Few industries have been disrupted more brutally in the last ten years than the news industry. More people are reading and sharing news stories than ever before, but few of the companies that create those news stories are in a position to capture the value they create.
The Internet destroyed geographic barriers that had given local news companies easy monopolies and kept national news companies from achieving easy scale. What’s worse, platforms like Facebook and Twitter, and search services like Google, wrested control of news distribution from companies that never had to share it. News sites are making lunch, and these digital behemoths are eating it.
Any news company that’s managed to thrive in such uncertain times could be considered a digital winner. Especially one that was born into them.
Politico is one such company.
Politico was founded by two former Washington Post reporters in 2007 to cover the 2008 election — with the financial support of Allbritton Communications — and quickly made its presence felt in a political news scene dominated by slow-moving legacy media hampered by the demands and conventions of print.
Politico’s focus and pace, as well as what some would call its knack for political drama, met the demands of a hungry digital audience when others did not. When most news home pages mixed political articles in among a busy mix of other topics, Politico covered politics exclusively. When other news sites published long articles with straightforward headlines, Politico reporters blogged fresh content in bite-size chunks that caught the fast-moving eyes of digital readers. While other media companies desperately laid off staff and worked to rile up free content, Politico hired strong reporters with years of experience, and in many cases, strong presences on social media.
The result? While other news companies struggled to hold onto the value they captured in the pre-digital era, Politico mined its hard-won audience of influential “politicos” to capture value in ways that went far beyond the harsh, dollars-to-dimes business of online display advertising. In October 2008, it was ranked as the ninth most read newspaper website in the country. In 2010, it reached profitability and net profitability. In subsequent years, its command of its digital audience’s attention helped the small operation grow into a formidable news brand.
Today, Politico’s 300-member staff runs an agenda-setting website, which gets more than 7 million unique visitors and 50 million page views a month. “Politico writers and editors are masters of knowing what will make prime time,” Gabriel Sherman wrote in The New Republic in 2009.
“They are always first with stories, and they’ve redefined the way I do my job and the way the internet-based journalists work,” CBSNews.com political reporter Brian Montopoli told The Wrap in 2011. Most of Politico’s revenue had come from its small-circulation print newspaper until that year, when revenue from print ads and online ads reached an even split.
But Politico runs more than the news site that helped it lead the political conversation. It also runs the POLITICO print newspaper, which distributes 35,000 copies in the high-demand Washington D.C. area; POLITICO Magazine, an online and print publication that features long-form stories on issues in the political landscape; and a recently launched European edition fueled by bureaus in London, Berlin and Paris. In addition, it manages its own line of mobile news apps and sells tickets to its monthly events, where Politico staffers interview top newsmakers like Nancy Pelosi, Marco Rubio and Bob Woodward.
Politico’s most lucrative product, though, the one that shows how successfully it’s captured value from its niche audience, is its thousands-of-dollars-a-year subscription policy news service, POLITICO Pro. Launched in 2011, it supplies insiders with scarce policy news in a host of verticals, including health care and agriculture, that have been expanding ever since.
“The idea with Pro is to go niche inside of a niche, to take slices of what we do and try to create a little politics for people who care just about energy or just technology and charge a large premium,” founder Jim VandeHei said the year of its launch.
Notably, Politico is also an early seller of native advertisements, a lucrative type of online ad in which advertisers’ messages appear not as sidebars or banners but as content. These ads, though controversial among traditional news organizations because of how much sponsored messages can look like news stories, make more sense in an increasingly mobile digital space of small screens and busy spaces.
Politico recently started a New York venture, and in April, announced plans to expand to more U.S. state capitals in New Jersey and Florida. With another presidential election around the corner, Politico should have another rare successful year in the news industry.