The COVID-19 pandemic hasn’t been a friend to the media business. Its economic impacts slashed advertising budgets, diminishing a key revenue plank for many publications. The results of falling ad spend have been felt across the industry, with a wave of layoffs hitting publications large and small, niche and general.
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Other forms of publisher income, like events, have also been reduced. But the pain of 2020’s media downturn hasn’t been felt equally in the industry. Publications that had built subscription revenue bases were in a better position to weather declines in other media incomes than peers who hadn’t; revenue diversification can provide real shelter when the economy rapidly shifts.
Subscription incomes are not enough for publications to avoid all pain; The Atlantic’s subscription base famously surged during the early months of COVID-19, but the company still saw layoffs. The Athletic’s subscription business was predicated on sports events taking place — it too underwent cuts despite a membership-first model.
In this era, the healthiest publications tend to have a subscription component. The paywalled New York Times and Wall Street Journal are hiring, as is Business Insider, which launched a membership service in 2017. But not all subscription publications that are succeeding are large. Indeed, thanks to a growing set of publisher-friendly subscription services, there are a number of options in the market for supporting publications as small as a single author.
Perhaps most famously, Substack has seen good growth in the last year. The venture-backed newsletter-and-blogging service provides authors with the ability to charge for their writing. But other startups are competing in the space, helping publications derive more income directly from readers.
Pico, which provides paid-subscription tooling for publishers, has seen strong growth in the COVID-19 era. TechCrunch caught up with its co-founder Jason Bade to chat about what his company has seen in recent months. A few months ahead of COVID-19’s arrival, publishing platform Ghost launched its paid subscription product into beta. TechCrunch asked Ghost about the reception, and growth of the membership portion of its business to better understand today’s media market.
What emerges from data and conversations concerning the startup-supported media membership landscape is something hopeful. Some writers are going to build micro-pubs that can finance their existence. Larger publications have never had more available help to wean their businesses off of ads, pageviews and Google’s favor.
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In July of 2019, Nieman Lab reported that Substack had reached 50,000 paying subscribers. TechCrunch reported in March of 2020 that the number had reached 100,000, a metric that Digiday reported as well in July of this year. How fast Substack has grown during the COVID-19 era is therefore occluded.
But what is clear from Substack’s growth since launch is that writers are attracted to the idea of writing for a smaller, paid audience. The situation is something akin to an inversion of initial Internet promise of free distribution and huge reach; but as the economics of digital advertising increasingly tip toward a handful of platform players like Facebook, Google and Amazon, the original model is increasingly unrealistic.
Pico, like Substack, has seen good growth since its own 2019-era funding round. The service raised $4.5 million in a seed round led by Precursor Ventures and Stripe, the payments unicorn, in May of 2019. (Substack raised venture capital in July of 2019).
According to Bade, COVID-19 accelerated the trend of publications that previously lacked a subscription business starting to build one, citing alt-weeklies as an example.
Pico is also seeing more digitally native news groups use its service, and, outside of the news media world, other types of businesses are selling content online in a similar fashion; think yoga studios, for example. As COVID-19 has made it hard to go out and do things, more companies are working to bring their services to people’s homes, and subscription services like Pico may prove a good fit.
COVID-19 also accelerated publisher discovery, said Bade, which has led to faster growth in both publication and paid reader sign-ups. For Pico, which charges a minimal SaaS fee and takes a revenue share of up to 5% for its service, that growth is welcome. Bade emphasized to TechCrunch that his company’s revenue grows when publisher revenue grows, in his view aligning their goals.
But Pico’s recent growth rates aren’t an exception. Ghost, an open-source CMS and privately held hosting service, is also seeing rapid expansion thanks to the launch of its own subscription publisher tools.
Launching into beta as part of its October 2019 “3.0” launch, Ghost’s membership feature set is a hit. According to John O’Nolan, Ghost’s founder and CEO, the reaction that the new feature set has “seen so far has been fantastic.”
The CEO continued in an email, saying that “despite still being in beta, the demand [for subscription tooling] has been very high, and we’ve had more engagement around these new features than at any other point since Ghost launched.” The results for Ghost itself have been material, with O’Nolan telling TechCrunch its “growth rate has tripled off the back” of the addition of membership and subscription features.
The results haven’t only been good for Ghost, but also for publications built on its service. O’Nolan provided numbers and a forecast to TechCrunch in an email:
We’ve had a very active beta with lots of new publications being created, and all of them growing quite quickly. Just within our beta group, there are more than 10,000 premium subscribers to Ghost publications. We expect this to increase significantly as we come out of beta — at the moment some basic development skills are required to get things set up, but with Ghost 4.0 later this year, that will no longer be the case.
It’s nearly gauche to find and celebrate green shoots in the media world while much of the industry is still reeling from ad revenue declines and the cessation of in-person events. But where there’s change, there are startups hoping to leverage cracks in old models to bring old industries forward into the future. It’s good news that Pico and Ghost and Substack and others are trying to make the new media world work.
Pandemic or not, it’s good to know that not only the largest, oldest and most famous publications will have a shot at building a paid audience. Smaller pubs might be able to make it, too. If they succeed, there are more than a few startups that could prosper as well. A good test in the future will be which startups that support paid media raise another round, and when. The sooner and larger that investment, the better we’ll know how things are going.
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