Subscriber-Only Market Is About To Get Even More Crowded

Although it’s only been a little more than a week since we’ve gone live, you should start seeing the site evolve into more regular features such as Hootie’s Wayback Machine, as we want to make sure we’re producing not only the news stories involving University of Virginia sports, but perspective, commentary and analysis of those things that also affect UVA sports.

I won’t be getting the DeLorean up to 88 miles per hour, but in addition to Hootie’s Wayback Machine, we will also be having a regular column on business and media as it relates to UVA and the ACC. The first topic is one we hold near and dear here at JerryRatcliffe.com: The move to subscriber-based websites that cover a particular niche in the sports universe.

They’ve obviously been around for a while and they practice one of the most sound principles in all of business: It is far more profitable to exploit a very specific niche in a marketplace than try to be all things to all people. I know I’d far rather read a publication that knows my favorite team as intimately as I do (“that person writing is one of us,” I think) than one that only covers it generally.

But many of those sites – and there are plenty that have been successful – seem to have fallen into two camps. There are those that have a staff of all writers (many who are big sports fans of the teams they cover) but not marketers, or those that are run by businessmen who emphasize clicks and don’t necessarily care about the content – or the customers. Those staffed by writers turn out great, passionate content, but may struggle with the business part of the equation to stay profitable. The latter…well, eventually fans figure out they’re being played and don’t renew.

The latest company that seems to want to dive into this pool is The Washington Post. They sent an email to me here at the Global Headquarters of JerryRatcliffe.com to get my thoughts on such a new venture. What would I want to see? How much would I be willing to pay? Is seeing the opinions of professional athletes important to me? How about stats?

I wish them well in the endeavor as there are some great people in sports journalism whose livelihood has been significantly affected by the simple fact the internet broke the newspaper business model years ago. Newspapers for a century were like exclusive franchises in a marketplace, and their real product wasn’t the news. A professor at Penn State once asked a group of us at a seminar back when Domino’s was first starting out what product did they sell. We all looked around as if to say “is this guy kidding? It’s pizza.” No, the professor said. It’s delivery.

Back then they were the first to offer delivery in 30 minutes. The pizza didn’t have to be great, he said. It just had to be delivered, and if you were hungry, an average pizza delivered to your house beat the heck out of a great pizza you had to get in the car and go pick up yourself. Newspapers were kind of the same way. The product was a delivery system to place advertising from companies into your driveway. The writing didn’t have to be great. But the circulation had to be big and they had to bring it to your home.

Classified advertising was the richest of all the ads. For things like obituaries, help wanted, selling a car…there were no other options, and newspapers charged through the nose for it. At many newspapers, classified advertising was at least a third of all revenue. Then Craigslist came out (followed by many others) and in the blink of an eye cut off that revenue stream. Few businesses can survive losing that big a chunk of revenue and the demise of newspapers is in no small part due to the inability of the industry to find a way to replace it.

Subscriber-based models are one such attempt, and the popularity of The Athletic, another pay as you read product, has more than probably influenced The Post. I personally love the product, but as a businessman think it is a mirage. They have signed up a lot of high-priced talent, are burning through a bunch of investor capital, and are hoping subscribers eventually come and make the product successful. I’m pulling for them, but when you spend other people’s money, there usually comes a point after around two years where investors get together, say “times up, no more money” and you better be financially solvent.

But whether they make it or not, big whales like The Washington Post and The Athletic can really disrupt a marketplace because they do have staying power due to their financial resources. If they come in to Charlottesville, for example, and take away 25 percent of a company’s subscribers or advertisers, they can be just like Craigslist was to the newspaper industry and remove the margin of profitability smaller operations have.

Our strategy at JerryRatlicffe.com is pretty simple as it regards such competition. We’re going to be very focused only on UVA and never try to be all things to all people. Between Jerry and I, we are blessed with complementary skills that allow us to be a lean organization. We are also both workaholics who in these last two weeks have exchanged more texts at 2 AM than you would ever imagine.

Our startup costs were extremely low because I wrote and maintain the website. Jerry (who I’ve nicknamed “The Face Of The Franchise”) is a beloved institution in Charlottesville who knows everybody and can crank out copy like a machine. And Wahoo Nation…you folks give me goosebumps at times. The outpouring of support has been incredible. There were gifts and subscriptions coming in hours after we went live. I even texted Hootie that night and said “Congratulations. We’re one of the few businesses I’ve heard of that is in the black on Day 1.”

Will a big corporation like The Washington Post be able to kindle that sort of an intimate relationship with an audience? I don’t know. The Athletic’s model seems to involve going into a marketplace, find the writer with that sort of following and hire them (rumor has it they have just hired the Roanoke Times’ Virginia Tech beat writer for specifically that purpose). The Post may try to do the same, although I would guess the first beachhead they will go after would be the Washington professional sports teams.

These are interesting times in sports media. The choices will be many and probably increase as time goes on, although I don’t think the overall pie gets bigger. People will make choices between whether to spend their money on certain sites, newspapers, or premium cable television channels to satisfy their appetite for information on their favorite sports team.

I personally think smaller is better. You can be more nimble, quicker to react, and at least to Jerry and I, it’s not just a job. Hopefully that passion and fun translates into the product and we create the community feeling we’re aiming for. As a Bible verse says, “steel sharpens steel” so the more competition there is, the better the overall coverage ends up being as that competition forces all of us to be better.

But being a smaller company in a market where large corporations play can also be like being a daisy in a field where elephants roam; you can easily get stepped on. So you have to bring your “A” game every day and take care of your customers.

We will. Because we clearly understand that if we don’t, somebody else will.