How MATTER succeeded in spite of itself

This is the first of four profiles of journalists at nonprofit news startups – the dreams, the struggles, the lessons learned. An abundance of studies have tried to assess the revenue strategies that can make digital news startups sustainable, typically focusing on successes like The Texas Tribune and the range of possible revenue sources.  Freelancer Naomi Lubick approached the question from the opposite direction as part of her work as a Scripps Environmental Journalism fellow at the University of Colorado over the last academic year.  She spoke to four science and environmental journalists who have experimented with a novel idea and tried to make it work.  Their adventures – and mixed results – are recounted in the four interview/case studies that will be published here this week.

These interviews are condensed versions of longer conversations, during which Lubick tried to deepen her understanding of startups and the brave new world of nonprofit journalism. How necessary is advertising? Perhaps not at all, if you can persuade people to subscribe. But can you persuade people to subscribe? Probably not, in the current market where journalism is given away for free. So how do journalists and journalism groups survive? A lot of hard work and maybe non-traditional revenue sources like offering training.

Despite all the room there is to publish on the Internet, there is limited time to do the work to fill it – and seemingly even more limited funds to pay for that work. After speaking to the following four trailblazers and others, Lubick tried to build her own business plan; she has set it aside for now to see what happens with the journalism industry in the next year. In the meantime, she continues to freelance as a science writer in Stockholm, Sweden, where the media landscape is very different from that in the US, and yet, perhaps soon to follow a disruptive path.)

Jim Giles and his business and editorial partner, Bobbie Johnson, launched MATTER in 2012. The two experienced journalists wanted stories that assessed scientific claims critically and also had some length and strong narratives.  They got down to business, after a successful campaign with Kickstarter, and published ambitious stories, thousands of words long. A notable success was Virginia Hughes’ piece “23 and You,” an exploration of the ethics and familial complications behind genetic testing companies like 23andMe, chosen for an anthology of best science writing.

But Giles is no longer with the digital magazine. The magazine no longer publishes long-form science stories and has sometimes veered into fluff on topics like online hook-ups and sexting.  What happened?

Aiming to be a for-profit from the beginning, Giles says, MATTER‘s founders decided to sell stories directly to their readers. Getting enough advertising (and eyeballs to sell that advertising) did not seem practical. The decision, Giles says, stemmed in part from philosophy: “People buy what they want. You have to please them or they go somewhere else. The old relationship between publisher and reader was an honest one, I think.”

Another online long-form publisher, Atavist, had managed to sell stories one at a time. MATTER started with that model and added paying subscriptions.  Readers could pay 99 cents a month to get all the stories MATTER published, or they could buy a single story for 99 cents.

 MATTER relied on freelancers. Getting good pitches turned out to be hard. “We got a lot of very explanatory, straightforward science pitches that would have been more at home in New Scientist,” says Giles, who once edited those kinds of shorter news pieces and features for the news section of the scientific journal Nature.

The narrative pieces often took much longer to produce than Giles had anticipated. Unexpected layers of administrative and other work – for example, tax accounting – led Giles and Johnson to consider mixing in short-form stories that would bring more regular eyeballs to the site.

Freelance writers got paid a flat fee of $7,500; copy editors, editors and others got paid by the hour. Giles and Johnson continued to work for free.

The Internet turns the publisher-reader relationship on its head, as more and more content is available for free. “So much of the traffic on the web at the moment is driven by social media and aggregators. None of those things will really work if your stuff is behind a paywall,” Giles says.If he were launching MATTER today, he says, he would instead use a “porous paywall,” where some limited free access gives potential readers a sample. For The New York Times, with its massive amounts of content, that’s less of a burden. For MATTER, publishing only one story a month, it was a different equation – more work goes into making fewer units, so to speak, and once a story is out, it’s harder to control its spread and get some kind of compensation for it.

MATTER would lose readers at the point where they had to pull out their credit cards. While the paywall eventually would have worked, Giles says, it was taking longer than they thought “to hit profitability.”  Perhaps alternative models might work — say, sponsored content like Buzzfeed’s — but Giles says they did not consider it for MATTER (they were, however, selling ads on the site). Micropayments could still make ventures like this more profitable – once someone figures out how to make micropayments work, he says. “The act of paying is hard,” Giles says. “If it were made easy, I think you would see many more paywalls. People don’t mind paying for good stuff.” The trick will be to develop a method that allows for small amounts – 10 cents, a few pennies – to be billed from a user’s account almost without them noticing.

But in 2013, those alternatives were unavailable, and Giles and Johnson could see that the Kickstarter money would run out before subscription numbers became high enough to be sustainable for MATTER. They started to reach out to individual investors for financing to continue. However, they couldn’t promise a potential bonanza of high returns that venture capitalists look for.

Giles and Johnson eventually met with Evan Williams, the Internet entrepreneur known for his role launching Blogger and Twitter. Williams proposed that he buy MATTER, folding it into his new enterprise, Medium.  The two founders would receive payment and new jobs as editors for Medium, continuing to work on MATTER.

Giles and Johnson ultimately accepted in April 2013. “Instead of raising money, we were acquired,” Giles concludes. “It was amazing – we totally didn’t expect it would happen, and we didn’t set [MATTER] up to sell it. We always imagined being independent. However it was the best option: a home where we could continue doing journalism we wanted to do.”

The deal, though, gradually took MATTER away from the long-form science mission. These days, MATTER has very little in the way of long-form science features. Quick reads, at four to seven minutes apiece, talk about online apps and other technology questions. The longer stories on the site include a 30-minute read on the Nigerian girls kidnapped by Boko Haram.  It’s an interesting and important story, but it’s not really about science or technology. (The magazine’s older science stories live on in the hard-to-find Medium MATTER Archive.)

Giles says Medium liked the original revenue model, but eventually dropped the paywall (he says MATTER had a few thousand subscribers when Medium acquired it). Several months ago, the publishing site had outside funding and was focusing on user growth to monetize later. Medium also ran some sponsored content, for example, a design blog reportedly sponsored by BMW.

After the acquisition, Giles spent a year and a half at Medium (Johnson is still an editor there). He parted ways with the company and will not comment on the terms. Now consulting for other new media outlets, he is partly focused on the experimentation with payments at Medium and elsewhere. While Giles thinks there are now more than enough long-form outlets out there, he offers some advice to anyone thinking of a new online venture, applicable to any kind of startup, it would seem:  Start with what you want to produce. Make sure it’s something not already in the world.