Kosner: “An Unforgiving Time” for Digital Sports Media Start-Ups
Original Article: Sportico, by John Wall Street, August 4th, 2020
Defector Media and the Local Media Consortium (think: an alliance of local media outlets) announced their respective plans to enter a crowded digital sports media landscape last week. Defector Media, a content co-op formed by 18 former Deadspin writers and editors, will launch a podcast later this month; their website will follow in September. The content and tone of the brand is expected to resemble that of the outlet the group collectively quit last year.
The Matchup, an effort by the Local Media Consortium to give sports fans access to more news about their favorite teams, will get started by making local publications available to all readers (their destination site will launch in ’21). A subscription to any one of the consortium’s individual publications will give the subscriber access to sports content from all of the outlets (without any additional cost).
The two companies intend to take vastly different approaches to the business (Defector will be subscription-based, while The Matchup will rely on advertising). But John Kosner (President, Kosner Media) says that “fundamentally, it’s an unforgiving time for either to enter the marketplace.” Existing competition aside, “the generation coming of age prefers video to print” (so any audience built threatens to age out over time), and much of the current generation of fans is pre-occupied with recovering from COVID-19, finding work or home-schooling their kids to allocate additional time and money to more sports content.
Our Take: The former CEO of a prominent sports media outlet said there is “enormous value”—from the fan perspective—in having access to the 2-5 articles/week that they might want to read but currently can’t because they reside behind a paywall (and it’s unrealistic to subscribe to each publication individually).
The former chief executive we spoke to called The Matchup “a death sentence” for The Athletic, another outlet operating on a ‘subscribe to one market, get the rest free’ model. That’s because despite having raised +/- $140 million in venture capital, it lacks the resources Google has (Google Media Initiative is funding The Matchup) and has significantly greater operating costs. While The Athletic has to fund its expansive network of writers, “the technology, the app, the marketing and the promotion [of all the content], all Google has to do [to put out a comparable product] is build the technology and the distribution opportunity, and they win. They’re building a publishing company without having to incur any of the costs.” If Google can get The Matchup to scale, it’s reasonable to assume sports won’t be the last digital media vertical the tech giant enters (think: news, business).
If there’s a reason to believe The Matchup is going to fail, Kosner says it’s because “there is no future in ad supported media”—not with a few outlets controlling the bulk of ad dollars (think: Facebook, Google, Amazon, YouTube, Snapchat). Brands have also stopped spending with newspapers over the last decade (see: advertising revenue is about 1/3 of what it was in 2008). But the former CEO we spoke to didn’t see that as a problem. They said advertisers wouldn’t look at The Matchup’s offering as “spending money on newspaper advertising. [Instead], they will look at it as spending ad dollars on a digital audience and trust that Google Adwords is able to funnel a certain amount of guaranteed money towards them.”
While the two c-level executives we spoke to didn’t necessarily see eye-to-eye on The Matchup, there was a consensus on Defector Media’s prospects: Neither believes the company is positioned to thrive in the current media environment. While Kosner readily acknowledged Deadspin did some fine reporting in its day and that several talented journalists have worked for the company, he isn’t convinced that the brand has a large enough following to operate on a subscription model. He pegged the entirety of their audience (i.e. those willing to read their free content) “probably in the hundreds of thousands of people—not in the millions.”
Defector had 10,000 subscribers (self-reported) sign-ups within the first few days. While that may sound like a lot, $960K in gross revenue ($8/mo.) obviously isn’t nearly enough to sustain a digital publishing company with 20 employees and real ambitions. The former CEO we spoke to isn’t expecting “that number to go up in any significant way from here, [either].” They said, “There’s a reluctance among consumers to sign up for paid products (only enhanced by the recession), and I just don’t see the former Deadspin crew—who lack relevance on an individual basis—[being another subscription most people would be willing to pay for]. If you told me that it was Bari Weiss, Andrew Sullivan and a bunch of big names were [pursuing this model, they would have a greater chance at success].”
It’s important to remember that “the media environment is also vastly different now [than when Deadspin was at its peak].” Kosner explained, “When Deadspin started in 2005 it was unique, and they had their own voice. Today, [that voice] is not particularly unique. In fact, a website with [the Deadspin] name still exists, trying to do some of the same things [this group wants to do].” The former CEO agreed, adding that the company no longer has a clear role in the sports media ecosystem. “They won’t be as high-minded journalistically as The Athletic,” They said. “They won’t be as deep and in the know as ESPN. They won’t be as much of a utility as Bleacher Report or as funny to enough people as Barstool. If someone really wants to read snark around sports, and they’re right wing they’ll read Outkick and if they’re left wing they’ll read Awful Announcing.”
Perhaps the biggest problem Defector Media faces is that some of its talent will inevitably bring more value to the outlet than others (think: revenue, attention)—a recipe for disaster when everyone is being compensated equally (or close to it). The former CEO explained, “The second somebody starts doing way better than the others, my guess is they fight, they split up and those who are doing great just make the move over to Substack.” Retaining top talent is always going to be a challenge.
