Q&A with Mike Donoghue, Founder and CEO, Alpha Group
This week, The Idea caught up with Mike to learn about Alpha Group’s partnership with BuzzFeed to facilitate conversations on covid-19 via Subtext, its text messaging platform. Read on to learn about Subtext’s origin story and how Alpha Group approaches innovating at the intersection of media and tech. Subscribe to our newsletter on the business of media for more interviews and weekly news and analysis.
Tell me about Alpha Group.
I’m the founder and CEO of the Alpha Group, which is the in-house tech and media incubator for Advance Local. Alpha Group has been around for about four years. We’re focused on creating technically differentiated tech and media properties that capitalize on trends that we see in the marketplace, away from what the rest of the organization is focused on day-to-day. The goal is to create intellectual property, new revenue streams, and new technologies that help the organization grow and diversify, but that also can function as standalone businesses in and of themselves.
Tell me about Subtext.
Subtext is the fourth product that we’ve taken to market and is about a year old in its current iteration. It’s a text subscription platform that’s meant to connect creators — media companies, journalists, business leaders, personalities, brands — with their audiences in a way that feels more personal. The goal is to allow organizations to take back control of their audience by opening up a meaningful dialogue between journalists and readers free from the chaos and clutter of traditional social media channels.
People have worked really hard to create followings on platforms like YouTube or Instagram, only to find out that they’re subject to algorithms, that their audiences are constantly throttled, and that it’s really hard to create a sustainable source of revenue. One of the neat things about Subtext is that creators have the ability to charge a subscription fee. So, if you’re a really popular YouTube personality and you want to be able to make money to support your work, and your biggest fans want a more intimate connection with you, that’s something that Subtext can facilitate end-to-end.
How did the BuzzFeed covid-19 partnership come about?
We’ve been talking to BuzzFeed for a while and thinking through interesting implementations that would be engaging and facilitate meaningful dialogue. When covid-19 happened, BuzzFeed's campaign was up and running within 48 hours. Mat Honan, who’s their San Francisco bureau chief, has done a phenomenal job. He must not be sleeping because, in addition to his day-to-day work, he’s sending texts, he’s replying to consumers. He’s also soliciting photos from subscribers and feedback for stories.
We’ve also had amazing campaigns from Advance Local and Gannett. They’ve been doing local coverage in states like New York (Syracuse.com), New Jersey (NJ.com), Oregon (OregonLive.com), Alabama (AL.com), Arizona (The Arizona Republic), Massachusetts (MassLive.com) and Ohio (Cleveland.com).
The response has been overwhelming. Last Thursday, we had maybe 35,000 subscribers. As of today [March 20, 2020], we have 135,000. We’re deploying millions of messages answering countless questions that probably would have gone unasked on traditional social media channels. The fact that the journalists who are using the platform are so invested in it has been the most impressive outcome. Our partners in Alabama are literally responding to over 50% of the questions that they’re getting from readers.
The pandemic is an unprecedented event in modern history, and people are justifiably scared. They have a lot of questions and it’s been really rewarding to be the platform that can help journalists answer those questions.
How does Subtext integrate into news organizations’ existing subscription/membership models?
If media companies just want to charge a subscription fee for this unprecedented personal access to journalists, they can do that. We also have a lot of partners that use Subtext as a compelling value-add to their digital subscriptions. We found that open rates are close to 90% and that the churn rate for all subscribers (including paid) is less than 3%. That’s because if you have a journalist you really love, the likelihood that you would lose your affinity for that person and unsubscribe is low. People unsubscribe from media companies all the time — what’s different about text is that it feels personal and that you are constantly reminded of the value of the service, since you’re getting a text or two every day.
You mentioned that Subtext is the fourth product that you’ve taken to market. Where do ideas for possible products come from and how do you choose which to invest in and take to market?
My team has only three other people: a head of strategy, a head of engineering and a head of product. We look for opportunities to solve problems within tech and media. Once we seize on something that we think has potential, we form a hypothesis around it. In the case of Subtext, we thought people might be interested in getting inside access to the personalities doing the reporting on the stories they care about. The hypothesis was that people would provide their phone numbers and enjoy getting text messages.
From there, we try to build the cheapest, fastest Minimum Viable Product implementation to test that hypothesis. After we prove that out, we move on to the next step, which in the case of Subtext was whether people would be willing to pay for this level of access. Once we start to gain traction and prove out the demand for the product, we start slowly investing in it, building a team around it, creating a lot more differentiated tech and intellectual property, and taking feedback from our initial users.
What have been your biggest learnings through the process of creating and iterating through multiple products?
The biggest thing we’ve learned is that building a product based solely on somebody else’s platform is really tricky. For example, building something that is totally reliant on Facebook or on Twitter to operate is difficult because you don’t have control over those platforms.
We also recognized really early on that brand itself is not a business model and that everything has to be highly technically differentiated. We never want to come out and say our next product is going to be for Vice because it’s cool and edgy. That’s not tenable. We need a unique spin on anything that we’re doing here to create the most value possible, so we’ve really leveraged technology to differentiate everything that we’re bringing to the market.
What is a trend in media and tech that you’re excited about?
One that I’m really excited about is seeing more media companies really investing in controlling their own destiny. We, as media companies, sacrificed our relationship with consumers at the altars of these social platforms that didn’t deliver the value back to media companies. We love it when we see organizations investing in their relationship with readers and using technology to do that. It’s not just dynamic paywalls, it’s not just for email newsletters — it’s when people leverage multiple available mediums to connect with their readers in a different way, whether it’s Subtext or even something like what the Wall Street Journal has done with conference calls [e.g. On Call With WSJ: The Great Streaming Battle].
Conversely, is there a trend you find over-hyped?
In the long term, I think creating new ways to chop up your content and charge people in a metered, paywall scenario is tricky. I understand why media companies want to do it, but at the end of the day, you’ve got a product that a lot of people have gotten for free for some time and creating new mechanisms to charge them according to the way they consume your product is going to be hard. We need to think about how to diversify the offerings and create new experiences they enjoy.
What is the most interesting thing that you’ve seen recently in media from an organization that’s not your own?
I really enjoyed what media companies are doing in terms of creating new places for consumers to interact, like setting up interactive Slack channels. Twitch also offers endless opportunities and is a cool, interactive way to connect with people via a platform they’re already really familiar with and where they spend a lot of time. I think you’ll see more and more companies figuring out how to facilitate experiences on there because there’s a huge audience and a glut of quality content.
RAPID FIRE
What is your first read in the morning?
Our Slack, just because I want to make sure that overnight there’s nothing that I could have helped with or there’s nothing really pressing to address. After that, it’s The New York Times and The Washington Post.
What is the last podcast you listened to?
Decoder Ring from Slate — even if it’s not a subject matter I know about, I love being able to get under the hood to see how things work. I also think Gimlet does a phenomenal job with Undone.
This Q&A was originally published in the March 23rd edition of The Idea, and has been edited for length and clarity. For more Q&As with media movers and shakers, subscribe to The Idea, Atlantic Media’s weekly newsletter covering the latest trends and innovations in media.
