After four years of operating a portfolio of digital magazines, Say Media is saying goodbye to its media business. The company is also saying goodbye to its investors, buying them out as it seeks to reinvent itself as a product-focused business focusing on what it believes is a next-generation publishing platform.
The move is a big reversal for Say Media, which was formed through the combination of interactive ad startup VideoEgg and content management company Six Apart back in 2010. The idea then was to create a powerhouse of media sites, and over the next few years the company went about purchasing and building out a portfolio of various content properties.
Rather than focus on a specific vertical or segment, however, those properties spanned the gamut from fashion to technology to pets, without having a real comprehensive thread tying them together. But as CEO Matt Sanchez admitted in an interview with TechCrunch, “Ultimately that didn’t work for us. We were not building singular brands, but had a bunch of mid-sized brands.”
Well it turns out media businesses are really hard unless you create real size and scale of audience. After failing to accomplish that, Say Media has started the process of unraveling its media properties and selling them off. That began with the sale of Dogster and Catster earlier this year, but will extend to all of its content brands, including sites like ReadWrite and xoJane.
Rather than continuing to create content of its own, the company will instead be focusing its energies on helping other publishers to create their own “digital magazines.” It’s doing that by doubling down on its publishing platform, which the company calls Tempest.
“We wanted to go back to what we were focused on from the beginning,” which was being a product company, Sanchez says. But before Say Media was able to change direction and go all in on Tempest, it decided to buy out its investors.
Say Media isn’t disclosing how much it’s buying the company back for, but it’s likely investors are getting back just a fraction of what they put in. In the more than ten years since the founding of Six Apart and VideoEgg, the combined company had raised a total of $113 million.
To accomplish the buyout, Say Media found a small group of investors, mostly individual angels, to back the company and its new vision. Those investors include Justin Kan, Sean Glass, Michael Levit, and Ryan McCalley, among others.
Sanchez said doing so will bring Say Media back to being more of a “Series A-type company,” but one that already benefits from a pretty large product and sales team. Say Media will continue to have about 170 employees working for it once the sale of its media properties are complete.
And unlike most Series A companies, it already generates a fair amount of revenue. The company is on pace to bring in $60 million in sales this year, Sanchez said. Most of that comes from its content marketing and advertising business, which it’s hoping to grow by moving more digital publishers onto the Tempest platform.
Say Media is hoping to position Tempest as an alternative to WordPress and Drupal, the two platforms many digital publishers use to manage their content sites. After developing it to power its own sites, the company believes it can help out others who want to build beautiful, responsive “digital magazines” of their own.
Rather than having to do a bunch of custom development on a publishing platform like WordPress, Say thinks publishers will be attracted to the idea of a fully hosted but highly customizable platform for managing their sites. Tempest provides not just the publishing platform, but all the ad serving, content recommendation, and analytics that publishers frequently tack on through third-party tools.
Say Media is essentially trying the “It Just Works” pitch to publishers. Move your site onto Tempest, and Say Media will take care of everything else.
That said, most publishers face a fair amount of lock-in to whatever publishing platform they’re using, especially after years of custom development. Few are willing to look at that as a sunk cost, even if Tempest potentially provides a better alternative.
But Sanchez notes most online publishers go through a refresh every 12-18 months. It’s hoping to capture new publishers while they are in the midst of such an upgrade cycle. According to Sanchez, Say Media will handle all data migration from a competing platform to its system (a process that he says can take up to six weeks), but once there they’ll be able to monetize the platform and sell their own ads.
The other big selling point to publishers, other than just a better interface, is that the platform will be free for them to use. So how will Say Media make money?
Essentially it hopes to profit by operating as the yield-management solution for publishers who use Tempest. In English, that means selling remnant ad inventory for its publishing partners. And just like all other ad players, the bigger the network, the better it can monetize.
Say Media already hosts about a dozen sites on Tempest, including those it owns and some it has partnered with. But it’s onboarding more as we speak. Publishing brands that are in the process of being migrated over include Beauty Geeks, Ape to Gentleman, College Fashion, Sabotage Times, MomSpark, Pacific Standard, and Daytime Confidential.
But that’s just the tip of the iceberg. Sanchez says there are more than 12,000 digital magazines out there in the world today. If it captures just a small portion of those, it could have a big business ahead of it.