The 80/20 View: What the Puck? And what could it tell us about the future of journalism?

In his regular column for Mumbrella, media analyst Ben Shepherd looks at the possibilities behind subscription-based journalism on a new online platform.

I remember watching The World on ABC News last year, and a segment regarding a strange affliction that had begun to impact American CIA agents tasked with identifying Russian activity.

CIA agents in Moscow had reported on incidents where they would suddenly be hit by intense, heavy bouts of nausea and dizziness. For one agent, these symptoms continued once he arrived back on US soil. They got worse and worse – to a level his vision began to fail and he could no longer work.

The short version of the story involved the use of microwave signals which caused brain damage to those they were deployed at. It was an absolute ripper of a story and the research and journalism behind it was deep and impressive.

The journalist who wrote that story is a woman named Jula Ioffe, and she appeared on ABC that night back in October 2020 to talk through the story. At the time I was unfamiliar with Ioffe, but I quickly followed her on Twitter. And since then, she’s been a constant go-to for stories around world events and the incredibly complex, and incredibly fascinating, US political environment.

Jula Ioffe

The reason I recount this story is that last week, Ioffe and a bunch of other journalists and entrepreneurs properly launched a new business called Puck.

“Puck is a platform for smart, engaging (and, yes, occasionally dishy) journalism owned and operated by the journalists themselves,” says the website, which states that it’s looking to narrow the divide between elite creators and their audience. It raised a US$7 million Series-A funding round from the likes of TPG Capital and 40 North Media, and has execs from Luminary, The Athletic, Vanity Fair and the New York Times managing the business side of the enterprise.

It’s a subscription based model with two core revenue models. A base level subscription at US$75 per year or US$9.99 per month; or a premium subscription at US$250 per year, which offers further access to journalists and a wider range of content.

A well-regarded chief marketing officer friend of mine told me that in their view, the most natural applications for paid subscription newsletters and publications are those who can bring people into the tent who 1) are presently out of it, and 2) have a financial upside in feeling they are in the tent. The tent being the inside elements within an industry or area that are often hidden to the normal observer.

My friend’s view was this was needed to move the buyers mentality away from it being a discretionary purchase into being a business related one. The example they gave was that they personally would over-analyse purchasing a $0.99 app for their phone, but had never really thought about the price of their $50 a month The Australian Financial Review subscription.

Puck is smartly going after areas where being in the tent is coveted by many – Wall Street, Washington, Silicon Valley and Hollywood. The consistent elements – big money, big egos, big power and no shortage of people wanting to break in. Puck has assembled eight well-known journalists who cover these areas, and the idea is to give each journalist their own brand and let them report without limitations.

These journalists bring not only prestige and talent, they bring ready built audiences across social platforms and name recognition. Ioffe for instance, has 263,000 Twitter followers. Dylan Byers, who covers media, has just under 100,000. All of Puck’s founding partner journalists bring large followings of their own.

And the beats they cover have no shortage of potential readers. Hollywood, Silicon Valley, Wall Street and Washington shape the global agenda. This means Puck has a strong audience opportunity both within the United States, and outside of it. This addressable audience makes Puck a reasonably sensible investment from a VC, especially as it’s not a hugely labour intensive business to set up.

For example, if Puck can deliver 100,000 subscriptions in year one, this translates to an annualised revenue run rate of US$7.5 million, which is the equivalent of what it has received in its Series A. It’s largest expense initially is likely to be acquisition marketing costs. But with a smart strategy across digital platforms this can be tuned to deliver high volume, highly relevant prospects at relatively low costs. Aside from this, it isn’t a massively complex business with significant operating expenses.

If the model works it becomes attractive to an acquirer. Subscriptions deliver SAAS type revenue streams, and are not subject to the intense volatility of the advertising market. A potential acquirer in three to five years could purchase a cash positive business with a few hundred thousand rusted on subscribers, as well as a hell of a lot of IP around how to monetise journalism via subscriptions and specific areas of interest. It becomes a more attractive buy than an ad funded media business that is reliant on ad hoc advertising campaigns and likely subject to the same structural pressures as the potential acquirer.

The model is attractive not only to venture capitalists. It’s extremely attractive to the journalists. They become not just employees. They are partners in the endeavour. They have equity. Puck is not a company they work for, it’s a company they part own. This will be attractive to other journalists. And if Puck is an ad free business, this will just add to the appeal. No advertisers means no restrictions.

Of course, all of this upside is contingent on their being an audience demand to pay for a product like Puck. If Puck fails to hook in subscribers, it has very limited means of finding other ways to pay the bills. It can always raise more funds, but it’s far easier to raise funds (at a higher valuation as well) if you can show strong traction as opposed to raising because you’re low on cash. But for the partners involved – the journalists, the managers, the VC’s – it’s a pretty low risk undertaking. The journalists, in particular, are all recognised enough that they could go back to newsroom and media brand jobs and take their following with them.

If it works, it will provide the confidence for other high profile journalists to follow a similar path. Combine their talents, audience and beats and start new media brands that bet on the willingness of a small volume of readers to pay for access to the areas they cover. In doing so they become part of the brand, part of the upside and in much more control of their own destiny.

It’s not going to upend the news business, but it will add another dimension to it. And for subscription driven news companies, it adds even more competition. I don’t see this model working in a market like Australia on its own. Australia is too small. But it can and does work in the US. And it could work in Asia Pacific inclusive of Australia), the UK, and the European Union. Anywhere with an appetite for money and power, and a sufficient amount of people willing to pay to sate that appetite.

Ben Shepherd is a media analyst. The 80/20 View is a regular column on Mumbrella.


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