Can Matter succeed?

By Felix Salmon
March 7, 2012
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".

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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.

15 comments

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Too expensive. Should charge 10 cents.
Still waiting for the entrepreneur who gives newspaper quality for like $10 a year. We’ll see him/her in the next five years.

Posted by RZ0 | Report as abusive

“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.”

I don’t know, I (and lots of other people) buy songs for 99 cents, when albums are cheaper per song, and there is free music available.

Matter seems to think if a business can’t say everyone is their potential customer, it can’t be a success. That’s not true, if your model doesn’t require tens or hundreds of millions of customers.

He’s going to be wrong.

Posted by KenG_CA | Report as abusive

I have my doubts that “great content” (however that might be defined in this particular instance) alone for a price is a winning business model, even at the edges. I think it might have a small chance if it is quickly successful in establishing a compelling brand. But I’ve always said that publishers need to experiment to find out what works in their unique circumstances. Good luck to Matter.

Posted by Curmudgeon | Report as abusive

Just one thought: Isn’t it difficult to talk about “value” as long as we just have an idea about the price, and don’t know much about what the customers will get for their money?

Posted by thoresson | Report as abusive

I sure hope they succeed. At least for my sake as I’m building an online magazine that focuses on humanitarian issues. Like Matter World Media Now focuses on what we consider “gaps,” in current mainstream news coverage – focusing exclusively on the human condition. But we’re training citizens to produce their own content.
There is free content out there but much of it contains redundant themes, ideas, not very original or so badly written you’d be hard pressed to actually get through it. We’re offering basic journalism training to elevate the “free content,” so readily available to broaden the media marketplace and have stories that aren’t being covered available. Our biz model depends upon the uniqueness of our content – we can’t have the same stories that the New York Time has. We believe there’s a gap in global coverage. Here’s an example – I have a Google alert on Egypt which sends me all the news stories Google gathers on Egypt each day. Yesterday my Egypt digest had 6 out of 13 stories listed on one topic – an Egypt legislator resigning after he lied about getting a nose job. Surely, there’s more important news happening in Egypt than that? We are betting our potential readers do as well. I’ve run the numbers and like you said we don’t need 4 million readers…10,000 a month will do us fine. It’s the Long Tail of journalism I guess…

Posted by writingprincess | Report as abusive

I sure hope they succeed. At least for my sake as I’m building an online magazine that focuses on humanitarian issues. Like Matter World Media Now focuses on what we consider “gaps,” in current mainstream news coverage – focusing exclusively on the human condition. But we’re training citizens to produce their own content.
There is free content out there but much of it contains redundant themes, ideas, not very original or so badly written you’d be hard pressed to actually get through it. We’re offering basic journalism training to elevate the “free content,” so readily available to broaden the media marketplace and have stories that aren’t being covered available. Our biz model depends upon the uniqueness of our content – we can’t have the same stories that the New York Time has. We believe there’s a gap in global coverage. Here’s an example – I have a Google alert on Egypt which sends me all the news stories Google gathers on Egypt each day. Yesterday my Egypt digest had 6 out of 13 stories listed on one topic – an Egypt legislator resigning after he lied about getting a nose job. Surely, there’s more important news happening in Egypt than that? We are betting our potential readers do as well. I’ve run the numbers and like you said we don’t need 4 million readers…10,000 a month will do us fine. It’s the Long Tail of journalism I guess…

Posted by writingprincess | Report as abusive

I sure hope they succeed. At least for my sake as I’m building an online magazine that focuses on humanitarian issues. Like Matter World Media Now focuses on what we consider “gaps,” in current mainstream news coverage – focusing exclusively on the human condition. But we’re training citizens to produce their own content.
There is free content out there but much of it contains redundant themes, ideas, not very original or so badly written you’d be hard pressed to actually get through it. We’re offering basic journalism training to elevate the “free content,” so readily available to broaden the media marketplace and have stories that aren’t being covered available. Our biz model depends upon the uniqueness of our content – we can’t have the same stories that the New York Time has. We believe there’s a gap in global coverage. Here’s an example – I have a Google alert on Egypt which sends me all the news stories Google gathers on Egypt each day. Yesterday my Egypt digest had 6 out of 13 stories listed on one topic – an Egypt legislator resigning after he lied about getting a nose job. Surely, there’s more important news happening in Egypt than that? We are betting our potential readers do as well. I’ve run the numbers and like you said we don’t need 4 million readers…10,000 a month will do us fine. It’s the Long Tail of journalism I guess…

Posted by writingprincess | Report as abusive

Sorry for killing cats and doing repeated posts…dont’ know how that happened. :)

Posted by writingprincess | Report as abusive

Have you ever looked at any customer reviews on Apple’s App Store? A typical one might run like this:
Great, life-changing app which I use every day. I’m knocking off two stars because $1.99 is an outrage.
People determine value in mysterious ways. Most of us would probably have a shock were we to fully trace all expenses and see where we senselessly pinch pennies and carelessly dump dollars. And this gets more out of whack with the more money we have to spend. Buying a can of Coke often feels to me like extortion, whereas I hand over my money with a clear conscience for a coffee at Starbucks. It makes no sense but there it is.
What I’m trying to say is that it is useless to compare one dollar spent on media with another spent on food or tips or what have you. I’d like to see sites agree on a single micro-payments method that would allow me to fill up an electronic purse with, say, $20, then slowly spend it all over the web with a nickel here and a nickel there. One good article or blog post could make a man rich overnight. Hell, I’d even pay a nickel for the right to post a comment.

Posted by KitFR | Report as abusive

It would be good for this project to succeed, but I also have doubts. First, is the likelihood of the regression to the mean. I cancelled my Nat Geo Nook because it has degraded into a fluff and puff publication. (btw – my MA, Interdisciplinary Studies, combined geography and art history) Pop Sci/Mech is for geared towards the Dunning-Kruger EE set. (I’m in the computer networking field) There’s the paucity of decent science communicators Check out Jerry Coyne’s Why Evolution is True website and today’s post about New Yorker’s Jonah Lehrer and Ethan Siegel’s piece on Science Blogs. Both men are scientists and discuss science in short form. However when the filter of a writer is used, the “value” increases while the accuracy decreases. What Matter will produce may be interesting and entertaining, but there’s a possibility it will be very very wrong.
I write this because I am the significant other of an ivy league research scientist (DevBio) and someone who interacts with that set. I’ve come to the conclusion that the field has a high number of idiot savants. They know what they know very well, (and gods forbid you ever find something that contradicts that knowledge!) but once out of their comfort zone – watch out! Niel DeGrasse-Tyson is the anomaly of the science set, civilized, willing to work with others, appears to know his limits. The darling of pop-culture, Michio Kaka is a brilliant physicist who doesn’t recognize that he’s a blithering idiot on the subject of biology and evolution. Then there’s Lubos Motl who is closer to the norm than most will admit – hostile, arrogant, self-centered, and simply intolerant of those he deems unworthy of his esteemed intellect. Incapable of admitting ignorance, many scientists will say something wrong rather than say nothing or that they do not know.
Finally, that some of the professors (and mind you, some of the best ones) could be mistaken for homeless vagrants speaks volumes of their interest in interacting with the rest of society.

Posted by OnkelBob | Report as abusive

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