Commentary

Was Quartz's Subscription Strategy A Mistake?

The diverging fortunes of news startups Quartz and Axios offer some insights about monetization strategies for publishers. While Axios is thriving and has plans to expand, Quartz is said to be on the auction block after cutting jobs this year.

Quartz's Japanese parent company Uzabase is seeking a buyer for the business news site -- a mere two years after acquiring it for $86 million from Atlantic Media, The Wall Street Journal reported. The newspaper's sources say Uzabase, a financial-data company based in Tokyo, is likely to lose money on the sale.

The coronavirus pandemic and its economic fallout have hurt publishers, but the pain appears to be unevenly distributed. Axios is on course to boost revenue by 30% to $58 million and make a profit this year as the digital news startup finds more sponsors for its free newsletters, the WSJreported last week.

In contrast, Quartz saw a major drop in revenue when Uzabase revamped the business model to lessen a dependence on advertising, according to public filings. To diversify revenue, Quartzstarted charging a subscription fee, currently $100 a year, or $15 a month.

Uzabase estimated it will see $1.9 million in subscription revenue this year from Quartz, which said it ended the first half of the year with about 21,000 subscribers. In a public report to investors, the company said the pandemic actually helped to increase subscriptions to Quartz, likely as more people worked from home and spent more time reading news.<

However, the subscription gains weren't enough to overcome a steep drop in ad revenue that hurt overall results.

After declining by 22% to $27 million in 2019, Quartz's total revenue plunged 57% to $5 million in the first half from a year earlier. The falling revenue has magnified its EBITDA loss, which reached $11.2 million in the first half and is on course to exceed the $18.6 million loss for 2019.

It's easy to say the pub made a mistake in charging subscriptions for Quartz, given the difficulties in weaning readers off free content. However, businesspeople are willing to pay for value-added news and information that help them make better decisions.

The key is offering exclusive content that can't be found elsewhere, boosting the value proposition for paying readers. Any new owner of Quartzwill have to recognize the importance of investing in quality editorial that make the site more valuable.

2 comments about "Was Quartz's Subscription Strategy A Mistake?".
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  1. Ed Papazian from Media Dynamics Inc, October 9, 2020 at 9:46 a.m.

    Another mistake might be the silly name they chose---Quartz. When you hear that name do you automatically think ---"news service"? Then again, with a parent company named Uzabase, maybe I'm wrong and Quartz is a perfect moniker for their news service. Meanwhile, I'm developing my own news service for America. We're thinking "The Daily Truth" as a possible name---but I'm leaning toward something more digital in nature---like "The Purple Pickle". Of curse we'll pre-test all of the logical possibilities before seeking the $1 trillion  in funding we need for our startup. That reminds me---I've got to look up the fellows who invested in Quibi---they should be logical first choices to back my guarantted-to-be-successful news venture.

  2. Robert Williams from Mediapost replied, October 9, 2020 at 12:35 p.m.

    Ed,
    I would read "The Daily Truth." Sign me up!
    Rob

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