A Media Operator is a media company for those building digital media companies.

We Need to Better Incentivize Star Talent

We’ve got a few great pieces in today’s issue. First up is a look at star talent at media companies and why nothing has changed. Then we’ve got a couple of deep dives that are worth exploring.

In the first, we explore Hodinkee and the recent story about its tough financials. Does this mean that the content-to-commerce strategy is dead? I don’t think so. Give it a read.

And then there’s a tactical look at how publishers are using LinkedIn to grow their businesses. There’s a synopsis below, but it’s worth exploring.

And then, of course, there’s the latest episode of the AMO Podcast all about local news.

Three tools have become absolutely critical to me running A Media Operator, and media companies, big and small, should consider them. (Disclosure: these are affiliate links, so AMO will be compensated.)

The first is Apollo. This is primarily used by sales teams to find contact information, which is also what I do. But it’s also a really interesting enrichment tool. There are thousands of people who read AMO and most don’t tell me much about themselves. Apollo can help provide that additional information.

The second is Megahit. The team markets this as helping you find sponsorship leads within your newsletter subscribers. Marketers at our target advertisers read our newsletters. Megahit helps filter those people out. But I think the better go-to-market is as enrichment of subscriber data. It uses Apollo, LinkedIn, and Reverse Contact to get you more information about your subs, which is useful for all sorts of media operations.

And the third is Sponsy. We have a newsletter, podcast, webinars, and sponsored deep dives… there’s a lot going on here at A Media Operator. Having a tool that allows me to organize it all, collect assets from sponsors, get their approval on the copy, and just understand what inventory I have is huge.

There’s always this debate about individuals vs. brands and whether media companies can survive with all of these creator economy tools. This past week, a couple of stories have laid out how media companies are handling their star talent.

First up is the story about Puck acquiring Artelligence. According to Axios:

Puck has acquired Artelligence, a Substack newsletter about the global art market authored by veteran art director and journalist Marion Maneker, Puck editor-in-chief Jon Kelly tells Axios.

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The newsletter — which boasts 32,000 free and paid subscribers, according to Substack — will be integrated and rebranded within Puck's portfolio, Kelly says. Puck plans to rename the newsletter "Wall Power."

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The Artelligence deal speaks to Puck's push to invest in news-adjacent verticals for high-net-worth individuals who are underserved amid the fallout of print trade publications.

Puck’s entire business is stars. They have their own newsletters that people can subscribe to and their job is to drive subscribers. They get rewarded based on their ability to drive subscribers. According to Axios, Puck has 40,000 paid subs and generated more than $10 million in revenue last year. Last year, I estimated that it generated $14 million in revenue, so I’m feeling pretty good about my napkin math.

I have no insight into what they paid, but here are some assumptions. I estimate it had 3,200 paying subscribers—a 10% conversion on 32,000 total subscribers—and they were charging $120 a year; it was generating nearly $400k a year, is my guess. Maybe the conversion rate was higher, but who knows?

Here’s the tricky part, though. How much do you pay for a newsletter when you can’t bring over the paid subscribers? They’ve acquired the free list but not the paid one. I suspect there are weird intricacies regarding Stripe migrations, which limited their ability to migrate that data over. And so, they are starting from scratch marketing this product.

If I were structuring this deal, I’d assign some value to the free email list and then provide a bonus based on the percentage of Artelligence subscribers who become Puck subscribers. So, if Puck generates an additional $400k in subscription revenue, Marion Maneker, the creator of Artelligence, should get a bonus. It de-risks the deal since you’re effectively having to overcome the inertia of someone not paying after they might have been paying before.

This deal makes perfect sense for Puck. Puck has a high net-worth audience. And so, what do high net-worth people like to do? Buy art. But more than that, they like to understand the inner workings of the art world. I would be shocked if Puck doesn’t look to make other personality-driven acquisitions like this.

And then there’s The New York Times story on how Axios is evolving with the coming AI coming.

Mr. VandeHei says the only way for media companies to survive is to focus on delivering journalistic expertise, trusted content and in-person human connection. For Axios, that translates into more live events, a membership program centered on its star journalists and an expansion of its high-end subscription newsletters.

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The company has also introduced a $1,000-a-year membership program around some of its journalists that will offer exclusive reporting, events and networking. The first one, announced last month, is focused on Eleanor Hawkins, who writes a weekly newsletter for communications professionals. Her newsletter will remain free, but paying subscribers will have access to additional news and data, as well as quarterly calls with Ms. Hawkins.

Look, this is a no-brainer. Of course Axios should be trying to generate increased revenue from its star talent. Sara Fischer and Dan Primack are next, according to The Times, and it just makes perfect sense. The audience has been reading their newsletters for years—and it’s free—so why wouldn’t Axios look to generate a much stronger return on those people?

But I think the question for the broader media ecosystem is, what should they do about this? The reality is, none of this is new. Throughout the history of media, star talent has always played a crucial role in attracting audiences and generating revenue. Long before Puck or Axios existed—long before the idea of them even existed in their founders’ minds—we had anchors like Walter Cronkite, Barbara Walters, Bernard Shaw, and the list goes on. And they made good money.

As media operators, we need to get comfortable with the fact that some people on our teams are going to get paid really well. They have to. Otherwise, they’re going to leave. It’s too easy to spin up a Beehiiv-powered newsletter and start creating great content.

Just look at Politico Pro. There are dozens of future b2b media companies waiting to launch; Politico just won’t see any of the upside. Helena Bottemiller Evich from FoodFix (former Politico) is the perfect example. Or Christina Farr who spent time at CNBC before going the VC route and has recently launched her own publication. Both are unbelievably talented and recognize that there is significantly more upside on the outside of their legacy media companies.

But why should we be fine with this outcome? We need to get comfortable creating incentives that align our star talent with our brands. It doesn’t have to be equity, but there needs to be some sort of upside. Maybe give them the tools to launch a paid newsletter on the side where both parties share in the revenue. They can promote it; you’ll also promote it. I’ve long believed that media companies need to encourage entrepreneurial talent—ideally, within their own walls.

The natural extension of this whole theme of star talent is that people connect with people and not brands. I agree, but I want to caveat. People connect with good information. That information can be anonymous, a person, or a brand. And so, even if your team has zero stars if they are all serving their audience, that brand can thrive. I’d argue that Defector is a great example of this. That brand will win over any one person.

Focus on the audience, create incentives for your talent to thrive, and build a sustainable business. That’s media past and present.

If you’ve followed me for some time now, you’ll notice that I’ve been trying to do the LinkedIn thing—posting more, engaging more, etc. The expected outcome is, of course, driving new people to AMO so that they sign up.

Other publishers are doing the same. Take, for example, MIT Technology Review. Last year, 15% of its newsletter sign-ups came from organic social. The team also knows that “LinkedIn followers are, compared to our followers on other social media platforms, the most likely to convert into paid subscribers.”

One area that has really helped is LinkedIn newsletters. Because LinkedIn notifies every subscriber of a new edition, it minimizes the impacts of algorithmic changes to the feed.

Become an AMO Pro member to read and never miss a story like this.

My guest this week is Andy Cates, the founding chair of The Daily Memphian and its parent entity, Memphis Fourth Estate. The origins of this episode go all the way back to last year when I said that non-profit is a tax status, but it doesn’t absolve these media companies from having a sustainable business. The Daily Memphian generates the vast majority of its revenue from business operations. In other words, subscriptions and ads fund the bulk of it.

And yet, this is controversial with many national funders who believe that all content should be free. So, while The Daily Memphian serves its market and generates cash to pay for a large newsroom, the big non-profit funders ignore it. I think that’s wrong.

Give the episode a listen. It’s an interesting approach to doing local, and I am envious of Memphis for having this coverage in its city.

Listen here or search for the AMO Podcast on your player of choice. Special thanks to SEBPO for making this episode possible.

Thanks so much for reading today. If you have thoughts, hit reply or become an AMO Pro subscriber for an invitation to the members-only Slack. I hope you have a wonderful rest of your week.