This year is looking grim for the news business.
Facing a set of harsh financial realities — resulting from a mix of news fatigue, an unsteady advertising market and a precipitous fall in traffic from tech giants — many outlets have been forced to fold or make significant cuts in recent months.
But there are some signs of hope. A small cohort of for-profit digital media companies that sprang up during the pandemic have found success — at least for the moment — by taking the opposite approach of many predecessors, such as BuzzFeed and Vice, which fatefully relied on huge amounts of investor money to prioritize growth.
The new class of news start-ups — Puck, Punchbowl News, The Ankler and Semafor are among the most prominent — have kept spending down and hired carefully. They are all centered on newsletters covering specific niches with broad appeal. They have attracted top journalists by putting them at the heart of the enterprise, sometimes as part owners in the companies.
“There was possibly a mismatch 10 or 15 years ago between funding structures and media companies,” said Jon Kelly, the co-founder and editor in chief of Puck, whose 14 reporters write about topics including politics, finance and media. “And I think that the entire industry has learned from that.”
These start-ups exemplify a shift in the conventional wisdom about how to make money in digital publishing. A decade or so ago, many venture capitalists and top media executives thought the then-rising class of digital start-ups might eventually dominate the industry. The big influx of investor money was put toward chasing the biggest audience possible.
But traffic from social media giants like Facebook and Twitter dropped, and the economics of digital ads didn’t add up. Predictions of supplanting traditional TV networks or sprawling print empires never came to pass. The most recent outlet to try this playbook, The Messenger, folded in January, fewer than nine months after it launched.
The formula embraced by the new start-ups is instead sustainable growth built on a mix of revenue sources, including ads, paid subscriptions and sponsored events. Instead of trying to reach everybody on the internet, they have kept more narrow lanes of coverage and targeted high-income readers, following a path more similar to the 10-year-old tech website The Information or the politics outlet Politico.
“What all of them have in common is this intense need to serve specific audiences rather than to serve everybody,” said Jacob Cohen Donnelly, the founder of A Media Operator, a newsletter about the media business.
Some of the other new companies finding early traction include publications on the newsletter platform Substack, such as The Free Press and The Bulwark, which have attracted tens of thousands of paid subscribers. Several worker-owned publications, like Defector and Hell Gate, are showing promise. And some older digital outlets, like Vox Media, have survived by expanding into businesses such as podcasting, and cutting costs.
Punchbowl News, started in 2021 by three former Politico reporters, aggressively covers Congress and has become “the hometown newspaper of Capitol Hill in a lot of ways,” said Anna Palmer, a founder and the chief executive. Now with 30 employees, Punchbowl publishes three newsletters a day and has added coverage of the financial services industry. It is looking to expand into other policy areas.
“What we have really focused on is not being something that people might find interesting, but that they actually need to be able to do their job,” she said.
Punchbowl offers its morning newsletter for free, while a subscription to its other newsletters is $350 a year. Access to Punchbowl’s policy reporting starts at $1,200 a year. The model is akin to Politico Pro (which starts at the low five-figures per year), Axios Pro ($599 a year) and The Information Pro ($999 a year), the premium offerings from those websites.
Ms. Palmer said Punchbowl had been profitable since its first year and generated $20 million in revenue in 2023, though she declined to discuss subscription figures. A person with knowledge of Punchbowl’s finances said that in the first two months of this year, the company had already booked 90 percent of its annual newsletter sponsorship goal.
The Ankler, a paid newsletter focused on Hollywood, is anchored by Richard Rushfield, an entertainment journalist who has emerged as Hollywood’s unsparing gadfly, narrating the industry’s unending chaos and skewering the actors, agents and executives responsible for creating it.
Ankler Media has raised $1.3 million at a valuation of $20 million and has been profitable for more than a year, said Janice Min, the company’s chief executive and founder, who previously helmed The Hollywood Reporter and Us Weekly. The Ankler now has seven employees and publishes several newsletters, including Wake Up, a Hollywood news digest.
“If we want to make a Hollywood analogy, it’s like these growing franchises are multiverses,” Ms. Min said. “People like what we do and see our newsletters as an extension of the voice that might have drawn them in in the beginning.”
Semafor is the largest of the group, with about 75 employees and ambitions to provide global news. But the company is charting a careful path, said Justin Smith, one of the founders and its chief executive.
Semafor launched in late 2022, with 30 to 40 percent fewer employees than its original business plan had called for, Mr. Smith said. The company decided to start smaller as interest rates were creeping up and the economic outlook was darkening.
“The pandemic really marked the transition from the social media era to what we call the post-social media era,” Mr. Smith said, noting that outlets must now focus on direct relationships with their audience.
For Semafor, that has meant committing to newsletters centered on a handful of topics, as well as the geographic areas of the United States and sub-Saharan Africa. Semafor now has more than 650,000 unpaid newsletter subscriptions, according to a spokeswoman. The outlet is hiring for an editor in the Middle East and plans to add a newsletter focused on the region.
The company generates revenue from advertising and events, and has a sponsorship deal with Microsoft for a global elections tracker and a news feed aided by generative artificial intelligence. Mr. Smith declined to share specific financial figures for the company but said it had a couple of profitable months in the last six months of 2023.
Of course, nothing in media lasts forever — particularly in the fast-changing digital world. So there’s no guarantee that the early success of these companies will translate into sustained growth.
Many of these start-ups are also taking a somewhat risky bet on talent.
At Puck, the start-up that covers topics including entertainment and finance, early hires such as Matt Belloni, who is a definitive chronicler of modern Hollywood, and Julia Ioffe, who has established herself as a must-read on Russian politics, are “founding partners.” In addition to a salary, they receive bonuses based on the number of people who subscribe to their email newsletters and how many of them stick around. New employees also get a small ownership stake in the company.
Puck, which has about 40 employees, now has roughly 40,000 paid subscribers. Shortly after the company launched, Mr. Belloni accounted for about 30 percent of paid subscribers, according to a person with knowledge of the figures.
If one or more of the star journalists leave the publication, would Puck’s subscribers follow?
Mr. Kelly said he didn’t “want to even contemplate a world” in which one of Puck’s journalists exited.
“We made a promise to everyone: You will do the best work of your career here, and we will find a way to make sure that you are valued for it,” Mr. Kelly said. “And I really think that our model is actually becoming one of the moats of our business.”
