Digital disruption is infiltrating the local sports page thanks to a new publication that opened its doors with something many newspapers have fought for years: a paywall.
The Athletic, a subscription-based sports website, debuted with its Chicago vertical in January 2016 and has substantially grown by recently raising $20 million and expanding its subscriber base to six figures. (The Athletic declined to provide either its audience figures or demographic information, other than a rep noting “our readers run the gamut—fans of all kinds.”)
As more publications introduce a paywall, including Vanity Fair, Bloomberg and Business Insider (and Adweek), media experts say The Athletic’s model is unique because the company is growing through attracting loyal subscribers, luring them with the promise of high-quality journalism that’s not interrupted by advertising.
“Can they get enough subscribers where they don’t have to start advertising? That’s the million-dollar question,” said Rebecca Lieb, co-founder and analyst at Kaleido Insights. “Building that base is critical no matter what.”
The Athletic operates in nearly 30 cities and has 150 full-time staffers. With the $20 million it just secured, The Athletic is looking to expand into more markets and hire for its headquarters in San Francisco to support that growth, said The Athletic COO Adam Hansmann.
The Athletic markets itself as a place readers can find in-depth coverage of their favorite local teams. The publication attracts top reporters with the promise of letting them write the long-form stories their previous publications likely wouldn’t consistently greenlight.
“We want our writers to write for the customer, not an advertiser,” Hansmann said.
Media experts say they’re curious to see if the website will maintain the subscription model, offer ads or wade into, as other publishers have, alternative revenue streams such as ecommerce or events.
Brian Wieser, senior analyst at Pivotal Research, said it’s feasible for a company to find success through a subscription model.
“You can argue that a company that tries to first demonstrate its value to a group of customers to pay for it probably has more durability than one solely focused on advertising,” Wieser said.
A spokesperson for The Athletic said the publication is exploring ways to diversify, including new media platforms, such as podcasts and video, and holding events (which the publication is already dabbling in with this subscriber appreciation gathering in Chicago). Though they’ll “never say never,” Hansmann said advertisements are not currently up for consideration.
“We’ve built our business today on the fact that the user experience is sacred,” Hansmann said. “To interrupt that experience with ads or third-party content of some kind would effectively violate the trust that we have with our customers, and we don’t have any intention of doing that.”
An annual subscription to The Athletic costs about $50, and about 90 percent of subscribers renew each year. Its oldest markets, which Hansmann says are profitable, grow at a rate of about 20 percent month over month.
Hansmann declined to give exact overall numbers, but said some of the publisher’s earliest cities, such as Chicago, have more than 25,000 subscribers. After two years in business, it’s one of the top-performing cities, said Taylor Patterson, a spokesperson for The Athletic. (The Athletic declined to provide more detailed audience figures or demographic information, other than a rep noting “our readers run the gamut—fans of all kinds.“)
“We are very patient investors—but if a city takes longer than hoped to grow, we capture a ton of data that allows us to isolate whether the problem could lie with the content strategy, a lack of consumer awareness or something else,” said Patterson. “The other good news, in sports, is there is a constant flow of new data and storylines that allow us to iterate in real time with the content mix and product.”
Media analysts agree subscription models work in areas where readers are passionate. Sports, for example, is a good topic to launch in this space because of the fanatic sports readers, said BTIG Research media analyst Rich Greenfield.
“Rather than having to pay for a whole newspaper that has a tremendous amount of content you don’t care about, you’re getting just the vertical you care about,” Greenfield said. “So, I think it’s a really interesting idea, sort of unbundling the legacy newspaper, and is another example of someone willing to pay a modest subscription fee to avoid disruptive advertising.”