A little over a year ago, I wrote about the popping of what I called the “VC-fueled media bubble.” For a period spanning from about 2012 to 2018, Millennial-focused publishers raked in hundreds of millions of dollars in easy venture capital investment, but this cash waterfall dried up soon after Facebook announced in 2017 that it was pivoting away from news. Within a year, publishers were missing their chimeric revenue projections and investors started fleeing the media sector in droves.
Companies like Vice and BuzzFeed, after years spent bragging about monster VC raises and hockey stick growth, suddenly started laying employees off in an effort to claw their way into the black. Smaller outlets like Mashable and Mic were gobbled up in fire sales. In the year since I wrote that column, VC firms have generally avoided throwing more money at digital publishers.
That’s not to say there aren’t a few exceptions, the most notable of which is The Athletic. Recently, investors plopped $50 million on the company in a Series D round, bringing the total amount raised by the publisher to a whopping $139.5 million.
What makes The Athletic the exception to the rule? Well, its business model certainly seems unique. Since its founding in 2016, the company has gone from city to city and lured the nation’s best sportswriters away from their newspaper jobs in exchange for huge salary bumps and even a cut of the revenue they generate through subscriptions.
The Athletic is essentially securing the most knowledgeable beat writers for every professional sports team and locking their content behind a hard paywall. The writers, in addition to receiving the aforementioned salary bumps, are then freed from the content quotas that they were subjected to at their old jobs and told only to write stories that are truly original.
Paul Fichtenbaum, Chief Content Officer at The Athletic, hammered this point home in a recent interview. “I tell our folks ‘watch the game, don’t type,’” he said. “After the game, don’t go to the press conference because that’s where everybody gets the same quote. Go find somebody who’s not there. Go talk to some other personnel from a team, develop sources. If we get the same information as everybody else, then why would people give us their credit cards. It’s really about differentiation and uniqueness.”
By generating truly original content and placing it behind an advertising-free paywall, The Athletic has created a differentiated bundle that sports fans, known for their slavish devotion to their teams, can’t resist. By August, the site had signed up over 600,000 subscribers who pay roughly $60 a year for its coverage, and its executives projected that it would reach 1 million subscribers by year’s end. Today, it employs more than 500 people, most in editorial, and it’s aggressively expanding into Europe. “Soccer has far and away been the new thing for us and it is the thing that probably has the highest ceiling of growth, so we will continue to invest there,” said co-founder Alex Mather.
While there are lots of interesting aspects of The Athletic’s content strategy that are worth covering, for the purposes of this piece I want to focus on its approach to local news, because, at the end of the day, that’s really what the company is delivering to its readership. While paying subscribers get access to The Athletic’s full bundle of content, the main draw for most users is coverage of their local sports teams.
When you think of the traditional local newspaper and the role it plays in its community, you probably picture a print or web product that bundles several niches, including schools, government, lifestyle, sports, and business. If the newspaper operates in a big enough market, it might assign individual beat reporters to cover these niches, but a lot of local journalists actually report on a wide range of subjects. In my first jobs writing for newspapers, I covered everything from local town council meetings to high school graduations to coffee shop openings.
The Athletic’s chief innovation is that it unbundled local newspapers by luring away its top sportswriters and then combined their content into an entirely new bundle that focuses solely on serving one very specific type of news consumer. Whereas traditional local papers must cater to multiple constituencies interested in a broad range of subjects, The Athletic can hone its product to attract a single demographic: sports fans. And the fact that it’s stealing away newspapers’ best sportswriters gives it further advantage. “We will wait every local paper out and let them continuously bleed until we are the last ones standing,” Mather told The New York Times in 2017.
Its founders’ arrogance aside, I do think The Athletic’s success in its mission should cause us to rethink how local news can be monetized. Instead of treating it as an all-you-can-eat buffet, is it possible to take the traditional local newspaper beats — government, schools, business, and crime — and spin them off into their own niche publications?
Though no company has done this with the same scale and breadth as The Athletic, I can think of at least a few publishers that adopted similar models.
One of my favorite examples is a company called Technically Media. It’s a publisher born out of the Great Recession, in that its founders literally couldn’t find any jobs after graduating college and launched the initial website out of desperation. After attending a few local events put on by the tech community in Philadelphia, they realized that there were no news outlets servicing this emerging sector. “I found there were these really interesting tech stories locally in Philly, and there wasn’t anyone writing about some of the topics,” Brian James Kirk, one of its three founders, told me back in 2015. “Business coverage from newspapers was mostly focused on the big companies and most tech coverage was self-reported from the community, either on Twitter or blogs.”
So he and two other college classmates created a blog called Technically Philly, and it didn’t take long for it to become a daily read for Philly tech employees. After several failed attempts to drum up traditional advertising, the Technically Philly founders pivoted to live events and suddenly found themselves running a profitable media company. They later rolled out a tech jobs board and charged companies to post to it.
Within a few years, this bootstrapped company was generating enough revenue that it was able to expand into other cities, and today it publishes local tech news in Brooklyn, Baltimore, DC, and Delaware. “We don’t need the biggest audience,” Christopher Wink, another co-founder, told me in a podcast interview. “We have a super small audience relative to our 20-person team. We don’t have millions of pageviews a day. The business model we were building was dependent on the quality of our relationships with our audience, so niche makes sense.”
Chalkbeat is another organization that adopted the niche + local model, although it went the nonprofit route. It’s the outgrowth of two education news sites that merged in 2008, and in the intervening decade it’s expanded to seven bureaus that operate in Chicago, Colorado, Detroit, Indiana, Newark, New York City, and Tennessee. Its mission statement is to “inform the decisions and actions that lead to better outcomes for children and families by providing deep, local coverage of education policy and practice.”
Chalkbeat relies on a mixture of revenue sources, with a sizeable portion of its funding stemming from foundational support. But there’s also ample incentive for each bureau to service its local community to the maximum extent possible. “We require our bureaus to have the majority of their funding come from the local community,” Maria Archangelo, Chalkbeat’s senior director of partnerships, told Nieman Lab. “The thinking of that is, if the local community wants us there, that’s better for all of us.”
It’s hard to say whether The Athletic is actually worth its $500 million valuation — as I noted on Twitter, I’m hard-pressed to name a single digital-only publisher that sold for that much — but you can’t deny that it’s developed a strong business model by servicing its audience with a laser-like focus. Given the current struggles in local news, with newspapers facing mass closures and layoffs, there may be room for more niche coverage at the state, regional, and city level.
Local news doesn’t need to be an all-in-one bundle, a smorgasbord of disparate beats. Sometimes, servicing a narrow constituency not only produces superior coverage, but it may also result in a better business model as well.
Simon Owens is a journalist living in Washington, DC. His weekly newsletter provides deep analysis on the media industry. You can find it over here.