I’ve written about Thompson a number of times before, because I think his attempt to build a business around just his writing is an interesting one: he launched his site, Stratechery, in April of last year as a fairly unknown blogger — certainly not someone who was a household name, even in tech circles — with a tiered “freemium” subscription plan based primarily on long, analytical blog posts.
Within about six months, he had over a thousand subscribers paying him $100 a year for access to his newsletter (the shorter daily posts on the website are free). That meant an annual revenue run-rate of about $100,000 — enough to make it a living, along with some speaking and consulting, and tentative proof that a “thousand true fans” model like that envisioned by Wired editor Kevin Kelly could actually work on a practical basis.
Niche readers will pay
In a response to the “blogging is dead” meme that was triggered by Sullivan’s announcement, Thompson says that he just passed the 2,000-subscriber mark, which means he now has a revenue run-rate of about $200,000 a year (the “churn” rate, or the rate at which subscribers drop off, is less than 10 percent he said). And this proves a niche model that serves a specific interest group will work, Thompson argues — as well or better than a model that relies on mass advertising revenue.
“I am, of course, acutely aware that there is a tradeoff when it comes to the subscription business model: by making something scarce, and worth paying for, you are by definition limiting your number of readers. Stratechery, though, serves a niche, and niches are best served by making more from customers who really care than from milking pennies from everyone.”
In fact, Thompson argues — and I agree — that Sullivan’s own success proves this case: in less than a year, the Daily Dish blogger managed to convince more than ** subscribers to contribute money, and by last year was pulling in close to $1 million in revenue solely from subscriptions. That may look sad compared to the revenues of a site like BuzzFeed or Vox, but it’s an amazing success for a small team with a single blog.
The core of Thompson’s argument is that the more niche and targeted your content is, the better off you will be with a subscription model (The Information, started by former Wall Street Journal reporter Jessica Lessin, is another good example). Sites like Vox have to go broad, he says, but that ultimately means that advertising revenue is your only option, and making that work requires hundreds of millions of pageviews (unless you go after a very specific topic niche like Daring Fireball blogger John Gruber does), or a site like Search Engine Land.
The barbell effect
In a sense, the blogging world — or even the world of online publishing as a whole — has bifurcated to create what I call a barbell effect: sites or even publications like newspapers that are huge and broad and have powerful brands will likely succeed, because they can make advertising work. And those that are small and targeted (either by topic or by geography) will likely also be fine. Everything in the middle, however, is in for a world of pain, and in most cases will not survive.
Vox’s Ezra Klein and BuzzFeed’s Ben Smith may argue that size and scale is the only route to success, says Thompson, but that isn’t the case — there is room for the one-man (or woman) blogger as a lifestyle business as well:
“I almost feel compelled to note that my conclusion – and experience – is the exact opposite of Klein’s and all the others’: I believe that Sullivan’s The Daily Dish will in the long run be remembered not as the last of a dying breed but as the pioneer of a new, sustainable journalism that strikes an essential balance to the corporate-backed advertising-based scale businesses that Klein (and the afore-linked Smith) is pursuing.”
Not everyone will be able — or will even want to — put in the kind of work required to maintain such a site, as Thompson admits. After all, Sullivan’s departure didn’t come because his model wasn’t working, but because he was simply worn out. But for those who do want to pursue this individual model, the Stratechery blogger argues that the potential for them to do that, and to be successful at it, is larger than it has ever been.