Josh Luger

Sullivan initially set a revenue goal of $900,000 a year to maintain the standard of the blog. He specifically set out to reach his revenue goal without the help of any advertising revenue, saying “it provides a vital revenue stream for almost all media products. But we know from your emails how distracting and intrusive it can be; and how it often slows down the page painfully.”

Sullivan also declined to take any venture capital. He threw himself entirely at the mercy of his loyal and sizable readership, outlining the core principle: “we want to create a place where readers – and readers alone – sustain the site.” He asked readers to sign up for annual subscription that costs a minimum of $19.99, and gave the readers the choice of paying more if they wanted.

The Dish’s financial performance is being closely watched, as is every high-profile effort to monetize digital content these days. Luckily, for those interested, Sullivan has made the performance of his paywall entirely transparent.

So, how’s he doing? Well, Sullivan got off to a booming start. He raised over $333,000 from 12,000 subscribers in the first 24 hours his new blog went live, leaving him “gobsmacked.”

While subscriptions have continued to come in, the initial burst has gradually turned into a more consistent trickle (or as Sullivan puts it, they’ve “flat-lined.”) As of March 12th, The Dish had collected over $660,000 from nearly 25,000 subscribers. Sullivan has both tightened the meter and introduced a new monthly subscription option (a $1.99 “app-like fee”) in an effort to bump subscriptions in the last few weeks.

A few months in, it’s very clear that when it comes to the viability of Sullivan’s experiment, things are still very unclear. So, I decided to sit down with Sullivan to get his take on the performance of his model so far. We discussed how and why he launched the meter, analyzed what he’s learned since the launch, and talked about his future ambitions for the The Dish and digital journalism in general.

The full interview is below (all bolds are my own).

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The deal is simple: the Dodgers have to play baseball and collect the $7 billion or $8 billion TWC will pay them over the life of the 25-year agreement. TWC owns the programming, must produce the channel, and get it carried (and paid for) on other cable and satellite systems in the DMA. 

The deal was met with smiles from the new ownership group that purchased the team just last year for a record $2.15 billion.  

However, it was met with almost universal outrage and disgust by everyone else. The Los Angeles Times exclaimed that “rising sports programming costs could have consumers crying foul.” Industry analysts labeled the deal a “game changer,” “essentially a high tax on a lot of households,” and “for some, the straw that breaks the camel’s back.” Consumers, such as Vincent Castellanos, 51, a fashion stylist who lives inLos Feliz, were quoted as complaining “I’ve never once gone to a single sports channel. I wasn’t even aware I was paying for it.” 

This kind of outrage is expected, easy to understand, and on the face of it, entirely logical.

But, a deeper analysis of the deal shows that it may also be short-sighted and incomplete. Over the long-term, this deal could actually save pay-TV consumers a whole lot of money.

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The entire first season will be available to stream beginning tomorrow.

Netflix won the rights nearly two years ago, outbidding the likes of HBO and AMC with a massive upfront commitment of $100 million for 26 episodes (or two seasons). Netflix has an exclusive two-year window on the series. After that, the show’s producers are free to take it wherever they want.

Ted Sarandos, Netflix’s content chief, argued at the time that the commitment was “not much of a radical departure in what we do every day,” and was based on the same methods and algorithms that Netflix uses to screen the rest of it’s content. He did add, however, that “There’s an added risk factor, in that this is the first time we’re licensing something that hasn’t been produced, or at least completed.”

That’s putting it very mildly. It’s an incredibly large deviation from how Netflix currently goes about acquiring content. It also represents only a piece of the commitment they’ve made to original content. By the end of the year, Netflix will launch a new season of Arrested Development, an old FOX cult favorite, and feature a new series by Ricky Gervais, among other new projects.

Original content, and House of Cards specifically, represents a very visible high-risk, high-reward proposition for the company.

More than that, it’s also a potential game changer for the entire pay-TV industry.

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Over the past six weeks, paywalls have become an especially hot topic of conversation in the media world. In December alone, The Washington Post, The Daily Beast/Newsweek, and The Atlantic all announced that they will likely experiment with some form of one in 2013. 

It’s probably no coincidence that these announcements all came in the last month of last year. The continual decline of print advertising revenue and circulation has resulted in a decease in profitability across the industry. Publishers, determined to reverse this trend, are looking for new revenue streams. Q4 is the usual home of the annual budget meeting where publishers actually go about demanding them.

And, just like that, 2013 has already become “The Year of the Paywall.” Over the course of the next 12 months, we can expect a constant stream of selectively released paywall data flowing through the columns of media reporters. Interest will be intense. Winners and losers are ready to be crowned.

But, there’s a problem.

Major media brands just showing up to the paywall party are late.  Entrance now simply reflects a long overdue recognition of something that many analysts have already understood for years: that, in our increasingly digital world, traditional media companies will have to charge for access to some form of digital content. Many publishers had been hesitant to fully internalize this need. They waited for industry leaders, such as The New York Times and Gannett, to provide some leadership before dipping their toes into the water. Now, they seem to be coming on board in a wave. 

But, 2013 has moved beyond the paywall conversation. 2013 demands something different, more radical, and a bit scarier, from traditional media companies. It demands true product innovation. 

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