There are two ways to build a successful media business. One is to grow so quickly to such enormous scale that you can command enough low-ticket advertising revenue to cover your enormous cost base; the other is to have a direct relationship to your user base that you can consistently monetise them directly.

That’s the contention of Rafat Ali, founder of business information publisher Skift, though he admits it’s not exactly an earth-shattering revelation. During his discussion at Digital Media Strategies last week, he was the first to admit that all the problems he identified with current digital publishing models are well-known – but unlike many analysts he also provided some potential steps publishers can take to avoid those pitfalls. 

He began by expounding on points made in an interview with TheMediaBriefing last year, in which he noted that by chasing enormous scale in the first place many news publishers have made themselves disposable:

“We overestimate our value to the society and the people that we’re serving in good and bad ways. The challenge is to become indispensible to the fabric of whatever audience you’re trying to serve.

“By pursuing strategies that lead to diffusion of its focus leads to diffusion of its editorial quality… they have made themselves disposable. Arguably now we’re seeing what’s happened by the strategies that media companies have pursued that they’ve become so weak in so many ways that Donald Trump comes in… and we’re in an existential crisis for media.”

Essentially, the mechanisms by which publishers have attempted to grow to reach enormous audiences have contributed to their brands becoming anodyne and have led to many of their audience members becoming news-brand agnostic. When people are thirsty for water, they don’t necessarily remember the details of the spigot.

When asked whether the recently reported success of news outlets like the New York Times and Washington Post in gaining new digital subscribers was a refutation of his idea that news publishers had made themselves irrelevent, Ali responded that he hopes to see news brands reclaim their importance and therefore a sound business model, and actually sees the NYT in particular taking steps towards achieving that:

“I think the numbers out of NYT’s latest quarterly report are actually pretty good in terms of them replacing the print dollars or at least having a path to replacing print dollars. Large companies like BuzzFeed and others have figured out the model of working with platforms and creating enough large businesses that will stay [for the foreseeable future].”

Ali was, however, sceptical of the notion that enough news publishers can succeed through scale alone. There is, after all, only so much room available at the top. He was especially critical of the notion that ‘scale’ is a fixed target, noting that what we might consider a large reach for a news publisher today is unlikely to stay static over the next couple of years, and that voracious advertisers and brands will always ask for more eyeballs:

“There is space for a fixed number of large – and by large I mean very large – companies to exist. The middle is where the problem is.

“[Back in the early days of the internet] 10 million uniques was big. Now it’s 100 million, it’s billions of Facebook video views. At that level yes there need to exist large, powerful media companies that can talk and impact big issues. [The NYT, Guardian, BBC…] These are the types of institutions that need to exist.”

He pointed specifically to recent layoffs at Thrillist and Slate as examples of news publishers who are struggling to keep pace with that demand for scale, noting that “had they not been bought by Murdoch you would have seen a massacre over the last few years at WSJ and Dow Jones”, essentially arguing that Shane Smith’s promised media ‘bloodbath’ has only been postponed.

When asked specifically about the Guardian, which is operating at a loss of around £80million a year as of its latest results, Ali criticised the Guardian management’s reluctance to commit to a model that would best serve the editorial product, which he admires:

“In many cases the editorial probably did not let the business need to do the things it needed to in the past. Historically the management that has run the company could have been a lot better than it has been in the past considering the time they had over the last 20 years to fix this shit.

“They’re going for subscriptions in such a half-hearted way, as donations and contributions which I think is a completely neither here-nor-there sort of thing. If you want to go all-in like the New York Times or WSJ to an extent, they are going really seriously… into subscriptions while also keeping the advertising model.”

For its part, the Guardian seems to be betting big on the ephemeral nature of its membership programme, with CEO David Pemsel telling a DMS audience last year that it was comfortable with the ‘ambiguity’ of the membership programme, and also telling TMB that it would be introducing content ‘exclusively for members’ (while shying away from calling that a paywall).

Admittedly, however, Skift’s model is considerably different than most generalist media companies. Described by Ali as ‘the Bloomberg of travel’, it has a tripartite structure focusing on providing news, information and data services for the travel industry. That joint revenue model has always been a focus for Ali to prevent Skift becoming overreliant on any one revenue strand.

Speaking to TMB last year, for instance, Ali said that a progression into more branded content was a natural progression for Skift, but that it would not shed the data-led approach that allowed it to succeed initially. He advised that there is still plenty of room in many verticals – whether that be tech, agricultural equipment, you name it – for new media companies with a consumer-first approach to launch:

“The lesson to learn from us is that even thought there may be enough existing competition in various sectors there’s a different way to look at a sector that will allow you to create the white space and build the business out of it.

We were focused on, as opposed to covering the industry silos, we’re very much focused on consumer behaviour. If you look at a lot of sectors there’s opportunities to do that because, in every sector there is upheaval as a result of tech, as a result of globalisation and other larger forces. Every sector is changing, much like the sectors that I used to be in, whether it was tech or media or finance where the silos have collapsed.”

That approach to growth within a vertical is incompatible with the nature of a generalist news publication (though many do have many sub-brands covering individual verticals which might be monetised in such a way were they to be spun off). The key difference between the two models was reflected in Ali’s choice of language to discuss the consumers of both types of media; ‘audience’ for the largely passive consumers of generalist news, and ‘user’ for the consumers of vertical media sites and services.

Ultimately, then, Ali argues that while it might be hard for the generalist news publishers to all survive, despite the clear necessity for many to do so purely for democracy’s sake, there is room for a few enormous publishers in that space. The rest will either have to monetise directly from a comparatively smaller user-base, or figure out some new and untested means of survival. Ali was relatively sanguine about that latter idea, noting that “there’s enough foolish money to keep funding whatever needs to be funded”.

Looking to their strategies for the next year, then, publishers might want to consider the following:

  • Is your strategy based around ‘audience’ or ‘user’, and is it possible to shift to the latter by introducing a more direct relationship?
  • Does your plan for growth involve simply scaling up the business, and will that make you overreliant on the platforms you need to do so?
  • Are you truly indispensable to your consumers, and would they miss you if you disappeared?