The Logic’s David Skok on funding quality journalism with subscriptions

Transcript of full conversation:

(Audio was transcribed using an automated service. Please excuse mistakes and typos.)

Jack Marshall  2:00  

Give us an overview of The Logic’s subscription offering. What audience does it serve? What’s included in a subscription? What needs to address for subscribers?

David Skok  2:15  

So I’m based in Canada, in Toronto, but we’re a national news publication based in Toronto that covers Canada’s business and technology sectors, essentially. Now, I should point out, we didn’t start that way. We started out as just covering the tech sector. But we’ve expanded our coverage as we’ve grown, and I’m sure we can talk about that a little bit more as we go on. That The Logic is focused on Canadian business and tech coverage. We cover everything from the transformation of industries like automotive, to EVs, and abs, finance, from, you know, traditional banking to open banking and fintech and ESG, from oil and gas mining, traditionally, to environmental practices. And on that front, and of course, in Canada, you know, we’re an interesting country where government policy plays such a heavy role in the economics of the country. So we also have a large presence in in Ottawa, so we have our nation’s capital. So we have six bureaus across the country, who we serve tends to be decision makers in organizations. So anybody at the C suite level or VP level and above, household income is higher than a traditional publication. And most interestingly, and from someone who came from the traditional publishing background, I tell younger audience, you know, we, we don’t have the typical demographics that you would have from a traditional newspaper audience. And you know, that form and function makes that the case, we launched in 2018. With a team of three, we are now a team of 23 and still growing.

Jack Marshall  3:56  

So do you consider yourself a B2B, prosumer or B2C publisher? 

David Skok  4:05  

Yeah, it depends on the day I. I think prosumer is probably the most accurate sense. We tend to have a mix of b2b and b2c, but we write for a b2c audience. So we’re trying to tailor our work to make it accessible to the most amount of people while understanding and recognizing that some of our verticals are going to be very intentionally designed for a b2b niche audience. So I’ll take we just launched a newsletter called shift which is focused on the automotive transformation. You know, automotive manufacturing in Canada, in southern Ontario in particular, around Niagara Falls in Toronto and Detroit air Windsor Detroit area has been such a huge part of the country, its economy, but nobody had been covering the sector as it’s developing. And so we now have a dedicated product for that. I would say that is more b2b than Our wider publications product, which is accessible to a lot of people, but if I kind of bristle you know, you should one of those days where artists be asked on a on an interview, you know, what are you punk rock? Are you ska? Are you? r&b What are you? And the artist always says, Well, you know, we’re, it’s not for us to decide for others, I kind of feel the same way. And I tend to bristle at the idea of being a niche product because you know, I’m a student of of innovation theory and disruption having worked and written with Clay Christensen. And anything that starts off, perhaps to find his niche can always grow and expand as it improves, increases its market share. So I’m not keen on putting labels on it. But I appreciate that others others may do that for us. From an

Jack Marshall  5:47  

From an editorial standpoint are there specific areas that you’ve zeroed in on in these early years? Are you biting off small chunks and then broadening from there? 

David Skok  5:59  

Yeah, I think that’s a fair assessment. Early on, we were heavily focused only on technology. So the startup venture capital scene, Canada’s, as I called it, a nascent startup sector. And over the last four years or so as more money has come into that sector, there was a need for some accountability, and some reporting that really dove into that. And, and also, you know, the government is still the largest venture capitalist in Canada, and so some accountability, reporting and journalism on that. So that was really where we started was breaking stories, all original reporting, we don’t have wire feeds, we don’t match others. In our original reporting, we, the, you know, the basic premises, as I’m sure you’ve heard elsewhere, journalism worth paying for. So I would think, you know, the best way that I find to describe The Logic is we are a combination of the product strategy of the information, Jessica lessons project in San Francisco meets the editorial strategy of the Financial Times. And so that’s kind of the common theme of how we define ourselves.

Jack Marshall  7:13  

So break down the core subscription product and features a little bit for me. Subscribers are buying access to the core editorial output and reporting. But they also have access to conference calls and data, and it looks like events and some other bits and pieces. So how do subscribers typically engage with the product? And how do you think about the different jobs that those features do both for the audience and for The Logic as a business?

David Skok  7:43  

Yeah, very early on. I think one of the hardest decisions that we made before launching was knowing that we were going to be a subscription first publication was pricing strategy and what kind of tiers we would offer what kind of buckets and we came out of the gate with a an annual subscription flat fee, only. We didn’t have the monthly sub, we still don’t have a monthly subscription. And it was, it was a hard decision. But it was actually predicated on necessity, we didn’t have a lot of cash flow. And we needed a commitment from our readers to be able to assure us the amount of runway so we could keep the lights on. Yeah. So you know, having been in large publishers in my life, when you go to a monthly subscription model, you’re just constantly on a hamster wheel chasing your tail on on churn, and we just couldn’t afford that. So we so the first decision we made was to just have annual and I think the why I’m saying that to answer your question is that really focused our offering in terms of what we were able to provide to our readers. So we really just started off with that offering and everything was included events were included. conference calls, conference calls, the Slack channels, community, all of that was part of that subscription. And we really tried to stay true to that the only thing we we’ve added a premium tier, which allows you to share a number of articles with your, with your colleagues or friends. What we found was, you know, like all subscription publications in this world, there was an abuse of the terms and people buying one subscription and then sharing that across the organization. So we tried to appease that by adding a premium tier where we allowed that sharing of a certain number of articles or to a certain number of people at a premium price, and that’s really, from a consumer b2c perspective. That’s the two offerings that we’ve maintained from day one and we haven’t changed those. We constantly look at others but we’re not quite. We’re not keen on introducing a monthly offering. We also do have a licensing product for Large corporations that want to syndicate our journalism within their organizations. And this gives them the permission and rights to do that. We also have a syndication agreement with a publisher here called Plex Media, as well as with, you know, the usual LexisNexis, Bloomberg terminals, everything else, which is another additional revenue stream. And of course, advertising is we did not start with advertising. But advertising since 20, late 2019. It has grown exponentially as a part of our a part of our offering. Because and I’m sure we can get into this. Our subscribers are the right demographic for the right people and the brand alignment and brand equity is, is really attractive to to advertisers.

Jack Marshall  10:45  

I think we’re starting to see some publishers move away from the kitchen sink approach, where it’s conference calls, its events, it’s tote bags, its x y&z, and instead just kind of focusing on slimming down their products a bit more to focus on where the most value is derived. Product positioning is getting simpler. When I look at The Logic, the core value is the reporting, and that’s front and center and is really the key value proposition for the product. How do you think about that?

David Skok  11:22  

That’s right. And so that actually informs all of our decision making, we know what our core product is, we believe that our core product in and of itself, can stand up against any other leading organizations, publications work in the world. And so now, it’s, you know, we measure the opportunity cost in a lot of these offerings. Yeah, you know, we, we had a podcast for a hot minute. And then we made the quick decision that it was just too much of a sunk cost for us to have that time away from the core product. Oh, that’s a job. And that, you know, it’s the same as you remember the pivots to video, the pivot to all of that stuff? You know, I’m lucky in that I’ve been around the industry long enough, at scale, meaning I’ve been able to see and test things and at a much larger audience size than The Logic. So I kind of have a, you know, what, what’s old is new, again, everything new comes out into the sun, whatever the expression is, yeah. And so we’ve tried to pare our offerings back to only asking two questions. One, is this going to be value add true value add for our existing subscribers, and because you know, the classic thing of delight 100 people to lead 1000 people, and then you’ll delight more. And the second thing being okay, you know, conversion funnel, top of the funnel growth is, is helping to grow the funnel, those are the two criteria. So, nothing we do, we won’t indulge in things that are not focused on that. And so, you know, having an event, for example, I think, is a great retention play. It’s a great offering for our community of subscribers to get to know each other, get to get to see each other and feel the value out of those relationships that can come from being a part of The Logic. Building a mobile app is a part of that too, for retention, not growth, in that it gives our readers our regular readers some sort of cadence and habitual habit that they may not get when they get our stuff over email. Podcasting would be a top of the funnel thing for us, I think. But can we do it effectively enough? Can we do it in a way that is that adheres to our high expectations and brand standards, while still growing an audience? I’m not sure we can. And so that’s always the you know, the variables that we’re considering are, is the opportunity cost of this outweighing the potential growth benefit for us?

Jack Marshall  13:50  

Yeah, that’s fascinating. So podcasting, for example, was an area that you pushed into, and you felt like you’d maybe overstepped, at least at this point in your sort of growth and evolution.

David Skok  14:01  

Jack, you know, I don’t know if you remember the early days of convergence. In the early 2000s. These are the AOL Time Warner days, right. When, when, when a reporter was asked to file copy, shoot a video, do a radio hit, and all of these things, and at the end of the day, as journalists, which I am, in my core to the end of the day, I think all of the products suffered as a result. And so the decision that we’ve made is I’d much rather have a reporter break an incredible exclusive investigation or scoop that people will pay for, then I would having them stretched in 1000 different ways having 1000 different obligations that dilute their strength.

Jack Marshall  14:45  

Yeah, definitely. And I think that becomes even more pronounced if a lot of your work is behind a paywall. 

David Skok  14:53  

It does, although, you know, even if it’s not behind a paywall, it’s still great for top-of-the-funnel attention right I’m sure The best marketing you can do is steal organic marketing through your work. At least that’s been my experience. It’s the cheapest, it’s got the highest the furthest reach, and it speaks to the qualities and fabric of your identity as a brand more than any marketing campaign.

Jack Marshall  15:21  

Why launch with subscriptions at the core of the business? Why did you think a subscription model was right for the business at that point in time, and how has that sort of played out and evolved over the past four or five years? You mentioned advertising is now part of the revenue mix as well.

David Skok  17:11  

My experience had been that subscriptions everywhere I’d worked. Subscriptions had been something that was added on to an existing advertiser site. I had seen very few examples of news publishers, building subscriptions first, publications, from a product perspective, from a business perspective out, and then expanding, its advertising everything else. I mean, the examples that I looked at were the information, the athletic, and I think those are the only two every other publication out there had started as a free ad product and had added subscriptions or had to circulation business. That was, you know, for many years subsidized by, by advertising. So it was a product decision to I wrote, before we launched, I had taken some time and written a couple of blog posts. Doing a recap of some of the work that I had done with Clay Christensen and James Allworth, we wrote a paper together, called Breaking News, mastering the art of disruption in journalism, back in 2013, and it had been five years since that paper came out. And I what we had not done in that paper was look at the current ecosystem of digital first players to see if they were vulnerable to being disrupted. And, and so I did that analysis. And what I concluded was, it sounds obvious now, but at the time, it wasn’t that the Huffington Post’s of the world, which were primarily driven from programmatic advertising, and scale, were being disrupted by the buzz feeds of the world, which were driven by social and agency content marketing. And that ultimately, my hypothesis, applying Clay’s theories was that they were going to be disrupted by subscription publications. Because they were cheaper, faster, good enough. And all of these other types had overshot the needs of their consumers. And so I just saw it as being the right model for the right time. Because it was it satisfied the innovators dilemma of cheaper, faster, good enough, you could launch a business without a lot of overhead. It was better journalism. And it satisfied a niche that could then grow. So that was how I got to and we had seen, you know, Canada, I had the advantage of of seeing what was happening with the information and the athletic. Yeah, and had really admired those models. And thought, Okay, well, Canada doesn’t have this yet. And there’s a market opportunity to try that. So that’s why we started with that model. But I also felt in this As my speaking as a journalist, as a lifelong journalist, I felt that it was the purest form of model to satisfy or to align your journalistic mission with your business mission. I’ve always felt that journalistic independence can only come from financial sustainability. Whether you’re a nonprofit, a foundation, or for profit corporation, you really don’t get to do real great journalism unless you have financial freedom to do so and aren’t beholden to one advertiser or, or to one client or one, one donor. And so it felt like the right model at the right time, what we’ve seen, and so just adding a little bit more meat on the bones there, we built the product with that in mind. So the product strategy, the business strategy, and the editorial strategy have all since day one been aligned around journalism worth paying for. And that’s where you hear me talk about cost benefit analysis of getting distracted by doing other things we’re very focused on knowing that our core is to create journalism worth paying for. What’s happened, as as I touched on is that because we’ve taken that approach, and because we’ve built up a readership that is so loyal, that is so engaged, it has become really attractive to advertisers. And we, we’ve tried to maintain the sanctity of our journalism, by not having advertising on our pages. But we do have advertising in our in our emails, and our newsletters. And that’s, that’s and our events, we do. But we don’t do pay to play events, we try to keep it as clean as possible. So that’s, that’s really where advertising has come in, it’s now makes up about a third of our overall revenue, which, you know, for a revenue stream that didn’t exist two and a half years ago, that that’s something we’re very delighted by,

Jack Marshall  22:00  

I get frustrated by these binary subscriptions or ads arguments. My view, which sounds very similar to yours, is if you build a robust subscription business it can help inform all sorts of other revenue streams, potentially. What are some specific examples where having subscriptions at the core has helped drive advertising revenue or other revenue streams?

David Skok  22:28  

Well, I think it’s we, you know, I can I always say to our team, we’re competing against brands that have been around for 150 years, at least. And every, every story that we break, every original report that we do, that gets any traction, you know, it goes through an incredible factchecking copy editing process where we don’t, you know, we take, we take the journalism process incredibly seriously. So when we publish something, it’s fair. It’s reported, it’s written well, and it’s reported deeply. And I think when you have that, it sends a signal to your customer base, or your readers that you are a brand they can trust, the brand equity is, is there. And again, it takes you know, it took the New York Times, Boston Globe, Globe and Mail 150 175 years to get to that brand equity. But I’ve been incredibly proud of the fact that over the first four years of our existence, we are now talked about in the same breath in terms of the the quality of our reporting. And so what that does is it then attracts the kind of, of brands who see themselves as being aligned with high quality, prestige, in depth work. And, you know, we’ve we’ve got some blue chip advertisers on our site. Currently, I won’t single out any of them, people are more than welcome to see them if they sign up for a newsletter. But, you know, I think that’s that they haven’t they’ve come because of the work. And they’ve come because they trust the brand. And I think in an age of misinformation, disinformation and the erosion of journalistic trust, being able to stand out as being a place where corporate Canada can align themselves with an audience that believes in that and believes in that mission and reflects it. I think it’s served as well.

Jack Marshall  24:22  

The paywall approach that you guys are taking – talk to me a bit about the strategy behind that. It’s a pretty hard paywall, and  essentially no content is available without a subscription or at least handing over an email address. Why do you think that specific implementation is the best fit for your product and content?

David Skok  24:51  

Yeah, it’s it’s and I shouldn’t I want to be careful to not everything is behind a paywall. It’s just very arbitrary. Above when something isn’t isn’t and So it seems to the outside user that it’s all behind a paywall. Gotcha. But we, you know, we understand that we have two levers. One is, you know, getting you to pull out your credit card and pay to read this, or two is give us your email address so we can build the relationship with you. And really, from day one that’s been our RMO, we are sacrificing scale and reach for known users and relationships. You know, having worked at the Boston Globe and Toronto Star and others, you know, it was always the holy grail to turn a fly by night visitor from an unknown to unknown user. And this is no different once we have somebody giving us their email address, we then have a extremely sensitive, extensive marketing campaign, email marketing campaign, that is the that drives the bulk of our subscription conversions. When we get somebody to give us their email address. We have about a four to 5% conversion of that group to ultimately becoming paying subscribers, which is extremely high in my wealth. Yeah, that’s strong. And it’s because we built once we have them, we then are able to double down on the subject areas, we know what areas they’re interested in, we know what their likes are, and behavior who what what subject matters there. They want to see more coverage up and so when we have more coverage, we we let them know. And we also have a drip campaign, like any SAS business does. And it’s it’s extensive. It’s also, you know, outside of the hosting costs, for an email provider, it’s, it’s really cheap, you know, most of our cost of acquisition, as our cost of acquisition has been incredibly low for the lifetime value of a customer that we have. And that’s mostly because we do this email marketing that’s, that’s really extensive and really sophisticated. You know, really no different to, if you signed up for Netflix. And if you look at our website, you’ll notice if you’re if you’re not a subscriber, that homepage doesn’t look like a homepage, it looks exactly like Netflix. Yeah, yeah. Where you know, we’re selling you, it’s essentially a marketing page to just tell you what you’re missing. And we feed in some stories there. But it’s, it’s really focused on on driving that user through the funnel, as opposed to giving away our content for free before you even give us any indication of who you are, you know, philosophically, ideologically, what we do isn’t cheap. We’re just asking you to know who you are, you know, and that’s an exchange, we don’t we don’t sell your, your information to third parties. It’s all on site. But, you know, we feel like it’s a fair ask to have an exchange of value between us and our readers at some point for them to gain access to our work.

Jack Marshall  27:58  

So what does that nurturing process looked like? I guess, at the top of funnel, how were you segmenting those people? Is it based on the types of content that they’re signing up on? And then how long is that nurturing process? Is it a multi month process before you get to that 4% that subscribe?What does that journey look like?

David Skok  28:18  

It’s based on interest based on you know, what, where are you? Where are you indicated your interest in The Logic on what what type of work you were reading or interested in? And it is a nurturing process. You know, I read a magazine many years ago that, you know, it takes an average of, I’m sure you have all this information, Jack at your fingertips, but it takes someone an average of seven times hitting a paywall or seeing an article that they’re interested in, before they ultimately decide to commit. And so yeah, I mean, we it takes, I’m not sure what the most recent numbers are, but when we last looked at it, it was taking upwards of eight to 10 months to nurture someone to ultimately make that conversion. It’s a long, long, slow process.

Jack Marshall  29:01  

So you’re just making sure you’re filling that top of funnel and then just trusting that the 10 months down the line that will that will result in conversions?

David Skok  29:09  

Yeah. And then you know, every now and then we try to flush it out a little bit with with some sales, that, you know, you can, you can certainly flush those lists and get a sense of who’s committed or not that way. But, you know, I am sensitive to the fact that we are not the New York Times we are not the Globe and Mail. And so we don’t have a built in income, incumbency advantage on reputation, there is a chance that when somebody gives The Logic, their email, they’ve never heard of The Logic before, it’s probably higher, like there’s a higher likelihood of that being the case than not. Yeah. So, you know, we have to tell them who we are, we have to show them who we are. We have to explain where we fit in the ecosystem and why we’re unique and what our value is, before they will commit as opposed to a general interest news publication that again has that you know, century of history, Millennium history, where they can, you know, the assumption is that If somebody already knows when they don’t have to do that part, they can skip that part.

Jack Marshall  30:05  

What are the key drivers of top of funnel audience for you? Having a relatively hard paywall can be a challenge for generating search traffic, for example. Is social a key driver for you? Is it word of mouth? Is it getting picked up by other publications? What moves the needle for you there?

David Skok  30:29  

So it’s, as I’ve said, in the last one picked up by other publications, the Canadian media landscape is incredibly small. And it’s been challenged over the last 20 years. So there aren’t a lot of real big players with a lot of scale left. And so it’s been all that has made it extremely challenging for us to get any pickup in Canadian media. You know, they will cite us when they have to, but it’s a hyper competitive space. And, you know, they would have their reasons why they don’t cite us or acknowledged, but it’s, it’s, we haven’t been able to count I, you know, I know that for an American publication, you know, see before it gets written about, even before it gets launched in the New York Times, and you know, that that can help tremendously with Legion. Yeah, we don’t have that luxury, the Globe and Mail has never written about The Logic or nor the CBC, you know, I’d love them to if they’re listening, but they haven’t as of yet. So we really relied mostly on word of mouth, on the email marketing. But most of all, as I said earlier, the journalism, when we are breaking a story that you cannot get anywhere else, that is really good, really deep. We are, sometimes we’ll open those stories up so people can read them without paying they maybe they can give us their email address. And that kind of helped our distribution that way, as well, we do syndicate in post media, which is the largest newspaper chain in the country, I try to think about a credit to get net or are attributing kind of equivalent, but they, they take a selection of our articles throughout the month, and put them in their newspaper, and on their website. So So that’s been helpful in building the reach of our work. And also, it’s been helpful for our reporters who, you know, we are in somewhat gated small space, reaching a small, limited group of people, it’s helpful for our reporters to to have the work amplified by larger scale publications, to get sources to talk to them. Yeah, the also search and social, I would say search has been better than social, we’ve never really been a social publication. And part of that is because the work we’re doing isn’t necessarily conducive to being shared. It’s it’s, it’s not we don’t do opinion work. We don’t have opinion columnist on our, on our site at all, it’s all original reporting. So you know, people having heartaches and then rage tweeting about the heartaches, you know, that’s an easy way to build relations with to build your audience, it’s a model that seems to work, I will say that it’s a model that works for some, you know, so we don’t we don’t have that, you know, our work is usually, you know, we’re breaking stories, and sometimes even people are, they don’t feel comfortable sharing our stuff, because it’s, it’s a, it’s, you know, they don’t want to be seen as, as sharing something that’s, that’s original, and perhaps a bit controversial. So social hasn’t been great. I never really, I don’t think we built social into our business at all, though, to be quite honest, it was not a it was not a an avenue that we really looked at for growth, my my feeling was FOMO was going to be the way that we could grow. So if you have a CEO, sitting in a boardroom with his or her executives or their executives and saying, Hey, I read a story about x and The Logic, and then you have the chief marketing officer sitting there going, what the heck is The Logic and having to Google The Logic to figure it out? And the next thing, you know, while the CEO is reading it, so I better read it? Yeah, they can’t afford not to. Exactly. And that starts to trickle through the organization and through the community. And we’ve actually seen that it, word of mouth has been great. And again, the lower cost of acquisition has been really helpful for our business and allowed us to grow because, you know, we’re putting those proceeds from revenue right back into our journalism, which is only helping the grassroots campaign even more. So. So yeah, you know, I think I think we

I think one area that’s under-explored that we were looking at is is you know, other newsletter channels, other digital channels that are more personalized, kinda like how you know, podcasts, promote other podcasts. It you’re starting to see more of that type of relationship building among newsletter groups. And so that’s been interesting. We also I’m sorry, that’s a very long winded answer. We also made a small investment in a company in Canada called the peak, which is a call it a morning brew equivalent. It’s a free business newsletter. That’s light and fun and, you know, amusing in the mornings. And that’s been a great relationship. And we’ve seen, you know, people who read the peak, have discovered The Logic that way. And so we that that that investment has been, has been good for us as well.

Jack Marshall  35:35  

My next question was going to be if you’ve done any paid acquisition, but it sounds like you’re doing that in a way through investments potentially, like the one you just mentioned. Is that more of your approach than just putting money behind Twitter ads or retargeting or whatever it might be? 

How do you think about that?

I call it strategic marketing and acquisition strategies. Yes. And, you know, I will say, I took great inspiration there from Axel Springer. Yeah. Looking at the, you know, when you look at what Axel Springer has done, and in buying political buying morning brew protocol, and how they, you know, in effect, they’re building their own internal funnel through all of these properties to drive people down through. I think that’s a brilliant strategy. And, you know, if there’s one to emulate, that would be

Jack Marshall  36:25  

I think a lot of publishers really agonize over the pricing of their products, especially those catering to professional or prosumer audiences. How did you arrive at your price point? How has that changed over time? Do you see it evolving over time? And then I guess the second part of the question is how you feel about discounting. You mentioned that you have a promotion running currently, that’s 50% off. This is something I’ve written a lot about, but I think there’s a clear trend towards cheaper and longer introductory offers. I think on one hand, there’s an argument that that kind of cheapens the product. But then on the other, I think the reality is, these offers aren’t going anywhere because audiences have been trained to expect them and, and because they work. So how are you thinking about about pricing and promotions at this point?

David Skok  37:22  

I read that piece, I thought it was really interesting and caused a moment of introspection on my part, I would say, you know, we we, the initial pricing was very simple, we just wanted to be a little bit cheaper than the Globe and Mail. So we, you know, I would say, you know, our closest kin compatriot in terms of comparison, so we, we, that was how we got to our pricing. So it’s, it’s 299 99. Canadian for the year. And, you know, we haven’t changed that price, since we launched. So I see, you know, Netflix and others, increasing their pricing by 15%, to account for inflation. And that’s interesting to me. I’m not sure where we’ll, we haven’t really talked about that yet, as a business. But it is interesting to see these these places doing that. In terms of discounting, you know, I like what we like to do is, look at the overall lifetime value of a customer. It’s a long game. And I think viewing the discounting through the one year lens, one year cycle, is probably not not conducive to making the best long term strategic decisions. My goal, you know, when you look at it over the long term value, so let’s say we have a 50% discount, as you just said, right now, well, it’s 50% in year one, so $250 for the first year. If if your lifetime value is hypothetically $1,000. And, you know, you’re you’re charging $150, less less in that first year, then you really only losing, you’re still getting 850 out of that out of that customer. So, you know, I’d like to look at it long term. Yes, it cheapens it maybe people start to expect that or the brand becomes more, you know, we will wait for the sale. But at the end of the day, if that’s what gets you in to a product that you didn’t know existed before you signed up for our email. We’re willing to take that risk because we’re confident in our product. Yeah, this the same way we do that. We also make it very easy to cancel the product from day one, we’ve made it I say wiziwig but you can go once you subscribe, go online, turn off auto renew, you know, and away you go. We are We are confident in what we’re building and what we’re producing that you need it and what we see we also then have wind back off was on and all the rest of that go. coincide with it. But, but I think it starts, forgive me for sounding trite, but it starts with, are you producing something that’s worth paying for? And if you’re journalism are the high quality enough, then you shouldn’t be worried about discounting off the top. Because you’re, you’re gonna have lower churn, you’re going to retain your users, and they’ll stick around because they need it. And that’s the ultimate barometer of success in everything we do is ultimately, it comes down to, is the product worth paying for?

Jack Marshall  40:33  

How significant are corporate or group subscriptions for you as well? I’d imagine given the audience you’re catering to there’s sort of a robust market or opportunity there.

David Skok  40:50  

Yeah. And it’s all in down to, which is great. You know, it’s, it’s, it is a robust part of our business. It’s not as much as people think it is, you know, I remember, you know, when, when, way back when before the New York Times even had a paywall, it was the Financial Times and the Wall Street Journal, and everybody said, well, well, they can do it, because their business publications and we can write it off, it’s a business expense. And then the New York Times launched a paywall, and said, well, they can do it because they their New York Times, and then the information came and said, well, they can do it, but they’re doing tech and the athletic, etc, etc. It’s not as much as you would think it is. For us. It’s a growing area, obviously, it’s also the best type of subscription, because it tends to renew at a much higher rate. And the average revenue per user is obviously much higher. So it’s a great one. But I wouldn’t say it’s dominant, I think, I also would say, you know, this is maybe the difference coming back to the thing off the top about, you know, are you b2b or b2c? It’s, it’s my belief that if we are catering to a b2c reader first, that the other revenue streams follow that, that that, you know, the b2b will want to be involved, because somebody on that team bought an individual subscription first, and, and that’s really big, you know, so it’s like a Maslow’s Hierarchy of Needs satisfy your b2c for? Yeah, it’s the tip of the spear? Yeah, then you’re a b2b will come, then your syndication will come in licensing, and then your advertisers will come. And so, you know, as long as you’re approaching it from that perspective, that’s, that’s really been our Mo.

Jack Marshall  42:33  

The economy has been a major factor for all businesses over the past couple of years. There’s a lot of people talking about how resilient different media revenue streams are given current economic conditions. Obviously it stands to reason it’s harder to convert and retain subscribers when consumers are reining in costs. But on the other side of the coin ad budgets are getting cut from from what I see and hear. So how do you think subscriptions as a revenue stream and business model are holding up?

David Skok  43:20  

Well, what we’re seeing and this is this is the question for the next 12 months. And I thought it’d be it for me to know what what the answer is, I think, you know, we’re like all publications. We’re looking at it closely. We’re not ready to draw any conclusions yet. But what we are seeing is certainly perhaps a slowdown in the in the in new subs, but but not a not a dramatic drop off yet. We’re still growing, we’re still getting new subs coming in. And churn has stayed constant. We are not seeing yet that that departure. Now, that’s not to say I don’t you know, I lose sleep thinking about coming back to the same question discretionary spending, if we are, if we are considered a discretionary spend, then we’re in trouble. We have to remain relevant we have to be, in fact, in these times, you need us more than ever. And so how do we do that? Sorry to sound like a broken record that comes back to producing work that you simply cannot get anywhere else that you need in order to navigate through these times. But we haven’t seen a drop off in subscriptions. And in terms of advertising. You know, I’m hearing about the slowdown. I’m hearing about cuts on staffing and budgets. We haven’t seen it yet. And so all of this is a little bit you know, I’ll put the shrug emoji out there. It’s it feels too early to draw any conclusions at least from what we’re seeing in the in the landscape in the marketplace over the summer. The other variable too Adam here is we are, you know, we’re having this conversation in the last week of summer. And I don’t think we’ll really know until q3 q4 December of 2022. Yeah. Because we haven’t, you know, nobody’s back at the office, I think people really did take a lot of the summer off. It’s been, you know, the last two years have been crazy for everybody. And I think a lot of businesses are seeing a slowdown over the summer, so we won’t know if that’ll pick up again in the fall. But again, it really, you know, what can you focus on? And what what are we focusing on? It’s the inputs, it’s, we just need to keep producing indispensable journalism, and a product that that people feel like they need in their lives and will be able to withstand it. I think I would be worried or more concerned if if if we were not positioned that way. Because yeah, it discretionary spending will go down. And I suspect that a lot of the subscription fatigue that we’ve been hearing about reading about talking about for almost a decade now will start to actually happen. If, if inflation stays as high as it is,

Jack Marshall  46:08  

With the benefit of hindsight, what something you think you would do differently if you were starting over back in 2018?

David Skok  46:21  

I think this is just a founder journey thing. It’s someone who was never an entrepreneur, who came to it late in life, I think I would try to balance out the highs and the lows. It’s a long, long process. Yeah, to build a business, especially in media, especially in media. And if anything, you know, our biggest strength is surviving, which makes no sense. But if you think about it, you know, it’s, it’s, you just got to make it through these first couple years, because people will trust that once you’ve been around long enough that you’re more valuable. Yeah, you just got to be around. Yeah. So you know, some of the highs and lows of the early days, I really was swinging. I’m finding I’m a little bit more balanced now. And so if I could tell my past self something, it would be chill out a little bit.

Jack Marshall  47:07  

What’s a myth about subscription models or businesses that you see perpetuated that frustrates you, or a piece of conventional wisdom that you know,to be false or disagree with?

David Skok  47:22  

That that subscription, journalistic outlets are undemocratic, okay, that, that you are walling yourself off from society, and that by not being accessible to the most amount of people who can read your stuff and have impact that you are actually privileging the few who can read it and pay for it. The reason why I think that’s a myth is 99% of the time, when we do a great story, it gets picked up somewhere. in some capacity, maybe they won’t credit us or whatever else, but it will get picked up or somebody else at another outlet will chase it. And whether it’s in our case in Canada, the public broadcaster of the CBC, which is free for everybody to read, or another news organization that has a cheaper subscription model that, you know, fits more general interests, publications or readership, people pick up what others do, the industry isn’t very, isn’t very large. And so the idea that by having a hard paywall, you are being elitist. And restricting yourself, I think, is a misnomer. I think it’s actually helping to drive competition, spur innovation that ultimately leads to more people doing more great journalism as a result. And I would also say, you know, just like the Tesla example of, you know, Tesla’s started with a very Jose $350,000. Car, electric vehicle, and now they’re selling them for 3035 or 40,000. But also, they’ve inspired an entire industry that change, and now also produce their own EVs. Yeah. And so this idea that, you know, in isolation paywalls are undemocratic to me feels unfair, and unjust, because if you look at it over time, it’s actually spurring the innovation across the industry. And the work itself is replicated elsewhere, to reach the broadest amount of people.

Jack Marshall  49:17  

Give us subscriptions related prediction for the next 12 months. Let’s say if if we’re sitting here in a year, what’s one thing that you think could have changed significantly for publishers with subscription models?

David Skok  49:33  

I think we’ll, you know, you just saw the this. I’m gonna get to policy for a second. You just saw legislation being proposed a bill in the Senate about big tech, subsidizing news organizations. We are a couple of steps ahead of you here in Canada. We have had that legislation proposed in the spring. It’s been an extensive heated debate. And it continues. It’ll be an extensive heated debate in your neck of the woods. And I know, I know the UK is also going down this path. This is to follow the Australian model. Yeah. I think it’ll be top of mind for a lot of publishers and subscription publishers as well, because one of the important measures that can come out of this kind of a bill is currently and this is my own view, I speak as a CEO not as a journalist here. My own view is that, as big tech platforms have struck deals with some publishers and not others, they have distorted the marketplace with those deals. And they twist themselves in pretzels to justify Well, it’s about advertising or it’s about, you know, our news showcase or it’s about subscription, you have a subscription you don’t you don’t impact you’re not impacted by that. Ultimately, what it’s done is really distorted the marketplace and created an uncompetitive playing field in Canada, at least where the haves and have nots are divided. I think you’re gonna see a lot of that conversation play out elsewhere in the world. And I think subscription publishers in particular should pay close attention to it because they have a risk if they are not engaged in this conversation of being shut out of what ends up happening. So more of just a clarion call for the industry to pay attention.