Can Matter succeed?
Stephen Morse doesn’t Matter. In fact, he calls the journalism startup — whose Kickstarter campaign broke past the $100,000 level in just nine days — “Snake Oil Salesmen 2.0″ and “a scam”. And after getting a smart explanation of exactly how Matter’s business model is, he doubled down on his position and said he would keep it even if they manage to raise $500,000. So I invited him up to Reuters for a little debate.
We disagreed about a few different things. The first is Morse’s idea that there’s so much great content out there for less than 99 cents that no one’s going to pay that whopping sum to read Matter’s stories. I, obviously, disagree. I think that the success of the Kickstarter campaign is proof that there’s huge untapped demand for this kind of material — demand which is not being met by the competitors Morse cites, like Scientific American or Popular Mechanics. I think that the success of books for the Kindle — for that matter, the success of decades of magazines and centuries of paper books — demonstrates that there’s real demand for quality content, even from people who don’t necessarily have the time to read it all. I think that mobile devices like phones and tablets have revolutionized where and how we consume a huge range of written content. And, most importantly, I think that trail blazers like the iTunes Store and the New York Times are changing the willingness of millions of people to pay for digital material.
“If I were a content consumer,” says Morse, lapsing into a rather odd conditional, “I wouldn’t pay 99 cents for one article” when magazine subscriptions amortize out at a lower per-article cost, and besides there’s lots of great content out there which is absolutely free. Such things, he says, are “a much better value” than Matter. But here I think Morse misses the great hope of the 99-cent price: it’s low enough that substantially everybody in Matter’s target audience can afford to pay it without any real effect on their wealth or cashflow whatsoever. It’s less than the amount you tip a cab driver, or a bartender; in fact, it’s less than the cost of just about anything you might buy in the physical world. 99 cents is low enough that, for hundreds of thousands of people, worries about value disappear. They pay that on text messages all the time, which have much lower value. Why not pay it for something great, if doing so allows that thing to exist in the first place?
Put it this way: if Matter found a way for people to pay them after they read a story, rather than before, on a purely voluntary basis, I’d still be optimistic about their ability to make money doing this. Think of a world where you got the New Yorker delivered for free every week, and then clicked a button paying them 99 cents every time you really liked one of the articles. I think they could get a lot of revenue that way, and I think the success of the porous New York Times paywall is strong evidence of that. Yes, there will always be people who don’t want to pay, and there will always be others who somehow find free samizdat versions of Matter’s stories. But those people aren’t important. What’s important is the number of honest people who are more than happy to pay when they find something good to read. And that number is extremely large, and growing.
Matter’s Kickstarter campaign proves that people want to give them their money. The task facing Matter is to create material that’s so unique, so great, that readers around the country and the world will be eager to buy subscriptions, or individual issues, in the knowledge that their money is going straight to the creators of that content. It’s an exercise in doing something which has historically been extremely rare, in the world of journalism: selling stories to readers, as opposed to selling readers to advertisers. But the internet makes it so easy to reach millions of potential readers that a small and enthusiastic subgroup can be big enough to sustain this kind of publication. Nanopublishing didn’t work when Nick Denton tried it on an ad-supported basis. But Matter is effectively running a publication at a CPM of $1,000 — and a lot of math starts working when the numbers get that big.
In our debate, Morse snarked that no one down below us, in Times Square, had heard of Jim Giles or Bobbie Johnson, the co-founders of Matter. And in saying that he revealed his broader mindset: that of a would-be internet entrepreneur who raises venture funding by using the words “platform” and “scale” a lot while promising things like “explosive growth”. It’s no great secret that Giles and Johnson have talked to VCs, many of whom have been very supportive. But what they’re building doesn’t lend itself to the VC business model, where you either have monster, multi-million-dollar success, or else you die trying.
Morse uses the fact that Matter doesn’t have VC funding as a count against them, when in fact it’s a great count in their favor. VCs provide two things: money and advice. And Matter’s getting the advice; it’s just doing so without having to sell its soul to people wanting a monster return on their investment. All it needs to do, at least in the first instance, is pay for itself. And at the end of our debate, Morse finally came up with a number: if Matter can get 20,000 paying customers each week, he said, then he sees a sustainable model there.
Morse also said that “even if every science nerd out there pays a dollar, this is not going to be something that will get the critical audience needed to be a financial success”. Which I think is plainly wrong: there are a lot more than 20,000 science nerds out there. Scientific American has a circulation of 475,000. Popular Mechanics and Popular Science both have a circulation of over 1.2 million. Smithsonian has a circulation of more than 2 million. And National Geographic has a circulation of over 4 million. Can Matter reach 20,000 paying customers? Of course it can. Here’s Johnson:
We don’t think it’s going to be a mainstream smash; we don’t think it’s going to change the world; we don’t think we’re going to out New Yorker the New Yorker; we don’t think we’re going to be billionaires. But we do think, done right, we can offer something valuable and remain sustainable in the medium term.
There’s nothing pie-in-the-sky about that idea; to the contrary, it’s eminently achievable. I think so, and 1,806 of Matter’s Kickstarter backers think so too. With 17 more days to go.