Audience Engagement Digital Publishing
3 mins read

Growing an employee-owned newsbrand: Insights from Defector Media

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This week we hear from Jasper Wang, VP of Revenue & Operations for Defector Media. Defector was formed after a mass staff exodus from former GO Media property Deadspin after an internal dispute about who knew its audience best.

Defector is now an employee-owned and operated news site that has introduced measures specifically to ensure its staff have a say in the business, even as they write for its audience. Now, on the first anniversary of its founding, we hear about the site’s ambitions, how it keeps its staff safe and happy, and what other media businesses can learn from an employee-owned outlet.

In the news roundup Chris and Peter take a look at GB News’ launch one week on, ask if there’s a future for The Athletic now that talks with the New York Times have broken down, and suggest that perhaps privatising Channel 4 in the current climate isn’t such a great idea. There’s a special appearance from a bird directly outside Chris’ window.

Here are some highlights:

Establishing a business model

The operating model and the business model, both of those come directly from just knowing our own audience.

So if we take the business model, first, we are subscription supported, because we knew there was a rabid group of readers, and is that millions? No. But is it tens of thousands, maybe even hundreds of thousands? Yes. And so the quickest way to get to some cash flow was to ask people to pay subscriptions directly.

And we had 10,000 paid subscriptions, within 24 hours of announcing the project. We’re at about 39,000 total paid subscribers. We’ve been able to expand the newsroom by a couple of people, we’ve been able to pay everybody a workable salary.

A unique structure

We’re entirely employee owned. I think if you looked at the the newsroom side, you would say, ‘Oh, this is actually pretty conventional.’ Tom Ley is the Editor in Chief, we have a set of editors, we have staff writers, Tom sets the editorial vision, the editors assign stories, commission freelance pieces. That’s all fairly conventional…

If you look at the operations of the business, it’s very different from other media companies or other companies in general, I guess. I’m the business leader, but I only have one full time person and one part time person on the business team. We have an array of outside partners and vendors, outside legal counsel, accounting, bookkeeping, HR partners, obviously all of our tech is outside. So I manage across all of those.

But our editorial staff – all of them – are expected to participate in the operations of the business. And so depending on the week, or the person, I’d estimate they spend somewhere from five to 20% of their time thinking about, “business decisions” that they otherwise wouldn’t in their editorial role.

Dividing up the profits

We pay ourselves a sliding scale. So everybody gets a salary that we get paid bi-weekly, like any other salaried position. But then every quarter, we look back at the last quarter and say, ‘Okay, which of this cash can we distribute as additional salary?’

It’s pretty conservative as far as cash management goes; we’re never paying out ahead of actual recognised profit. But that only works if everybody is an owner or feels that they are in control of the direction of the business in some way, that they’re not going to get screwed over by some other party.

We know every quarter, we’re going to look back, and we’re going to distribute some amount of money. And that is, for us, the mechanism to be sustainable every quarter after quarter.

Focusing on subscriptions

On the commercial side, so about 95% of our revenue right now comes from direct paid subscriptions. And the other 5% is a combination of merch sales, sponsorships on the site, podcast, ad revenue, Twitch streaming ad revenue split.

And so in terms of growing…for the subscriber base, I think we can still grow that. Every week or two, we get an email from someone who says, ‘You know, I used to love reading so much of the old site, and I didn’t know about Defector. But I’m glad I found out about it.’

And so there’s still some low hanging fruit as it were to just reach those people who are wondering where this group of writers went. But we also hope our writing can reach other populations who didn’t necessarily know the origin story, and they just, they just like the writing, and they’re willing to pay for it.