The four-year-old subscription sports app The Athletic this week announced an additional fundraising of $50m, bringing total investment to almost $140m and its current valuation to some $500m. The fundraising prompted co-founder and CEO Alex Mather to declare that “The Athletic’s launch in the UK was our biggest ever and we have been blown away by the reception we have received from subscribers around the world.”
The Athletic was launched in Chicago in 2016 by Mather and Adam Hansmann, former employees of a subscription-based fitness company, a kind of social network for athletes. They left to produce “smarter coverage and high-quality journalism for die-hard fans,” as an alternative to the traditional advertising-supported business models. They now have some 450 full-time writers, who each own shares in the business.
The UK launch is centred on English Premier League soccer/football whose success in the UK and globally is best illustrated by the fact that its 20 clubs get £2.5bn a year (and rising) – just from sales of TV broadcasting rights. This cash (along with majority revenues from sponsorship, attendance, advertising and merchandising) helps the clubs attract many of the world’s best players. This, in turn, builds the EPL’s growing popularity around the world – and brings in even more cash from TV rights and merchandising.
The 25-year-old EPL has always been a big attraction for pay TV audiences and live broadcasts are now variously shared by Sky, BT and (more recently) Amazon. It is also a year-round staple of the UK national dailies whose match-report supplements produce additional copy sales every Monday during the football season. That is why The Athletic’s semi-secret launch plans ruffled Fleet Street feathers last year.
The publishers were shaken by the way that the US digital media company signed up a team of more than 50 established sports journalists including star names and also established regional reporters specialising in their local EPL clubs. Despite denials, some of those journalists are known to have been recruited at double their existing salaries – and equity.
The Athletic claims to have reached 500k subscribers in the US and Canada last year and is forecasting 100k paying readers in the UK by the end of 2020. But the numbers seem to contradict the prediction last August that, having reached 500k subscribers in North America, its subscribers would double to almost 1m by end-2019.
In so many ways, the service is a test for digital-subscription journalism and a challenge for the “bundling” of sports and all other content by the legacy news brands. Many of the UK’s daily newspapers, which have large teams of journalists reporting on football, could compete directly with The Athletic. But they are, to say the least, reluctant to “unbundle” their content to attract “specialist” readers especially millennials. Executives talk of the need to avoid cannibalising newspaper sales, whether in print or digital. Presumably, they are waiting until news sales have fallen so low as not to be at any more risk, before offering readers the option to purchase only the content they actually want. It will then be too late.
Even in an era when the New York Times has demonstrated the benefits of “unbundling” by selling no fewer than 600,000 subscribers to its daily Crossword and 300k to its Food app, the response of traditional news brands to The Athletic’s UK launch has been limited. It is as if they see the whole idea of subscription “verticals” as neither a threat nor an opportunity.
The Daily Telegraph’s response has been to sell subscriptions to all its sports content rather than just to football, and you have to look hard to find the offer. The Times of London has a similar approach but is offered only to existing subscribers to the whole news service. These ‘no-risk, no-reward’ strategies have emboldened London newspaper executives who say unbundling “doesn’t work here”.
They probably also find “proof” in the fact that Tortoise (a kind of daily “op-ed” news service in the UK) has managed only to get 20k subscriptions in its first nine months, some distance from the 80-120k medium-term target. But there’s a long way to go for this well-funded launch and all such initiatives are only the start of an inevitable long wave of “verticals” which will eventually restrict the digital prospects of traditional news brands – if they don’t get there first.
Further, the indications that long-established, heavily-invested digital services are (finally) starting to make money should worry the daily newspapers which have always expected to outlast them.
This week, Axios said that Business Insider, Vox Media, The Information, Politico, and Axios itself all made profits in 2019; and that BuzzFeed, Vice – and The Athletic – will be profitable in 2020. For all the missed targets, wild valuations and profligacy, the best of the digital-only services (whether advertising or subscription-funded) are not going away and their emergence from years of loss-making will encourage many others to join the attack on legacy media.
Which is why we keep coming back to the same question. Which news publisher is going to take the plunge and launch digital “pick and mix” subscriptions in a serious fight for future audiences? There’s a future in it.
