If you follow the digital media sector, you’ve likely noticed that advertising as a business model is on the wane. With the Facebook and Google duopoly sucking up just about all the advertising money flowing online, publishers have been forced to find alternate revenue sources to fund their content.
One such source: subscriptions. More and more publishers are rolling out subscription and membership programs, and many have been successful.
One such success? Innovation Leader, a small business-focused publication that launched in 2013. It carries no advertising, has a hard paywall, and charges subscribers $695 a year.
I recently sat down with one of its cofounders, Scott Kirsner, and asked him about why he settled on such a high price point, how the publication markets to new subscribers, and how it approaches content development.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find a transcript of the interview.
A transcript is below.
Hey Scott, thanks for joining us.
Thanks for having me on Simon.
Before we start talking about your media venture, let’s talk about your career background. I was looking at your LinkedIn profile and it seems like you’re a longtime journalist.
Journalism was always what I wanted to do from the time I was a little kid. Making newspapers at my grandparents’ dinner parties and distributing. So pretty much right after college I found a job at the Boston Globe helping them launch digital publishing in the first dot com era. And then really moved from there to doing a lot of longform journalism for Fast Company and Wired. I wrote for the New York Times, for their long lost circuit section that covered technology. And then did a bit of reporting on the West Coast for Variety and the Hollywood Reporter, covering tech in the entertainment industry. I’ve always really liked the practice of journalism and storytelling.
You were involved very early on in the dot com days of journalism. You were at the very beginning when the Boston Globe launched its website.
Yeah. So it’s funny. That was the only way I could figure out a way to get a foot in the door in the newspaper industry. Right after I graduated from college, newspapers were still doing OK. It wasn’t falling off a cliff at that point. There was a recession, they weren’t doing a lot of hiring at that point. Really the only way I could figure out a way to get hired — I had taught myself HTML when I was working for a management consulting firm here in Boston. I could build some simple web pages and I was really fascinated with the possibility of the web as a platform at this moment where a lot of people experienced the internet as AOL or CompuServe. So I had a little bit of HTML skill, and that’s how I figured out how to get hired by a newspaper. I was hired by the Globe to sort of help them think about transitioning their content from really just existing in print to living on the web as well. And it was a really nice coincidence that I met my two cofounders for Innovation Leader in the early 90s.
What was it like to be assigned to an online newspaper? Was it exhilarating? You didn’t really know what this kind of stuff would amount to. Was it like being relegated to writing obituaries? I remember that the Washington Post, up until not that long ago, had a completely separate office for its website staff where it was housed in Virginia, whereas the print newspaper staff was housed in downtown Washington, DC. It was treating it as a lower caste. How did you feel working at this untested medium during these early days of web publishing?
It was kind of awesome to be honest. We had, like the Post, an office that was separate from the Globe’s newsroom. We were in Boston’s back bay neighborhood right across from the public library. And we had our own office space and our own culture. And nobody was really paying attention. In the 95, 96, 97 era, newspapers were still doing OK in terms of their print advertising and even their classified revenues. They really weren’t tracking that closely what we were doing. We had access to the content. We were either building or buying our own technology. It was kind of funny. The only time the senior management would come to our office was usually in April, around the time of the Boston Marathon. Because our office had an amazing view of the finish line of the Boston Marathon. So people would come visit really just to watch the end of the Boston Marathon and we’d throw a party.
But the other 364 days a year, they wanted to see some revenue, they wanted to see we were exploring business models for banner advertising or other kinds of sponsorship. But there wasn’t a whole lot of oversight. And it was a moment too when the Globe was still owned by the New York Times and we’d often compare the way that the Times was moving really slowly because that was the august, important brand they wanted to protect, and everything had to be done carefully. Versus the Globe, we were the run and gun cowboys, just build something and see if people like it approach. There wasn’t as much of a sense that we need to protect the brand with everything we put online.
So let’s flash forward to 2013. What led up to the launch of this publication called Innovation Leader?
Well I had spent the last 12 or 15 years after that job helping the Globe launch its website doing a lot of business journalism. And covering both innovation in the startup ecosystem, and also innovation inside bigger companies. Wrote fun feature stories about Disney’s imagineering division or visiting Ford or GM’s R&D. Paying attention to Google and how they were pursuing innovation as they grew. Those types of companies. My two cofounders and I got together and really just said, there’s so much journalism about the startup world, whether it’s in the Wall Street Journal covering it or TechCrunch or Venturebeat. There are a million blogs covering startups around the world. But there wasn’t a lot of coverage of these bigger, established companies. And we felt like there was an audience for it inside the Global 1,000, big publicly traded companies that have brands we all know, whether it’s Coca Cola, or Marriott, or State Farm. And they were just really struggling with how to make new stuff happen inside these big established companies. So we felt like, ok, this is an area not well covered by other media outlets, and we thought, because they were at bigger companies, maybe there’d be more willingness to pay for content than there would be other audiences for sports or movies or TV related content.
And so, you launched this publication, but you decided this wasn’t going to be an advertising focused business model, that this would be a subscription company. How did you arrive at that decision?
I don’t think we were geniuses, and I don’t think there was a lot of data about display advertising and its decline in 2013. If there was, we didn’t really look at it. But we just thought gee, once you start building a business around display advertising, you really need to start paying attention to pageviews, and it also kind of leads to some journalistic practices that I don’t really love. A lot of let’s get something up quick because people are Googling it. And you can get a lot of pageviews that way. Or, let’s package other people’s content and there’s a cool story that the Information or the Wall Street Journal just published, and let’s repackage it and summarize it, and get pageviews that way.
We didn’t want to be driven by needing to pursue traffic so we could have a display advertising model. And we just felt like subscription was a better way to go if you wanted to create original content that really serves a specific audience. In our case, executives inside big companies who have some kind of responsibility for innovation. And it wouldn’t force us to repackage and do a lot of listicicles and chase pageviews, but let us chase stories that other people weren’t writing. And create other kinds of content. We can talk a little bit about our ideas around downloadable resources and actually creating spreadsheets and Powerpoint presentations and things that don’t feel like stories or blog posts. We just wanted to do stuff that other people weren’t doing and take a little time in creating content. And subscription seemed like the best way to support that.
How did you arrive at the $695 price point? That’s a little bit on the higher end of subscription pricing. If you look at the Wall Street Journal or Bloomberg, those are around $300. The Information, which is like a tech business publication is like $300 or $400. How did you arrive at the $695?
We knew that we wanted to provide a lot of content. We didn’t do a lot of comparison around those kinds of businesses. In a way we were looking at much higher priced stuff like a Forrester research subscription or a Gartner subscription. We were looking at a lot of things that cost 25, 30, 50, or $100,000 to participate in and viewing ourselves as, hey we’re going to do media, but we’re also going to do events that bring together people in person. And there were a lot of people who were curating these small, high quality events that were at much higher price points than $695. Through that lense, we viewed ourselves as a lower priced option, sort of what Clay Christensen, the author of the Innovator’s Dilemma, would call a low end disruptor to these other businesses that were charging $50,000 to be part of a community.
It’s interesting that you namechecked some of those research companies, but it seems like looking at your website and what you have to offer you’re not really doing traditional journalism, traditional articles with inverted pyramids. You’re kind of a hybrid between a research company and a media company, right?
Yeah. I think the reason for that is because in our origin, we really always thought we want to be in service journalism and be helpful for the people in these roles. Sometimes being helpful for them is writing about the tougher stuff, like why did these innovation labs fail? Lose their funding lose their support. We didn’t want to shy away from the more difficult stuff. But we wanted to think about what did they need? Some of what they need is reading articles about other companies and us writing about how Disney or Starbucks or Fidelity Investments are structuring their own innovation efforts. But some of it is that deeper research. We don’t just pick research topics out of a hat because they’d be cool to do. A lot of it is paying attention to email we get from members and talking to members at events, and be like hey, there’s an issue that’s emerging. One example I like to use is hiring a more innovative person in these big companies and the need for a different type of talent at these companies. That’ll lead us to do maybe a 40 or 50 page research report on how are companies addressing that problem, of getting new kinds of talent to join them.
We want to think about content in lots of different forms and formats, not just the inverted pyramid news story.
Give me a sense of what your output is in your average week. What are you actually publishing? Because you guys are publishing these really meaty case studies. Tell me about what, on a week to week basis, you’re creating.
As I alluded to before, we really think about quality versus quantity. We never set it up to say we need to have a room full of journalists who each need to put out five posts a day. Because it does lead you to a lot of stuff based on a quick phone direct message. Or email interview, or repackaging other people’s stuff.
Also, the kind of journalism we’re doing, it takes sometimes a long time to get these big companies to agree to an interview. They’re not like the two-person startup in the garage that’s super happy to get any kind of publicity. They have corporate communications team, so it can take awhile to get them to say yes to an article. But usually we’re publishing just two or three things a week. Some of those things might be a case study. Why did a large dairy company start an accelerator for food entrepreneurs? That would be an example of a type of case study we’d publish.
Other stuff we publish might be a video replay of a webinar we’ve done recently. It might be a photo gallery from one of our live events where it’s just some pictures of what happened at our latest live event. Or it might be something we consider a resource or a tool. One we’re working on right now is a short Powerpoint presentation on how to think about where these innovation groups should fit in the overall org structure. That’s where we’ll get someone who has been a corporate innovator in the past to create something that’s useful for people in our membership who are all thinking about, gee, are we situated in the right place in the organization, or are there some better ways to structure innovation?
A typical week is maybe two or three things going up on our website, not 20 or 30.
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How many people are working for you, and what are the things you’re hiring for? Are you looking for traditional journalism backgrounds? What’s the skillset that you’re looking for?
Well, we’re still a small, 10-person company. There are some people who work on events, some people who do sales and marketing, and then three folks fulltime working on editorial, which is a tiny team given how much we produce. We do use outside freelancers, whether they’re writers, or people helping with the outside research reports, or photographers, illustrators, designers. We have a network of freelancers who help create content.
In terms of the in-house skillset, it’s people who have an interest in business and can think about all these challenges and issues that big companies deal with. It’s a lot of bureaucracy, and it’s a lot of process they have to wade through to make stuff happen. So it’s an interest in the subject area, not just I want to write about cool startups and who’s going to be the next Airbnb. And then it tends to be people who are writers, but might also be able to produce a podcast, or produce video, or do some other design work. It really is that Swiss Army knife set of skills, someone who can write, but also knows their way around Photoshop or Illustrator or Canva, or can create other kinds of content aside from just the 750-word story.
Are they coming into a newsroom, or is it a remote workforce?
All our fulltimers work here in Boston in our office. We have freelancers around the country. We haven’t really bought into that remote worker model, just because when you’re a small company, pulling people together in a room for a brainstorming session is so valuable, I think we may experiment with the remote worker thing in the future, but just haven’t done it yet.
For that $695 price point, what other benefits are you offering besides just content? I’m seeing some companies that have access to a special Facebook group or slack channel. Or they do live conference calls you can call into. Do you offer any other tangential benefits?
I think we’re always trying to figure out what is the right mix, and are there some things that people don’t care about, and are there things we’re not doing that they want? A Slack channel, or lately we’ve been talking about Linkedin Groups. What they’re getting is all the digital content, which includes these shorter case study articles, but also four research reports we do a year, which is much meatier, 60 or 80 page PDF that you can download. Some of them we publish in print and mail to you as a member, or you can pick them up at our events. We do conference calls where we’ll get someone from a big company on the line for a half hour, talking about their job and what their priorities are, and what some of their challenges are. We also do webcasts that we call master classes, which are a little more slide oriented. Sometimes it’s corporates, but often times it’s sponsoring firms who will be leading a class on how do you measure innovation? What are the right metrics to determine whether you’re making an impact on your company and making it a more innovative place to work, or creating more innovative products or services?
Conference calls. Webcasts. And also when you’re a member it gets you a pretty significant discount of a couple hundred dollars off any of our live events that have a ticket price. And we do five to six live events around the country that people would pay $2,000 for a ticket. You get a discount once you’re one of our members. There are also some comp events we do that are free for members, that are kind of an executive round table format. We call them the underground, where you get together with 12 to 14 people in San Francisco or New York or LA, and it’s an off-the-record, moderated discussion that people find really valuable.
One of the things I find fascinating about hard paywall sites like yours is how they market themselves. Because with the New York Times or Wall Street Journal, they have the metered paywall, so the marketing is the content itself. Whereas if there’s a more hard paywall, it’s harder to let people know about your content. Some of the higher end ones that charge upwards of $10,000 or more, they have actual sales forces that are calling up companies and trying to sell subscriptions on a one-to-one basis. How do you guys market and find new subscribers?
You put your finger on the biggest challenge in terms of growing the audience, which is we don’t like that metered model. We’re not putting out tons of content every week, and so if we metered it and said you get one article a month, is that more annoying than helpful? I also just wonder sometimes if metering, for some sites, just ends up training your readers to say oh yeah, three articles a month is plenty for me. I’m getting enough from this. There might be some other stuff I don’t have access to, but three is OK. So, how do we market? The thing I forgot to mention that members get, twice a year we do a nice hardcopy magazine that collects a lot of the content that has appeared on the website, and also includes some original content. It’s designed by my friend Patrick Mitchell who has been the creative director of Fast Company and O Magazine and Boston Magazine. The print magazine, we send to our current members, and a lot of people on our mailing list who aren’t yet members. That kind of serves as a marketing tool for us.
The other things we do is we partner with other people who put on conferences, and if we’re speaking at a conference or panel, we always love to distribute our print magazine or one of our print research reports, and use that as marketing material you can take home. We have really strong word of mouth among people who are already members. It’s just word of mouth is a slow way to grow. We’ll hear people say oh yeah, a friend of mine just got a job leading the innovation team at Company X and I told him the first thing he should do is join Innovation Leader. That’s great, but it’s not an exponential way to grow the company. We have a fantastic fulltime marketing person here who works on SEO and a little bit of paid social, and oversees organic social as well. And then we have one sales person who’s focused on doing outreach to folks who maybe have requested a trial subscription to the site. And they have three days of access of poking around the site and seeing what’s there. But then at the end of that trial he’ll likely follow up and say hey can I see what you thought of the trial?
I’m guessing you could sell group subscriptions that would make it worth a sales person’s time. To 50 people within a company.
Yeah, that is the goal. We sometimes have these crazy large companies where we have one member and it’s a 50,000 person company, and so, definitely trying to get that up to 10, or 50, or 100, is a big part of his objectives. It’s working really well. He just closed a deal with one of the big professional sports leagues that was like, hey, we want access for all our teams, because we’re really thinking about innovation in an era when there are so many people following their favorite teams on their phone or from home, or playing e-sports, or doing things that don’t involve going to a stadium or an arena and paying $250 for that experience.
You mentioned social media platforms. How do you approach them? Because obviously you’re not as reliant on Facebook or Twitter or LinkedIn as the advertising-based companies. Are you using them at all, and if so, how do you leverage them?
One thing we did earlier this year was we asked our community how do you find it useful to receive Innovation Leader’s content? Just to rattle off how that survey went, 87 percent said they found email to be really useful. The website, 60 percent said that’s how they found it more useful. Webcasts were next at about 54 percent. People could choose more than one channel where they liked to get our content. And then LinkedIn was number four at 44 percent. And the other social media platforms were really low. Twitter was 14 percent. And Facebook was just north of 7 percent. Our audience is really a B2B audience. We had been looking at LinkedIn, Twitter, and Facebook as pretty much equal. And thinking hey, those are all ways you can reach business people. So this data kind of surprised us. So many people found LinkedIn to be the best of the social channels. So we’re really trying to focus more on that. And not necessarily focusing less on Twitter and Facebook, but just trying to be realistic that this data showed us a lot of people at big companies aren’t on Twitter as much as you and I are, where we’re looking at Tweetdeck all day. A lot of people still look at Facebook as that’s where they want to see photos of their friends’ kids, or weddings, or vacations. And they don’t necessarily love for work stuff to be showing up in the Facebook feed.
You mentioned email. Are you distributing entire content pieces via email? Or is it mainly just teasers and getting them to click through. A lot of these paid publications are having self-contained email. I’m thinking of Ben Thompson’s Stratechery, where once you subscribe you never have to click through to his website, because his daily update is entirely contained within the email. How do you approach email?
We should experiment with that, sending full pieces by email. I generally find, I don’t get Stratechery, and most the emails I get don’t have that approach. And maybe I just haven’t been exposed to it yet enough for it to change my habits, versus wanting an email to be a minute read, and maybe I’m going to open up some of those articles, or save them for reading later. Our approach, we do two editorial meetings each week. One is on Wednesday and it’s a digest of everything new on the website, or maybe it’s a conference call or webcast coming up. Or it has a little bit of conference promotion. But it’s the standard first paragraph tease about each of, call it five different items.
And then Friday the thing we’re doing to try to get more conversation with our readers, we’re doing what’s called the Q&A. It’s often a member asking a question anonymously to the rest of the community. One example might be how does the budget process work for your innovation program. What can you tell me about? This is arcane stuff, but it’s what our members want to know about. How do you get money for this program? And we’ll have people who get that email and they just respond to it, it goes to one of our staffers, and we just collect the most interesting answers. And share it as the answers in the following week’s email. So if you imagine an email with a question section. Here’s this week’s question. And then an answer section, here’s the answer to last week’s email. For us, it’s turning out to be a great way to catalyze conversations. A lot of our readership don’t look at the comments section of our articles as being a place that they want to converse. I think, because they’re at these large companies, they’re either just reluctant to engage in public and ask questions with their name or company attached to it. Or in some cases they have a social media policy of, because you work for Boeing, you can’t just go posting questions about our strategy, and whether we’re doing things right or wrong right up there in the public internet. The Q&A email and giving people a little bit of feel of anonymity when they ask questions, is what we do on our Friday email.
Is your readership a reliable, consistent readership, or are they more popping in to read specific case studies or when they’re doing research? How are they consuming your content, on average?
It’s a pretty consistent readership in terms of folks opening the emails. And consuming the content. I guess the interesting dynamic for us, we have two kinds of readers, one is a reader who has just been given new responsibility for an innovation program, like hey Simon, you’re our new Vice President of Innovation, go figure out what we should be doing. So call them the like, newbie innovation leader. That might be the first year or two of setting things up, and who should be on my team, and how do I get budget? Should we be engaging in the startup world? And what should our strategy be? That’s a more active reader for us today, because they have such a high information need. They’ll go onto the website. They’ll be downloading it, reading all the reports, they’re really participating in conference calls and webcasts. They’re opening and clicking the email than would other readers.
The other reader has had something in place at their company for two, three, four, five years, and they’re interested in improving it and getting more sophisticated and getting better, but I would say they’re probably engaging with the content a little bit less regularly, because they have really specific needs where there might be some topic they’re trying to learn about, but they’re not laying the foundation for the entire building at that point. They’re more like trying to upgrade a specific floor of the building, or renovate a specific office in the building. They’re a little more targeted in their innovation need as they get more sophisticated and more mature, you might say.
How many subscribers do you need to sustain yourself? Are you guys still aspirational toward this being a sustainable publication, or have you already reached that threshold?
We’re in the thousands now of paying subscribers, which is a good place. We’re sustainable today, with this mix of subscription revenue and sponsored revenue, and event ticket revenue. We’re a company that has been built on revenue. We didn’t take any outside funding. In a way, that forces you to be really honest about your business, and you can’t go and hire 50 people and get great office space right off that bat, because you don’t have that nice $20 million in venture money that some media companies have. We’re in a really good position business wise and would love to get to the 10,000, 50,000, 100,000 paying members. I think it’s possible, because there are a lot of big companies, and they each have at least one person or a small team that’s thinking about innovation and new product development, and new ventures. We feel like there’s a lot of upside here for us, and that’s what makes it really exciting. I love being part of a media business that’s growing and experimenting and doing new stuff, as opposed to watching its business crumble or freaking out because Facebook just changed the algorithm, or their display revenue is going down. I’m an optimist, I just feel like there’s a lot of growth opportunity for us.
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