Month: August 2020

Substack is the newest savior for independent publishing, powering an array of subscription newsletters that give hope to the rise of a new class of journalist entrepreneurs.

“On Substack there are people paying more for one individual newsletter than they pay for all of Netflix,” CEO Chris Best said on the Digiday Podcast. “And it doesn’t really make sense if you think about it just in terms of dollars per hour of entertainment or dollars per word that I read or something like that. There has to be something else going on there.”

People “want to take back their mind” from the social media platforms that have dominated digital ad dollars, Best added.

The service launched in 2017 with just one newsletter: Sinocism, a newsletter on China by Bill Bishop that brought in over $100,000 on its first day (Substack takes a 10% cut of subscriber revenue).

“We think that we can make the writers much more money, and much more reliable money, by the way,” Best said. “A lot of publications have seen their advertising revenue just tank over the course of the crisis, but people who have a subscriber base — you know, it’s much more steady as you continue to provide value.”

To help them do that, the company has also been piloting Substack Defender, a resource for journalists who have been threatened by a “scary-looking letter on official-looking letterhead from a lawyer saying a bunch of blustery stuff,” in Best’s description.

Often these letters do the trick, intimidating writers who might not have the knowledge to know a legitimate case from a bogus one.

Here are highlights from the conversation, which have been lightly edited for clarity.

Why Substack imposes a $5/month minimum on subscriptions

“When we started we found a lot of writers, their instinct was to charge far too little. A lot of people would say ‘oh, maybe I’ll charge 50 cents a month.’ And not only does that not work with transaction fees, but it’s just too little. You undervalue yourself. So we kind of gave people an excuse to charge at least $5 a month if they’re going to charge at all. We tell people ‘look, if you’re making something for a general audience that’s just reading it for fun, somewhere between $5 and $10 a month is usually pretty good.’ If you’re making something that’ people are going to read because it helps them professionally and potentially treat it as a business expense, you can charge a lot more. We started offering a founding tier, so if you’d like to, as a writer, you can offer a special high end subscription that costs as much as four times the normal yearly price, for people who really want to see this thing exist. And we’re seeing a lot of uptick on that, which tells me there’s a lot of interest out there for people to fund the stuff.”

Providing legal resources — and funding

“We love the [Substack] Defender program because one of the things that worries people when they’re starting their own media enterprise is ‘what do I do if someone threatens to sue me?’ Unfortunately, there are lots powerful people who are sometimes the subject of critical journalism who basically try to take advantage of that and bully independent writers and journalists. It’s like: ‘I wrote something that’s clearly important journalism and well within the bounds of the law but I got this scary-looking letter on official-looking letterhead from a lawyer saying a bunch of blustery stuff.’ And that exists because it works, basically. If you can scare them with legal threats, often it’s easy to get them to be quiet. The downside of that is that it quells a lot of important journalism. It creates this environment where people are afraid to do independent journalism. Our biggest goal with Defender is give independent writers a place to start. But also, if we can through that help fund some of the cases where the most egregious abuses are going on and help vigorously defend those cases and make it clear it’s not without cost to send a threatening letter to a journalist, we can hopefully contribute to a broader climate where independent journalists can be more fearless, across the board, even if they’re not on Substack.”

People are more and more willing to pay for writing that matters to them

“On Substack there are people paying more for one individual newsletter than they pay for all of Netflix. And it doesn’t really make sense if you think about it just in terms of dollars per hour of entertainment or dollars per word that I read or something like that. There has to be something else going on there. And that’s the broader trend. The broader trend that I think we’re seeing is that people want to take back their mind. Because we’ve seen this media landscape dominated by what’s popular on social media feeds, and what’s popular on social media feeds is a result of the algorithms that run those feeds — which are crafted to be maximally addicting — that has created an environment where the things that win and get the most clicks are not necessarily the things that you want.”

Formed in January 2019, Shopify Studios is focused on developing and producing unscripted shows and films to air on TV networks and streaming services. Among the projects in the works is a feature-length documentary that will not feature Shopify’s brand nor any merchants that use its e-commerce platform, North said. One sign of how much of Shopify Studios’ work is marketing would be whether the studio is organized within the company’s marketing department. It’s not. Instead Shopify Studios operates as its own business line and reports directly to the company’s COO.

“At its core, Shopify Studios is a full-service film-and-TV production company,” said North, noting that Shopify Studios participates from a project’s development to its production, its sale to distributors and its debut.

Shopify believes “I Quit” and other shows and movies it produces will ultimately benefit its core e-commerce business by drawing attention to the businesses powering the burgeoning direct-to-consumer retail industry.

Asked about measuring Shopify Studios’ benefit to its broader business during the company’s earnings call in April 2019, Shopify CEO Tobi Lutke said Shopify Studios’ work would help to demystify the process of people starting their own businesses and spur more individuals to do so. As for tracking the return on the company’s investment, he admitted that would be “tricky” but added that “we are not falling into the trap of only doing short-term things because they happen to be more trackable.”

“They’ve been very clear that they don’t want their brand featured,” said Jon Murray, co-founder of Bunim-Murray Productions, which is co-producing with Shopify Studios a documentary series about disabled entrepreneurs titled “Born for Business.”

Shopify has applied its knowledge of the subject matter — entrepreneurship — to the shows while operating as a typical co-producer and financier rather than strong-arming productions as an advertiser might a commercial shoot. “It’s really a perfect situation where, in working together, we both understand what we’re bringing to the project and are respectful of each other,” Murray said.

As chief strategy officer at production company Wheelhouse Entertainment — whose subsidiary Spoke Studios is co-producing “I Quit” with Shopify Studios — Ed Simpson receives “a lot of emails and contacts” from companies trying to get into the TV business. So when Shopify Studios reached out sometime before the studio’s formation, his initial reaction was a bit skeptical. Then he heard the company out.

“One of the first things they said to me was, ‘We want to make great content.’ I was like, ‘OK, cool. How many times do you want your brand mentioned?’ They were like, ‘No, you don’t understand. What we want is to make great content. We don’t care how many times the brand name comes up,’” Simpson recalled.

Shopify Studios has hired people, such as North, with TV and film production backgrounds. Among them is Pam Silverstein, who has worked in branded content but also served as an associate producer on “Mortal Engines,” a film directed by Oscar winner Peter Jackson, and got her start in the mail room at Hollywood talent agency ICM Partners. 

When Silverstein was recruited to join Shopify Studios as an executive producer for film and TV, she received a similar pitch to the one Shopify has given to the production companies. “It wasn’t [that Shopify was] looking to write a check or look for an equity opportunity and just do a set visit and take a vanity credit,’” Silverstein said.

Shopify has allowed Shopify Studios to operate as a normal production company, albeit one housed within and with the backing of a tech company. For example, Shopify Studios updates Shopify’s finance department regularly on programs’ costs, sending through cash flow documents and cost reports as a production firm would typically provide to a show’s financier. 

“That comes into the trust that’s been given to me where I’m looking at where dollars are spent and do we want to go capture this moment or that moment, do we want to reshoot, do we want to add more cast members,” Silverstein said.

Meanwhile, Shopify Studios’ involvement in shows’ production has been similarly consistent with how a co-producer participates in a project, from brainstorming ideas during the development phase to providing notes during production. “Pam has visited the set, and we have weekly calls with her and the team,” said Murray.

“Shopify was as involved in [‘I Quit’] as myself and other [executive producers] on the show. And I say that in a positive way,” said Simpson.

Shopify also seems to recognize when aspects of the work are best left to its production partners. For example, Shopify Studios may have been met with skepticism when pitching “I Quit” to show buyers at TV networks and streaming services. So it didn’t try to be the one spearheading the pitch process.

“We did lead the way in the pitch and negotiating because we had the decades of relationships with the networks. It just means that we walk into a much warmer room than Shopify, who is just launching their [studio] business,” Simpson said. 

There is at least one example, however, of how Shopify Studios is able to uniquely participate in a show’s production. The opening of “I Quit” aims to show the trend of people quitting jobs to start their own businesses. Shopify Studios turned to the company’s data scientists to pull numbers on how many people are doing this and have those numbers reflect in the show’s opening. “That really helps the creative,” Silverstein said.

“It’s just not possible to maintain a full time job and have a child home 24/7 homeschooling and on Zoom calls,” said Cosindas. Moving across the country for the year, “felt like the best option as my job would have suffered and my son would have suffered if we tried to stay in Los Angeles.” 

Cosindas is one of many parents in advertising scrambling to figure out how to manage work and their child’s education as the school year begins. For many, that means resuming the tricky task of balancing virtual learning with work calls as many school districts are remaining remote for the time being. While parents were able to manage remote learning this past spring for a few months, many say that the prospect of having to do so for a full school year is daunting, as they fear employers will lose patience with the necessary tradeoffs.

For many parents, going into the fall “feels different because we now realize we are in it for many months,” said Karen Hunt, president of the West Coast region at UM, adding that when her kids initially started remote learning back in March the assumption was that it would just last a few weeks. Going into the fall, “we are planning to be more stringent with rules around both the kids’ school schedules as well as our work schedules.”

While Hunt says that UM has been supportive of working parents and the flexibility needed for parents’ complex schedules this upcoming year, others say that they aren’t sure it will last. Some parents say they worry that agencies were flexible last Spring as the need to do so was for a few months but with the prospect of being flexible for a whole semester or year, some agencies may not be as forgiving. Some of those parents say they fear they will be more at risk of being laid off should another wave of layoffs happen.

Some affluent parents have been able to create pandemic “learning pods,” and some agencies are offering to help parents create those pods as well as offering a childcare stipend, according to Nancy Hill, founder of The Agency Sherpa and former 4A’s president. But others have been faced with the difficult question of sending their child back in-person and risk infection or simply left to deal with another round of virtual learning. Whatever the case may be, agency employees say that agencies need to continue to be flexible and understanding of parents’ difficult schedules even if it’s for the long haul.

“Agency leaders and managers need to understand how difficult a time this is for parents,” said Carla Paschke Guy, co-founder and chief strategy officer at Dagger. “They need to model empathy and adaptability for parents going through these challenging decisions and to show up for parents in a better way.” 

Guy is the mother of three small children, the eldest of whom just started kindergarten in-person. “While we’ve made decisions for our family, it’s a very individualized choice,” said Guy. “We have to create the space to have a dialogue around what flexibility is needed to make their family more successful.” 

How difficult child care and schooling will be this fall varies depending on where agencies are based and how bad the spread of coronavirus is in that area. For London, England-based freelance creative director Belen Wilson, the trouble won’t be virtual learning but figuring out childcare once school is over as there won’t be after school programs this fall. That means whatever freelance job Wilson takes on will need to allow for flexibility with hours as well as remote work.

“I want to believe that yes they will [be flexible] but at the same time we are going into economic recession,” said Wilson. “The last time that happened, I was about to return from my maternity [leave]. I wanted to work one day from home and the excuse [a big ad agency] gave me is that the recession required everyone to be available and in the office.” 

Wilson isn’t alone in the fear that agencies won’t be as flexible for parents this fall. Some parents are now worried that having their attention divided between their child’s schooling and work duties will be seen as a liability. That’s especially worrisome for some employees who say that they are worried about being laid off because they are parents as agencies have started to layoff employees again to manage losses from the pandemic and the recession. 

“My agency has still been pretty accommodating, but you can almost feel this sense that they’re kind of over it,” said an associate creative director who requested anonymity, adding that he’s afraid of being laid off because he’s a parent. “I worry everyday as do so many other parents who work in advertising. What’s going to happen in three, four, six months from now?”  

As it stands, those clubs get 70% of the subscriptions minus applicable taxes and fees. In those instances where an app store from the likes of Apple or Google takes 30% of any transaction from an app downloaded from their app stores, then Facebook does not take any additional revenue share. If the revenue share is less than 30% with the mobile platform or occurs on the web, the remaining share of that 30% goes to Facebook.

“These subscriptions are never going to make up for all the lost ticket sales but if we’re able to generate $30,000 to $60,000 from those sales eventually, then that allows us to reinvest money back into content,” said Jared Orton, president of the Savannah Bananas. “That’s so important for a small business like ours because we can reinvest that money in equipment and talent to create better content more often.”  

The baseball team launched the ‘Bananas Insiders’ subscription program in late June, just before the start of the season. Since then, over 800 fans have decided to pay $4.99 a month to be an insider. In return, they can stream all of the team’s home games, watch long-form shows like documentaries about the club and its players, see behind the scenes footage like interviews and training clips as well as participate in competitions. 

Segmented subscriptions are likely to be the future of sports consumption for both broadcasters and clubs,” said Aaron Duckmanton, global head of marketing at video platform Grabyo. “If clubs can add real value with their fan subscription service – which is delivering timely, engaging content to their channel, then fans will respond and the interest in this type of service is only going to increase.”

When the Super League rugby tournament was put on hold in March, Warrington Wolves decided to try and make up some of the lost revenue from postponed matches via subscriptions. Now, there are nearly 1,000 subscribers who initially paid £3.49 ($4.57) a month to watch full-match reruns of archive fixtures from years past. With the season having started at the start of August, those subscribers also get to watch 15-minute highlights of matches 24 hours after they’ve aired on broadcaster Sky Sports before they get to watch the full match a week after it has aired. 

“The number of subscribers has been a source of some much-needed income for the club,” said Paul MacLeod, head of marketing for the Warrington Wolves. “Some fans want to have that detailed view of a match regardless of whether they know the outcome so we feel there’s a market for that due to pent-up demand for sports.” 

Once they have built a sizeable subscription base, both clubs will explore wider commercial opportunities. For instance, MacLeod said his team would look to offer potential sponsor partners a highly-targeted audience with more digital inventory to leverage. By having this first-party data, the club can work sponsors more directly to show reach and ROI, he added. 

The viewpoint was shared by commercial execs at the Spanish soccer team FC Barcelona. F.C Barcelona started testing the service in March prior to football matches being cancelled. Commercial execs at the club wanted to see whether charging Facebook fans to watch its content could be a cash cow in years to come.

“We’re piloting the store to see if we can get some kind of return from Facebook,” said FC Barcelona’s CMO Guillem Graell.