As publishers cast about for reader revenue in a tough digital ad market, many are finding that local sports coverage, which attracts especially passionate, engaged readers, is a good game to be in. For that reason, sports has emerged as a critical test case for the proposition the future of digital news lies in reader revenue rather than advertising.
The most prominent player in the space is $48-a-year subscription-based outlet The Athletic, which claims 100,000 subscribers and just closed a $20 million funding round led by Evolution Media, bringing the total amount of capital it’s raised to $30 million. Elsewhere, there’s DK Pittsburgh Sports and the 7-month-old Boston Sports Journal, which charge up to $35 for a year’s subscription. Hook ‘Em, a paywalled sports product that the Austin American-Statesman launched in 2015, claimed 16,000 digital subscribers in the third quarter of last year, costing $3.99 a week in a bundle with its parent paper.
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Their growth is also an encouraging sign for publishers who hope to focus on consumer revenue rather than advertising.
“One thing that’s abundantly clear in our industry is that free is not a business model,” said Todd Dybas, one of the co-founders of The Sports Capitol, a Washington, D.C.-focused subscription site that launched this March.
The idea of a subscription-based digital sports publication isn’t new. Dybas, for example, released a paid iOS app for his coverage of the University of Washington’s football and basketball teams back in 2012. The market for people who will pay for local news is usually limited by geography, but sports is different because interest in a hometown team persists even after someone moves away. For example, 48 percent of DK Pittsburgh Sports’ subscriber base lives outside western Pennsylvania. Hook ‘Em’s national audience is also helping it sell advertising the American-Statesman can’t get as a local paper, said Steve Dorsey, gm of the American-Statesman.
Subscribers to sports news can demonstrate a high propensity to renew. Alex Mather, The Athletic’s co-founder, said the renewal rates among his publication’s subscribers are above 90 percent.
To find expat fans, The Athletic uses Facebook advertising and retargeting as well as a referral program that gifts subscribers $10 in Amazon credit for successful referrals. DK Pittsburgh Sports, which got off to a strong start with Twitter ads, now uses paid Facebook ads and mobile app downloads to drive subscriptions.
The new subscription sports outlets will have challenges growing reader revenue. Like other subscription-focused publishers, they face competition from large, ad-supported established players, customer acquisition costs, churn and over time, competition from each other. Their content formats, like postgame rapid reactions, are easily imitated by competitors.
The bet is that they’ll succeed by serving their readers. While a few sites offer things like Periscope access to postgame news conferences and private podcasts, most of the sites focus simply on well-written, deeply reported written features and profiles. The Athletic gets reader feedback from one-question surveys at the bottom of every story and uses that feedback to inform its editorial direction, said Paul Fichtenbaum, The Athletic’s chief content officer.
“We’re intent on serving our audience, and we know what they want,” Fichtenbaum said. “We’re not interested in hot takes. We’re not interested in aggregation. Video is not on our radar right now. It’s not like the audience has asked for it.”
Direct feedback is taking other forms. Boston Sports Journal founder Greg Bedard said he is thinking about using a Kickstarter-esque system, where the Journal’s staffing and coverage will depend on whether enough people indicate they’d be willing to pay for it. “If we can get a thousand people to sign up for Revolution coverage, that probably pays for itself,” Bedard said.