, an array of podcast companies had submitted bids to have Normal Gossip join their networks; PR teams routinely pitch their celebrity clients as episode guests; Kelsey and Alex are adjusting to being notable figures in the audio world; members of the team are regularly invited to speak at industry events.

Defector’s profile has risen in the podcast industry and we hope to develop new shows in the future, but we have no delusions that we will ever publish another show as successful as Normal Gossip.

As previously mentioned, Normal Gossip has two separate subscription products with more than 4,000 subscribers between them: “the $5/month Friend-of-a-Friend tier (access to exclusive subscriber episodes plus a limited number of Defector blogs a month) and $12/month Friend tier (access to the exclusive episodes, plus a chance to be the guest on those episodes, access to Normal Gossip ‘Close Friends’ Instagram Stories, and full access to Defector blogs).”

“Relatively few” Normal Gossip subscribers regularly read, the report’s authors (Defector editor-in-chief Tom Ley, VP of revenue and operations Jasper Wang, and head of subscription strategy Sean Kuhn) write, and “a challenge in the coming year will be to help Normal Gossip subscribers begin building the habit of regularly reading the on-site Defector writing, so that NG subscribers will have more familiarity, and hopefully see more value, with the broader Defector brand and products.”

“Good blogs are good for business.”

“It bears repeating each year: We believe good blogs are our best marketing tool for acquiring subscribers,” Ley, Wang, and Kuhn write.

You, a savvy businessperson who has now read 10-plus pages of Annual Report, might ask: Why don’t they build the whole site out of top-5%-type blogs? Surveying the top-5% blogs provides an answer: The blogs which generate the most registrations are a mix of: (a) Big Swings that take a long time to research, report, write, record, and edit; and (b) timely responses to the day’s news in one of Defector’s voices. Work in bucket (a) typically develops slowly — if everyone did this work all the time, we couldn’t reach our normal level of blog output. And the breakout success of a blog in bucket (b) depends on exogenous factors like the nature of the news itself and how well the news matches who is available to blog when it breaks (and apparently how long the headline is).

Crosswords are key

Defector ran a 70-question reader survey this past summer and got about 18,000 complete responses.

These responses have already informed both: (1) our coverage plans (subscribers and non-subscribers alike want to see more Politics and Arts and Culture); and (2) our prioritization of non-blog efforts (respondents were most-interested in crosswords, dark mode browsing, and new podcasts) for the coming year.

These products are included with existing subscriptions — no “Defector Games” (yet). Defector Crosswords launched in August.

Our Growth Committee discussed launching a new “Defector Games” subscription product at a few dollars a month, that would include access to the crosswords and some set of TBD benefits. But figuring out and administering those other benefits would create additional technical work, promoting and analyzing the new subscription product would create additional operational work, and the hypothesis that there is some sizable population of “people already familiar with Defector’s writing who would finally be convinced to give us $8/month because they want the sports-themed crosswords” seems plausible enough that we’re simply including crossword access in the existing subscription products. We reserve the right to change our minds and break out a new “Defector Games” subscription, but for now we are going down the bundled path.

You can read the full report here.

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