Tortoise Media, the five-year-old, UK-based slow news startup founded by ex-BBC News boss James Harding, former US diplomat Matthew Barzun and Katie Vanneck-Smith (now Hearst UK CEO) reported a loss of £4.6mn for 2022 – 45% up on the previous year.
The loss was attributed in part to a major investment in audio as Tortoise doubled down on delivering its in-depth journalism the way it now believes its audience wants, and pursued deals with podcast companies including Amazon’s Audible. The investment was backed by a £10mn funding round – double Tortoise’s startup funding.
But Tortoise is fundamentally a subscription business, charging members for a range of perks, including access to journalists, exclusive content and ads-free podcasts. It means that building a subscriber base is integral to the search for profitability.
Though we don’t have the 2023 results, we can look at what was reported for 2021 and 2022, plus a few other data points, to consider what Tortoise’s trajectory in recent years might look like – and its chances of hitting profitability.
So, first off, we know that at the start of 2021 Tortoise had nearly 50,000 paying members – an increase of 50% over the preceding year, according to comments by Harding. Assuming a roughly even split between the then £50 discount rate for qualifying subscribers, the £80 first-year rate, and the £100 full-year rate, would produce membership revenue of about £3.9mn.
By the end of 2021, Tortoise had recorded £5.4mn in total revenue. In 2022, Tortoise brought in £6.2mn, an increase of about 15%. You wouldn’t expect subscriber growth to keep at the pace of 50% per year and, given the likely size of that membership revenue compared to the rest of the business, it seems that growth in 2021 is likely to be down primarily to growth in the number of subscribers. So, if we use that revenue growth figure as a proxy for subscriber growth, we might take a guess that – by the end of 2021 – Tortoise had somewhere in the region of 57,500 members, and perhaps 66,000 by the end of 2022.
A pricing change in late-2021 introduced a standard £100 – swapping out the £80 first year for a 30-day free trial. At 57,000 subscribers – again paying a range of rates – that would equal membership revenues of about £4.7mn.
And at 66,000 subscribers, our guesstimate for 2022, Tortoise would be looking at something in the region of £5.5mn in subscriber revenue. Its total staff costs for 2022 – which will make up most of the costs required to maintain its membership programme and its high-quality journalism – was £6.1mn. And, if we continue that trend and assume subscribers continued to grow throughout 2023 by 15% to around 76,000, and take into account another price rise to a top rate of £130 at the end of 2022, you might expect membership revenue to reach £7.4mn.
At steady staffing levels, inflation would take Tortoise’s staffing costs to around £6.6mn at the end of 2023. A modest increase in subscriptions, combined with price rises, would, in theory, give Tortoise enough revenue from membership alone to cover its wage bill.
There are lots of assumptions in those figures, and the real numbers could be quite different. For one, they don’t take into account the commission Apple and Android take from subscribers via in-app purchases, which is now 30% in the first year and 15% thereafter.
There’s reason to think the numbers signing up via the app are not insignificant. On Apple’s store ,Tortoise is ranked as number 37 in the news category for the UK, sandwiched between The Sun newspaper and CNBC’s stock app. To give us some idea of where that puts it, the FT’s Edit app (number 30 in that list) had amassed 140,000 downloads by the middle of 2023. Now the FT is likely getting a large chunk of those subscribers from around the world, whereas Tortoise appears still heavily focused on the UK. The take-with-a-pinch-of-salt numbers from SimilarWeb suggest that more than half of visits to the Tortoise site are from its home market, with under 10% from the next most likely source of paying members, the US.
We also don’t have much data on the other ways Tortoise brings in money. That investment in audio will likely be bringing in revenue both in fees from partners and advertising to non-members, with audio revenue up 67% in 2022. However, that sort of growth may be getting ever harder to achieve. After years of double digit growth, podcast ad revenue grew just 5% in the US last year.
Then, there are also other revenue streams, such as the sponsored emails to Tortoise’s 100,000 or so newsletter subscribers and its events, including a festival, Kite, and Responsible Business Forums, the latter of which Tortoise said in 2022 had nearly tripled revenue. There are also at least six licensing deals signed for TV and film.
It is also, of course, possible that Tortoise’s membership numbers haven’t actually grown at all since 2021, or been far below my assumed 15% a year. However, even if subscriber numbers were flat, the price rises introduced over the past few years would still have boosted membership revenue by close to £1mn.
If both membership revenue and other income streams have grown at a steady rate, matching the revenue increase between 2021 and 2022 – ie a steady 15% a year – Tortoise could quite easily be looking at 2023 total revenues close to £10mn. There’s a health warning on these numbers and further investment might have been required to maintain growth. But I wouldn’t be surprised if the privately-owned Tortoise Media was slowly and steadily approaching profitability for the first time since its 2019 launch. You wouldn’t expect payback to be quick, would you?
