Aug 12, 2015 · 9 minutes

Late last week, the New York Times gave about five minutes of hope to journalists when it announced it had reached a remarkable milestone: 1 million digital paying subscribers.

Soon the cold water was poured: It still isn’t enough to put the company in the black, it’s not a blueprint for other publications because the Times is such a premium brand, and the very fact that so many people are paying for the Times must mean others will lose, because there’s a zero-sum game of what people will pay for news.

I’d quibble with that last one. Going from zero to anything is an increase in that pie. If it’s a good experience, there’s no reason to think it can’t keep increasing. Think of how much people spend on video content these days. Certainly in a pre-digital world, people paid for multiple subscriptions to news.

But back to the point: The Times’ public editor Margaret Sullivan is penning a series on what this means and where else the Times goes from here. Her first part is about events-- or “live journalism,” the preferred moniker for people who get queasy about the conflicts of relying on event revenues to operate a newsroom.

Sullivan thoughtfully addresses a lot of the issues with event-- er “live journalism”-- revenue, most notably the question of whether sponsors get any preferential treatment.

The problem is, Sullivan mostly ignores the one real problem with journalists-turned-event-organizers: The fact that an over-reliance on the events business is hollowing out American Journalism -- maybe at a faster rate than even sponsored content has managed to. In the process, it’s killing what was a golden goose of a revenue stream for some.

I realize that’s an odd position for me to take given how many PandoMonthly events we host, not to mention our annual Pandoland conference. But I’ve always argued if events were our only business, we’d be screwed. I learned a lot of this from Heather Harde, TechCrunch’s CEO. Despite the dominant Disrupt franchise, Heather never wanted TechCrunch’s revenues to be more than half events-- for good reason. She used to argue it was the most cyclical revenue, and the hardest to scale.

Most people on the outside assume events are our strength. The truth is in the middle of last year when I realized it was some 80% of our revenue, I thought it was also our biggest weakness. That’s why we’ve made a lot of changes since then-- and have more coming.

I’ve spent a lot of time arguing this point to friends both inside and outside the media industry. Until recently, though, I hadn’t put any of that argument in writing.

As coincidence would have it, a week or so back, someone -- doesn’t really matter who but not a Pando investor or anyone financially connected with the company -- emailed to ask for my thoughts on whether events are the future of journalism. In particular this person asked about smaller, more interactive and bespoke events could finally be a way to pay for great journalism.

Below, unabridged and unvarnished, is what I replied. Perhaps it’ll be useful to you if you’re considering getting into the “live journalism” racket. Perhaps it’ll be too inside baseball to be useful to anyone.

At the very least, it gives you a window into how we run this site, and why membership is so important to us. (And it means, the next time I’m asked if events are the future of media, I can just link...)

I'm a contrarian when it comes to this topic. I think events are actually a HORRIBLE way to fund journalism. It sounds good in theory but there are significant problems in practice

A few reasons:

- Noise. EVERY SINGLE MEDIA OUTLET not just startups like re/code but large existing organizations like Fortune and the Atlantic are increasingly trying to make events the answer to their revenue problems. No market can support all those events. There's plenty of space for a lot of events to make money but they all become incredibly fragmented. Everyone picks their favorite but increasingly there is no "must attend" event like there was in the past with Demo or even Disrupt. There is no place you can speak or launch or sponsor where other press will cover it because everyone has their own competing event. The market is just flooded

- Scale. Events are good businesses for media outlets because your audience actually PAYS for something. But that's about it. Scaling an events business is tremendously hard. Consider Re/Code. They were gifted a $12 m. conference business by the Journal built in a time when there were mega-must-attend events. That still wasn't enough to build an independent company and they sold w/in 18 months. Why? The strategy was to be all event and just build smaller "code conferences" off of it. But you create internal channel conflicts in terms of audience, sponsors and speakers when you do that. There are only so many events you can do without cannibalizing the main one or destroying the original brand. Think of even the Lobby Enterprise vs the Lobby. When people tell me they are going to the Lobby Enterprise they look sheepish like it's not the real Lobby. Ditto Summer Davos in China. Even the most premium brands have this problem. And these three examples are where EVERYTHING GOES RIGHT. People feel slighted being part of a different smaller event -- you won't build a business with anyone in any of these three groups feeling slighted. much less all three. Also, events are costly. So even if adding more raised the top line there are still hard costs to developing them. Unlike subs, advertising or other ways media companies can make money. Sure, you can grow a conference business by it growing in prestige-- as TechCrunch did with Disrupt. But note: Disrupt expanded VERY cautiously for this reason. You basically have to grow a single event's prestige and revenues OR try to do a lateral land grab but the two won't work together. This is one reason our events have always had a very different audience intended, feel etc. but we are steadily decreasing how many we do.

- Conflict. Besides internal channel conflicts, there is a massive journalistic conflict. Think of what happens if you write critically on, say, Elon Musk. His companies would never sponsor anything or advertise. OK. And he may never talk to anyone from your publication. But both of those are risks you can weather as a media business. You can still write about someone even if they don't speak to you-- the best reporters do. Anything less is permission based journalism. But you can't produce the "must-attend" event unless you get a handful of people who don't speak at anything else. There are vanishingly few of these left post-Jobs. But one is certainly Travis [Kalanick]. why do you think a lot of the tech press will not criticize him? we have people who cancel on our events ALL THE TIME because of what we write. If that could kill our business, they could control our journalism. It's the biggest single conflict in my mind-- more so than ads or investors.

- Cycles. No event franchise stays on top for ten years, historically in business and tech and now the cycle is even shorter. It's almost like producing video games-- you have to keep reinventing. That makes the economics even less exciting. And we saw at Techcrunch that sponsor dollars were the most impacted by the ups and downs of the economy-- more so than ads (from what I was told. I was on the editorial side of the house)

- Faulty analogy. People always compare it to music. But it's different. There's inherent uniqueness to going to see a certain band. In addition, the music industry was set up that way because it was THE ONLY way for artists to make money (Even pre-digital, Willie Nelson writes about this in his recent autobiography). But that's not the case with media outlets. Individual performances are different than conferences. It's more analogous to how a book author makes more money off speaking gigs than publishing.

what are events good for? A lot of things. Important marketing positioning for a media brand. Early on it was great for us to have the lineup we did at PandoMonthly, It was an endorsement for us effectively. And we created a library of hundreds of hours of video. Also-- if it's not your entire business it is good revenue. Pandoland was profitable for us year one, and we think it'll grow. Two years ago PandoMonthly was the most profitable thing we did. But there's no way we could scale it to support even a medium sized business.

Now obviously-- as you say-- you could reinvent how they are. But to do even smaller events it would create bigger scaling problems-- especially to turn the audience into the value add/content.

Our model with subs FWIW is very different than the Information's. It's almost like it's a member club. In a way, that kind of model is best suited to what you are describing, because there is already a deep personal connection with power users/readers. But the horse has to come before the cart.

I think the big things with journalism are brand and time. I like to think about pando in similar terms to Vice. we are building a connection with a small but highly valuable audience. As the GigaOms and techcrunches and re/code come and go and sell, and the business insiders and the verges grow beyond tech to get more mass eyeballs and support their funding, we will continue to deepen that connection. In ten years, that will be incredibly valuable.

We already sell integrated marketing packages similar to how Vice sells. But it's a painstaking business to build, so we need to rely on more direct readers support... But pure paywalls make your journalism invisible. And because journalism doesn't scale like tech does, you can't just raise huge amounts of venture capital and hope to make the route quicker. In the past it took multiple decades and in some cases 50+ years to build massive entrenched media companies. One way or another we will be profitable in the next six months (or will go under, bc we aren't raising more cash). So four years to profits and ten years to build a truly unique valuable audience is comparatively "short cut" compared to the history of journalism. But it's not Snapchat.

A LOT of thoughts as you can see.... happy to chat more in addition. As i say-- almost everyone else thinks this is the future. I'm an outlier here but I've also been through it with traditional media, techcrunch, and now pando enough to have a lot of data points on it.