The Future of Media

A conversation with: 

Michael Wertheim

The future of media is niche. Or is it niché? It's definitely more focused.

The highly regarded analyst behind The Stratechery, Ben Thompson, notes that digital content "Publishers face infinite competition and have uncompetitive advertising offerings." In this episode we unbundle how media companies might adapt and capitalize on the strong audience relationships they have built.

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Interview Key Points

  • Growth alone is no longer enough; profitability is moving up in the hierarchy of needs
  • Almost all media companies are focused on diversifying revenue beyond display advertising
  • The future doesn’t bode well for undifferentiated, generalized, content creators
  • A roll up of strong niche sites can outperform a generalized company.
  • There will have to be more M&A across the media landscape
  • An interesting roll up: Fatherly, Food52, Apartment Therapy, Atlas Obscura, Greatist
  • Advertisers, cable and streaming providers want to reach niche publisher audiences
  • Brands look to publishers as models for building authentic consumer connections
  • Ramping YouTube distribution can be hard, but it’s valuable once you hit scale
  • Don’t overlook Snapchat Discover; some publishers make a significant money from it

Full Interview Transcript

Patrick Costello
Michael Wertheim

Michael: Hello.

Patrick: Hey, Michael, how are you doing today?

Michael: Good, and you?

Patrick: Doing great, so everyone who's listening in, I've got Michael Wertheim, the COO of Fatherly with us today, and to kick things off, Michael, I was wondering if you could share a little bit about Fatherly and your role there?

Michael: Sure, so Fatherly is the leading digital publisher for parents, we are targeted and men, and women actually, but mostly at dad's to help them be better parents and help them raise better kids. We've been around since 2014 and we have been growing rapidly and have done business with a ton of both endemic and non-endemic advertisers. We've got a podcast, we've got a book coming out, we have a website, email newsletter and a large Facebook following as well.

Patrick: That's great. Could share a little bit about where you've worked before, and how your past experience impacted your decision to join Fatherly?

Michael: Sure. I cut my teeth at Time Inc, where I was general manager of Entertainment Weekly’s website, Really loved that, it was a great job, I think a real enthusiast passion publication. After I left there I ended up consulting for about eight years and I consulted to about 40 different companies, including big companies like the New York Times and National Geographic, New York Magazine, the Atlantic and then smaller newer companies like Atlas Obscura. Fatherly was one of them as well. In my time ... I also worked inside some companies like Upworthy, where I was head of audience development and business development for about a year and a half. I spent a year and a half at Fusion growing their digital offering which eventually became Splinter News, and a part of Gizmodo. So I was really in a variety of different media companies, seeing a lot of different things and a lot of different trends.

I was an advisor to Fatherly and was brought on to do some work for Fatherly in January of 2017. What I actually knew even before I started were a few things: One, that they were really approaching a niche that no one else was approaching in the marketplace. I saw that a lot of media was #Metoo and trying to have a little different twist on something that everyone else was doing. But Fatherly is really doing something different and celebrating dads and really speaking to dads specifically. I really believe in niche publishers which we can talk about a little bit later. I believed in the management team, so I came to Fatherly really believing the model and its opportunity in the marketplace and its mission.

The face of fatherhood has changed over the last 20/25 years and that hasn't been represented in the media. I saw that there was a lot of possibility for this brand.

Patrick: Given your breadth of experience, I'm sure you've seen a variety of ways in which media companies are approaching driving growth and value to readers and I was curious what your thoughts are about something that the CEO of Bloomberg Media recently stated in an interview. He noted that, "Profitable growth is a Northstar." Has profitable growth been the de facto Northstar for media companies? And has that changed in recent years?

Michael: It depends on what media company you're talking about. I think that a lot of the media companies that we hear about in the news are venture capital backed media companies, which often have not been driving towards profitable growth, at least at their beginnings. I think that later on in their life cycle you do see them driving towards profitable growth, like Buzzfeed now and what's going on with all their layoffs.. A company like Bloomberg,, is always going to be focused on profitable growth. But I think there was, at least a few years ago, a lot of just trying to get to scale as quickly as possible in both the audience and the revenue side of things and profitability was a close third. Whereas now, it's a second or a first.

Patrick: That ties into a follow up question I have for anyone who is in the media industry might have heard of Ben Thompson at the Stratechery, he recently posted a series of content focused on some recent changes at Buzzfeed, Huffpost, other large publishers who have had a lot of reorganization taking place. He made some bold statements, notably one where he says, "Publishers face infinite competition and have uncompetitive advertising offerings." This is where he dives into a lot of the changes facing the pursuit of profitability and growth. What your thoughts are on that statement, as well as a follow on statement that he made where he noted that the future is niche, with the idea that media companies that have very specific vertical focus in mind will likely do better.

Michael: Yeah, it's an interesting topic, it's one we talk about and discuss here a lot. I do believe that there are some companies with mass audience that are going to survive and are going to do well. The New York Times is one example, which has established a lot of credibility and in recent years has moved very quickly to keep up to pace. I think there are companies, larger companies that have enormous scale like that which could do well, but I think undifferentiated general news companies with slightly different voices have a lot more of a challenge. I do believe in niche media. I would say that Fatherly, being a publication focused on dads,parenting, and the life of dads, we are definitely niche and we're seeing a lot of interest from advertisers because they are really looking to get at this audience specifically and in a very authentic fashion.

I think that the future may be a roll up of a bunch of niche sites, and I think it is a better model right now than the overall general interest publications.

Patrick: With the idea of having this mix of undifferentiated voices paired with specialized niche sites, I was curious, does that lead you to think that there will be a lot more M&A in the next five years in the media landscape?

Michael: I think there has to be, I don't that anyone really believes any different. I think that there will be M&A on the large front and then I think there will be roll ups on the niche media front because to become a really big company, Fatherly and other niche companies may want to join up and consolidate some of their back office functions while maintaining their brand identities and continuing to be attractive to advertisers and user revenue on their own.

Patrick: What do you think are the biggest differences between how a media company might approach achieving profitability today versus ten years ago?

Michael: Good question. It depends on what you're talking about — if you're talking about a larger media company like a Meredith or a digital media company like a Buzzfeed. Obviously the larger media companies have always been focused on the dual revenue stream of consumer subscription revenue and advertising revenue, mostly with advertising revenue dominating the model. I think that most digital media companies have really been focused on becoming profitable with advertising revenue alone. I think that really has been the hallmark of digital media companies, ten years, five years ago, even three to four years ago. But right now, the hot topics are really consumer revenue and how to diversify revenue.

On the non-consumer front, licensing concepts to places like Netflix and Hulu and other distribution channels.  On the consumer side, trying out subscriptions, trying out digital subscriptions, commerce, and even the development of products. I think that almost all media companies are really focused on diversifying growth now in ways they hope will  lead to sustainable profits, rather than advertising which can be a little bit more mercurial and tied to market conditions.

Patrick: Very interesting. For a newer media company like Fatherly it sounds as though you're taking a portfolio approach to your digital offerings. You've got podcast and other lines of the business that you're expanding out. What content distribution channels are you most excited about for the next two years, both in terms of social networks as well as mediums?

Michael: I don't think that Facebook is going to go away as a channel for publishers. I think it's just decreased in its importance, perhaps. I think that Search is also going to continue to be a channel that people are really interested in. Then a lot of emerging players like Apple news and Flipboard are very interesting to publishers. On a distribution side, I think it depends on what kind of an offering you have and if you have the capacity to develop concepts that could be sold to a Netflix or a Hulu. I think all of the cable channels and all of the streaming services are much more open to pitches from digital media companies now and leveraging the audiences that they have that they can bring that to the table.

Patrick: I'm curious to dive into that even a little further, I know that with folks like Vox, for example, and the “Explained” series that they pulled together recently with Netflix, it took years to go in and make that a viable option. It seems as though there's an interim period between now and a few years from now where a lot of content producers may not be around long enough to see those deals even come to fruition. Is this really is a target offering that makes sense for most companies to pursue seriously in the next year or two, or are there other channels that merit a lot more attention that might be going underserved right now.

Michael: I think that's a very astute question. The TV development, unless you're a big behemoth like a Buzzfeed or perhaps Group 9 and actually have a department that focuses on development, it is a longer term window from concept to sale. Smaller companies like us are treating it like a nascent business development function, but I think that in the short term, we are really still focused on building an audience on YouTube and on our owned and operated channels while we develop concepts and develop relationships with the Netflix's and the Hulu's and the Discovery's of the world.

Patrick: Speaking of YouTube, I've heard a lot of folks talk about YouTube being of interest, they have presence there, it drives value, but it's kind of the steady Eddie of distribution channels. It's not bad, but it's not great. Do you see anything changing on YouTube in the next few years that might have it become a much more high value growth and distribution channel?

Michael: I think a lot of publishers have shifted focus to YouTube given the suppression of their content on Facebook and that YouTube is a little more democratic, but it just takes a while to grow on YouTube and to get to scale. I think once you get to the scale it can be a nice part of your business model, but just getting there can be hard depending on what kind of a publisher you are.

Patrick: I notice you didn't mention Snapchat, thus far.  What are your thoughts on how Snapchat will tie into the distribution portfolio in the next couple of years? Is it something that you think still merits attention as a dedicated investment?

Michael: I think that for some publishers it is. Some publishers are actually making a significant amount of money off of their content on Snapchat -  mostly those publisherson the Discover platform. I know that the engagement rates are really strong on Snapchat as well. I didn't mention Snapchat because, for us, we're really targeted at parents and mostly parents of younger children, so we're not dealing with an audience for whom Snapchat is a primary go to platform.

Patrick: That makes a lot of sense. Maybe that will change in ten years when the current children of Snapchat become parents of Snapchat.

Michael: Yeah, yeah. But I know Snapchat has also been a challenge for publications, based off of the analytics that they are able to give. It also involves a lot of investment to produce a Discover channel, to produce the content for it. I think you really need to be right for the platform.

Patrick: We hear a lot about content producers now having to do more with less. I was curious what types of investments should digital-first content teams focus on slimming down? Where do you see the most opportunity to make things more efficient?

Michael: I've been thinking about that question, I think that on the text-based editorial side of things, having the audience contribute, especially for a publication like ours where you want to hear voices that have been unheard before, that can help bring costs down. I also think, frankly, a lot of publications have had to look long and hard at how much editorial video efforts are profitable or even revenue driving. I think that there was a real race by media companies in the last two years towards building video teams so that they could get lots and lots and lots of views on Facebook and then seeing that those views didn't necessarily translate to revenue or profitability. I think you're going to see, and we have already seen, a bunch of media organizations slim down their video teams.

Patrick: Switching over again to another line of revenue, brands are ramping up their own content marketing while still sponsoring publisher content which has been really effective for a lot of them. How do you think the relationship between brands and publishers will evolve in the years ahead?

Michael: I think that brands are looking to content organizations as models and they are really looking directly to leverage the voice of different publications in their “vanity” content realm. We're just seeing that a lot of brands are coming to us directly on the content initiatives and not going through a third party.

Patrick: If you were to create a portfolio of digital media properties and could acquire any five domains of your choice, which would you pull together and why?

Michael: Hmmm. That's a great question. I think I would probably pull together five very strong brands that are leaders in their categories that are actually doing really well. I think a company like ours [Fatherly], a company like Food 52, Apartment Therapy , companies that have very, very strong connections to their consumers and are growing and are thriving and with complimentary business models that aren't necessarily going to be sold as a network when put together but are going to be able to leverage a lot of the back office functions for savings there. Companies that really do have a distinctive voice.

Patrick: If you were to make a money ball, contrarian pick, who would you toss in the mix

Michael: I think Atlas Obscura is a company that I don't think on that many investors radar necessarily, but has a really strong brand and a really, really devoted audience. I think Greatist is also doing, excuse the pun, great things and has really built a large audience interested in health, large audience of millennials interested in health. I think rolling up this audience of millennials to younger Gen Xers would be the way to go. But I'm just prognosticating.

Patrick: Cool. Those are all the questions I have for you to day, Michael, I really appreciate your time, this is really insightful.

Michael: Absolutely.

Michael Wertheim

Michael Wertheim is a leader in digital media with more than fifteen years of experience driving rapid growth and monetization at digital media businesses. Wertheim is currently the COO of Fatherly, a media company targeting dads. Previously, he was a consultant and advisor to startups and established media companies, including Atlas Obscura, The New York Times, Greatist, TipHero, VinePair, Atlantic Media Digital, Fusion, National Geographic, New York Media Group, Fatherly, Alley Interactive, Chong & Koster, and Observer Media Group.