Atlantic Must Push for Sub Revenue in Post-Trump, Post-COVID World
NBC News: "Nicholas Thompson, the chief executive of The Atlantic, gave a presentation to employees last month in which he disclosed some uncomfortable truths about the state of the magazine. Subscription growth, which had skyrocketed in 2020 thanks to the Covid-19 pandemic and the presidential election, had come back down to earth. For the first time, the number of subscribers had plateaued and started to slightly decline. And even with last year’s substantial surge, the magazine had lost more than $20M and was on track to lose another $10M this year, according to slides of the presentation shared with NBC News. But Thompson was optimistic, according to four employees who saw the presentation and spoke on the condition of anonymity. The company would lose just a few million dollars in 2022, Thompson projected, and turn a small profit in 2023. When that happened, he said, every staff member would be given $10,000 or a 10% salary bonus, whichever was bigger. “We are on a path to profitability, or sustainability,” Thompson said in an interview. “Our losses have narrowed every year. We’re vastly ahead of where we thought we would be.” The Atlantic needs to make $50M in annual subscription revenue to break even, according to Thompson. Hitting that target has become more complicated since Trump left the White House and the pandemic let up. New subscribers are coming in at about a quarter of the rate they did last year (10,000 a month, on average), and the magazine faces challenges keeping some of its existing audience, which may have less of a need for The Atlantic’s journalism in a post-Trump, post-COVID world. “We did four years of business last year,” Jeffrey Goldberg, The Atlantic’s editor-in-chief, said in an interview. “One of the core challenges is, how do we keep all those new subscribers?” That is a challenge being felt throughout the news industry. For the last six years, Trump’s chaotic candidacy and presidency provided a life raft for this industry, as did the pandemic. Cable news networks saw a surge in viewership while publications like The New York Times and The Washington Post enjoyed strong subscriber growth. But with Trump out of office and the pandemic in retreat, both television news viewership and digital and print readership are in decline — resuming a multidecade slide for the news business. The Atlantic is in the privileged position of having a wealthy benefactor: Laurene Powell Jobs, the philanthropist, investor and widow of Apple co-founder Steve Jobs, who bought a majority stake in the magazine four years ago. But Powell Jobs, who has a net worth of around $22ZB, did not buy The Atlantic as a philanthropic endeavor, three sources familiar with her thinking said. She bought it in part to demonstrate that there can be a sustainable model for journalism if you invest in it. When Powell Jobs bought her stake from veteran publisher David Bradley in 2017, the magazine was turning a $10M profit but was in steady decline. Her solution was to hire about 100 new staffers, a move that would push the business into the red but with the promise of future growth. (In May 2020, two months into the pandemic, the magazine also laid off 68 employees, or 17% of its workforce.) In private conversations, Powell Jobs has referred to herself as a “generational leader” of the magazine. She meets with Thompson and Goldberg frequently and has professed a love of The Atlantic’s journalism. But she isn’t willing to cover its losses forever, the sources said. Goldberg has privately expressed fear that Powell Jobs and her organization, Emerson Collective, might pull the plug if the magazine doesn’t reach profitability within the next four to five years, Atlantic sources said. Goldberg disputes this: “I’ve said many times that Laurene and Emerson Collective both have strategic patience and have made the support of quality journalism their main goal here, but that they also believe that readers will pay for high-quality journalism,” he said. “They expect The Atlantic, a maker of high-quality journalism, to become profitable over time. I think Laurene is an excellent owner who is in this for the long run.” “We’re so proud of our colleagues at The Atlantic,” Peter Lattman, Emerson’s managing director of media and the vice chair of The Atlantic, said in a statement. “Despite last year being one of the strongest in its 164-year history, we still believe its best days are ahead.” For The Atlantic, profitability means about $110M in overall revenue, according to Thompson’s presentation. How the magazine plans to hit this goal is a mystery to a few employees and to news media executives who saw the Atlantic’s numbers and spoke on the condition of anonymity. The Atlantic brought in just under $75 million in revenue in both 2019 and 2020, according to Thompson’s presentation. Roughly $50M, or two-thirds, came from advertising, events and other business-to-business revenue streams. But Thompson anticipated only incremental increases in this area over time, up to about $60M in 2023. The bulk of new revenue will have to come from subscriptions, he said. At present, The Atlantic has about 750,000 subscribers: Roughly 450,000 digital subscribers who signed up after the magazine launched its $50 paywall in 2019, and another 300,000 legacy print subscribers who pay $35 to $40 annually on average, according to Thompson. (The Atlantic is working to convert these legacy subscribers to full-paying digital subscribers.) All told, annual subscription revenue in 2020 was less than $25M, according to Thompson’s presentation. Buoyed by 2020, the company hopes to get that number to somewhere above $35M this year [and ultimately to $50M]... From March 2020 to January, the magazine was adding about 30,000 subscribers a month, with more than 45,000 added in both June and July and a whopping 61,000 in September, when it published a bombshell story about Trump having called soldiers who were killed in action “losers” and “suckers.” Without Trump or the pandemic, the path to $50M is significantly harder. Since February, the magazine has brought in about 10,000 subscribers a month — roughly analogous to its growth rate before the pandemic. Its retention rate for existing subscribers is about 75 to 80%... The net result, according to Thompson’s presentation, is... a static or slightly declining subscriber base... “I never really think about 1 million subscribers. I think about $50 million in subscriber revenue,” said Thompson... “There are other ways to get to $50M... 800,000 subscribers who pay $62.50, 500,000 subscribers who pay $100.”
Opinion: Publishers Should Charge More for Digital Offerings
MediaPost's Rob Williams writes: "Publishers should charge higher prices for their digital-only products, according to Mather Economics. The consulting firm this month updated its list of recommended strategies for publishers to reflect the disruptions of the pandemic, which accelerated a longer-term shift to digital distribution. Its tests of digital-only products found that publishers have pricing power that’s comparable to print. “Many publishers’ digital-only prices are low relative to their print prices, although we are working with many publishers to raise prices to their digital-only subscribers,” according to Mather. “One important benefit of this strategy is that it maintains revenue and margins from subscribers migrating from print to digital platforms.” The new recommendations also reflect the growing value of data collected directly from readers. “Publishing has always been a platform business, acquiring an audience to sell advertising, and it will continue to be so in the digital era,” according to the report. “The increasing value of first-party data for advertising makes an audience data strategy imperative.” That advice is notable as technology companies take steps to limit the sharing of data about their customers. Google eventually will follow through on its plan to phase out support for tracking cookies in its Chrome browser, while Apple has continually updated its software to give customers more tools to protect their online privacy. Dynamic paywalls that respond to user activity and adjust subscription offers “are helpful but not a critical part” of a subscription acquisition strategy. The more popular strategy is to have a combination of limited access to premium content, a registration wall that offers more features and a metered paywall, according to Mather. “For publishers with scale, dynamic paywalls can help build your relationship with readers in the middle of your engagement distribution,” its report said. “Anonymous visitors should receive a tight paywall as should readers with very high engagement.""
OTHER NEWS OF NOTE:
7-Eleven Expands Mobile Checkout to Thousands of U.S. Stores
RetailWire: "Customers shopping at more than 3,000 7-Elevens in the nation’s capital and 32 states around the U.S. will have the option of paying for their purchases without having to stop at a checkstand now that the convenience store giant has expanded the availability of its proprietary Mobile Checkout technology. 7-Eleven plans to roll out the shopping option to its more than 9,000 primarily franchised stores by the end of 2022. The checkout feature is available on 7-Eleven’s app. Customers can use the app to scan purchases as they shop and pay for them without having to wait in line or interact with a cashier. Purchases are paid for via Apple Pay or Google Pay, a credit or debit card or through the 7-Eleven Wallet feature on the app. Some purchases, including alcohol, tobacco and lottery tickets, will still need to be handled at checkout in the traditional manner. Members of the convenience retailer’s 7Rewards program can use the app to redeem points they’ve accumulated to pay for purchases and receive special pricing deals and coupons. The company is offering members a limited-time incentive to try the tool, awarding 10-times the points every time they use it to make a purchase. “After over a year of living through the pandemic, Americans have a new perception of what convenience looks like. For many, it’s a contactless shopping experience without waiting in line,” Raghu Mahadevan, digital senior vice president for 7-Eleven, said in a statement. “Luckily, we were already testing Mobile Checkout and had begun expanding 7NOW home delivery to hundreds of markets before lockdowns occurred,” Mr. Mahadevan said. “Now, we are accelerating the expansion of Mobile Checkout to ensure customers can shop at 7-Eleven the way they want to shop: safe and convenient.” The convenience store chain sees its technology as a key selling point. It launched a $70M national ad campaign in the spring to let Americans know that today’s stores are not the same 7-Elevens they once were. The company has set aggressive expansion targets with plans to eventually grow the business to around 20,000 locations around the U.S."
Kroger Promotes Jabbar to SVP Retail Divisions
SN: "Valerie Jabbar has been named SVP of retail divisions at The Kroger Co., succeeding Steve McKinney, who is retiring after more than 40 years at the company. Jabbar, currently group VP of center store merchandising, will take over from McKinney on Aug. 7. In her new role, she will oversee several Kroger Co. retail divisions. Jabbar has served as group VP of center store merchandising since 2019. She joined the company in 1987 as a store clerk at Fry’s Food Stores and was elevated to several leadership roles before shifting to Kroger’s Mid-Atlantic division in 2012 to serve as VP of merchandising. The next year, Jabbar was appointed to the same role at the Ralphs division and then promoted to Ralphs president in July 2016. She was promoted again, to group VP of merchandising, in 2018 and was named to her current role a year later"...
End of Non-Compete Clauses Will Impact Retail, But How Much?
Businesses include non-compete clauses in their employment contracts to protect trade secrets, but the practice has come under fire in recent years for unfairly preventing employees from pursuing better opportunities and wages. President Joseph Biden, last week, delivered an executive order that seeks to restrict the future use of such clauses. The order encourages federal agencies such as the Federal Trade Commission to ban or limit non-competes in an attempt to curtail the practice, which the Biden Administration estimates is affecting 35M to 60M workers and stifling economic growth, The National Law Review reports. The Administration has not, however, released any information about specific moves it wants agencies to take. It will also potentially take a considerable amount of time for the order to yield results. At the signing of the executive order, President Biden pointed to cases in which non-competes appeared excessive, such as when they prevent people running machines that lay down asphalt from moving to competing businesses. He also cited two quick-serve restaurant giants as going too far with non-competes. “You can’t leave Burger King to go to McDonald’s,” said Mr. Biden. “Come on. Is there a trade secret about what’s inside that patty? ”In the last few years some states have taken smaller-scale actions against the proliferation of non-competes in contracts, especially those aimed at lower wage earners. Large corporations have lobbied on behalf of the restrictive agreements. The Washington state Senate passed a bill in 2019 exempting workers who make below $100,000 from non-compete clauses, a number favored by Amazon.com, according to The Associated Press. The original ceiling wage written into the rule was $180,000. Amazon’s average employee salary is $113,000.The state law passed the legislature and went into effect in January, 2020 according to the Tyson Law blog. The law further nullifies non-competes pertaining to independent contractors who make less than $250,000 per year. Some states even have existing labor laws that render non-competes unenforceable"...
Grocers Reassess Benefits Amid Labor Shortage
Grocery Dive: "Salad bars are opening back up across the country, but at Metcalfe’s Market the self-service station at one of its three Wisconsin stores remains closed. The culprit isn’t pandemic restrictions, but rather the labor shortage that’s frustrating retailers across the U.S... The current worker shortage, driven nationwide by a host of factors including childcare concerns and competition from reopening restaurants, continues a staffing challenge that stretches back years for Metcalfe’s. Fewer people have been looking for work, and the increased benefits during the pandemic from the federal and local governments have encouraged unemployment, said Tim Metcalfe, co-owner and president of the grocery store. [Metcalfe's] has doubled its referral bonus to $200 and added a signing bonus that ranges from $500 to $1,000, depending on the position... appreciation efforts have helped with retention and sign-on bonuses have attracted a few people. But the company is still struggling to make up for worker losses it has experienced due to COVID-19 concerns, retirements and poaching from competitors that can offer higher wages and bonuses... heir No. 1 priority right now is retaining workers in highly skilled positions in areas like the meat and deli departments... Grocers nationwide have rolled out sign-on bonuses of as much as $1,500 — a staggeringly high incentive for what in many cases are entry-level positions. Throwing money at the problem, however, offers limited ability to stand out in a labor market where fast-food restaurants, department stores and other sectors are all offering similar enticements, experts say. grocers nationwide have rolled out sign-on bonuses of as much as $1,500 — a staggeringly high incentive for what in many cases are entry-level positions... Françoise Carré, research director at the Center for Social Policy at the University of Massachusetts Boston, said the fact that unemployment isn’t particularly low right now — the current rate is 5.9% — indicates there could be deeper concerns keeping workers from taking jobs at grocery stores... The Washington Post recently reported that many retail workers, fed up with low pay and burned out from working in stores and warehouses during the pandemic, are defecting to higher-paying positions in environments that are less demanding. Given this, Carré said retailers may be overly focused on quickly hiring workers to meet current needs. “Are they putting anything in place that would be durable, or are they just doing very short-term things to see if they can prompt some response?" she asked. Beyond offering higher wages, grocers would do well to market their positions as opportunities for growth and advancement, said Chris Tilly, a professor at the Luskin School of Public Affairs at the University of California, Los Angeles, and an expert on labor markets. "Back when retail was a relatively desirable job, part of what made it that way was you actually could have a retail career, and it was not just a very small number of people who became supervisors and managers and took that path to the top," he said"...
OTHER NEWS OF NOTE: