Quartz and Being in the Middle of the Media Barbell

It’s not often that you write a piece about an acquisition that sounds almost like an obituary. But as I was thinking about the announcement on Thursday that G/O Media had acquired Quartz, I couldn’t help but think about it through that lens.

According to The New York Times:

Mr. Spanfeller said Quartz was an attractive acquisition because of its high-quality global business journalism, which has the potential to lure subscribers and valuable advertisers like the consulting firm Accenture to G/O Media.

Mr. Seward said in an interview this week that he had discussed the deal with G/O Media in virtual meetings since January. He said he thought it made sense for Quartz to be part of a network of sites like G/O Media’s, which includes Deadspin, Gizmodo and Jezebel.

I have so many questions, but I want to say this before I do. Media is a hard business. Seward and the team have tried their hearts out to build this business. I think he’s made many mistakes, one of which I think is worth exploring again in this piece, but I admire people who try.

But damn, G/O Media is not who I would want to sell my company to. This may bite me in a decade if I ever have a media company I want to sell, but G/O Media has done nothing interesting since it acquired Gizmodo Media Group in 2019. To see Quartz go from the equivalent of a glossy magazine but online to what will sadly become a programmatic minefield is disappointing, to say the least.

Alas, Quartz had little choice. As The Times reported:

The site lost about $6.9 million in 2021, according to people with knowledge of its finances. Before the deal with G/O Media, it wasn’t expected to break even until 2023. The site generated about $11.1 million in revenue in 2021, down from about $12.3 million in 2020, as advertising sales suffered, some of the people said.

To see revenue drop in 2021 in what was arguably one of the most incredible years for digital advertising is disheartening. But this also is not terribly surprising when you consider Quartz was pushing hard to build its subscription business. As I wrote a week and a half ago:

But that’s precisely why this move makes sense from an advertising perspective for Quartz. Locking the site down in a quest to get subscriptions seriously interfered with its ability to grow its audience. This is the catch-22 of a paywall. On the one hand, you might generate subscriber dollars. But, on the other, some of your best content (aka, your best marketing) can’t be seen by readers.

Now, visitors can read everything. This provides ample opportunity to generate advertising revenue. But I would encourage Quartz not to chase low-priced, high-volume programmatic advertising. Instead, it should sell the narrative about its audience and take the less-is-more approach. Then, if my suspicion is right about the audience quality, advertisers will follow.

With a metered and hard paywall, it is tough to simultaneously see growth in advertising and subscription revenue. You can do it, but it isn’t very easy. Getting rid of the paywall opens up so much more opportunity for Quartz to generate ad revenue.

But what this demonstrates more than anything is the significant risk of being in the middle of the media barbell. In essence, there are two winners in media and one loser. You’re either so large that you have actual benefits of scale—we’re looking at NYT—or you’re so niche that you can go unbelievably deep for a specific audience. These are the two sides of the barbell. So long as you’re here, you win.

The loser, though, is in the middle. You are neither niche enough to focus on a specific topic for audiences nor large enough to command more attention. The Times has so many reporters covering so many different topics it can acquire subscribers across various topics.

Quartz, unfortunately, sat squarely in the middle. It didn’t have a clearly defined audience, nor was it big enough to compete with major business publications. So if you had to choose between subscribing to WSJ or Quartz, you were likely to pick WSJ because the breadth of business news was just greater.

Jack Marshall has a really great graphic in this tweet that is worth looking at. But the substance of the tweet says, “when you boil it down, the ability for publishers to support subscription models hinges on their ability to create highly valuable and differentiated content consistently. Anything else is better monetized with advertising, sponsorships, and other revenue streams.”

I mostly agree with this. If you want to create an excellent subscription business, you either need to be differentiated (niche) or offer a lot of content that has value. A b2b media company, while small, is likely very differentiated. And a significant, general business publication like WSJ has a lot of content value simply because of its scale. Quartz didn’t have either. It had good content, but was it valuable? Did users need it? It certainly wasn’t differentiated because it was a generalist business publication.

The reason I only mostly agree is that great advertising also requires content differentiation and/or high content value. You can charge more for ads if the audience values it a lot and can’t get it anywhere else. That means you have loyalty, and that is monetizable. You’re stuck competing with average advertising if you don’t have that. And that is a race to the bottom.

In late 2020, I interviewed Dotdash Meredith’s Neil Vogel for the podcast. And he said something so important. I’ll paraphrase, but it was basically, “When we set out to create a piece of content, we look to create the best piece of content. The internet does not need another average piece of content.”

That stuck with me. So much of the internet is just average, derivative content. It left me asking a straightforward question: would my readers miss me if I was gone? People would inquire if I shut A Media Operator down or didn’t publish for a few weeks. I don’t know if the same would happen for many media companies out there.

And that matters for an advertising or subscription business. If you’re going to generate sufficient revenue from your content, it needs to be totally differentiated or provide a ton of value. This is why Quartz has struggled. It didn’t satisfy either the scale or the depth. And when that happens, developing brand loyalty is challenging.

For those of us running publications, we should look at what we’re doing and ask ourselves the question I asked after talking with Vogel: Will my readers miss me if I am gone? If you don’t know the answer to that or know that your content is really just average, there may be a problem. If you consistently see your ad rates compress and sell-throughs decrease, there may be a problem. If you can’t convince people to return to your site or convert, you may be running something derivative.

If any of this is true, you’re probably in the middle of the barbell. Unfortunately, this is where digital media businesses go to die.

Thanks for reading today’s newsletter. If you have thoughts, hit reply or join the AMO Slack channel to share your thoughts. I will be off next Friday because I am traveling, but I hope you have a great weekend!