What happens when Quartz shatters?
Its owners look to sell the digital darling. How did it get here.
Eight years ago, when I was a media reporter, I spent a day at the Quartz office, tucked away on Spring Street in lower Manhattan. I sat down with then-editor in chief Kevin Delaney and a whole slew of Quartz writers and editors and developers and sales staff. There was an energy in the newsroom. In fact, Quartz rigged a light bulb in its office to go on and off every time someone tweeted at it.
It was novel, but also a metaphor for where we were headed: a media company flickering at the whims of an audience it was trying to find.
Yesterday, the Wall Street Journal reported that Quartz’s owners, Japanese firm Uzabase was looking to shed the digital financial outlet after only two years of purchasing it from Atlantic Media for $86 million, which started the outlet in 2012 with a “mobile-first philosophy.”
Quartz was one of the new media darlings; I know this because I wrote many stories about its approach to the media business. A sample:
Quartz Scores With Designers October 10, 2012
Is Quartz the Very Model of a Modern Publisher? May 30, 2013
Kevin Delaney Tinkers With Media at Quartz November 15, 2013
Why all the coverage? First, it was new. The business philosophy was different. At the time, media companies slung banner ads the way my three-year-old slings boogers at his sister. Fast and with no concern of whatever consequence may happen. Quartz, on the other hand, built its architecture for the web.
As I wrote in 2012, it was a revelation:
Quartz is more application-like. It has eschewed the standard Web grid layout in favor of non-standard navigation. It has two panes, a narrow list on the left side contains a running stream of headlines. The right pane contains the flow of content. The twist is that the content well is never-ending: One story leads to another. There’s no need for a back button.
On the ad side, the company was an early, and often, success story in sponsored content/native advertising/custom content, often crowing about a 90 percent advertiser retention rate with a $75-to-$90 CPM to boot.
It grew quickly. Me, again, from 2013:
Quartz has also beefed up its staff across the board. It’s gone from three marketers and two sales people at the start to now eight marketers and seven sales people, plus rep firms in London and Singapore. It’s also grown its engineer and developer team, now up to five. Lauded for its design and user interface, Quartz is showing how a digital-only outlet can tap into the powers of design.
“We’ve learned the real importance of engineers and developers; the extent to which they can make a difference in your world, both on the ad side and in general on the product side,” (then-publisher Jay) Lauf said. “Those guys are so integral to everything we do.”
But much like the middle schooler who is a foot taller than his classmates and dominates the basketball court only to have everyone else catch up in size and skill by the time high school rolls around, Quartz found itself in the middle of the pack.
Buyers over the years have migrated away from Quartz, telling me as the company found itself as just another publication in an ocean of content, it wasn’t considered a ‘must-buy.’
The company faced several headwinds, all slowing down the momentum the outlet created from the jump.
First, Quartz expanded beyond its core product, smart analysis in 400-800 words, a calling card of the Delaney era. The company watched its traffic store, in large part because of the Facebook algorithm. In 2013, however, Delaney told me:
“So much of our traffic opportunity is social, so that pushes you to write for humans,” Delaney said. “We want to write headlines people click on. That compels you to write good content.”
In a 2017 memo, Delaney laid out the next products—from a book to an editorial strategy that seemed to throw a lot against the wall with Quartzy and Quartz At Work.
This change of editorial strategy also coincided with the changes in the media market, most notably how Facebook drove a boatload of traffic to the site, forcing reporters to pump out content like any other site. Instead of sharp analysis for the business set, quick hits ruled the day in order to capitalize on the traffic. A lesson many publications learn until it’s too late.
Additionally, management was also trying to figure things out. Namely, Atlantic Media’s owner, David Bradley, started selling off all his properties, causing staffers to constantly wonder what came next.
When it was sold, there were two trains of thought: not bad for a six-year-old outlet. Starting from 0 and selling for $86 million ain’t too shabby.
But, as Columbia Journalism Review’s Mathew Ingram wrote:
On the other hand, the Quartz deal doesn’t give media insiders much to celebrate from a financial point of view. Based on figures from a Uzabase slide presentation about the acquisition, even the higher end of the proposed sale price (based on certain subscription targets being met over the next five years) amounts to about 2.5 times Quartz’s projected revenues for this year, and less than four times 2017 revenue.
In the Quartz write up of the sale, it foreshadows the changing strategy from ad-supported to reader-supported:
The Japanese company is “turning to Quartz to drive its expansion outside of Asia, with a particular eye on subscription offerings,” Delaney and Lauf told employees in a memo today (July 2), adding, “We expect the biggest source of growth in Quartz’s next chapter will come from reader revenue.” No layoffs are planned as part of the acquisition, they said.
Over the years, former Quartz staffers told me how much of a Sisyphean task this was, and as the pandemic swept the planet, the company found itself like many media companies: forced to lay off staffers in order to keep the lights on.
It eliminated 80 roles, while closing four offices around the world. In the first quarter of this year, its ad revenue dropped 54 percent from the previous year’s first quarter.
As the WSJ reports, the transition to subscription never quite materialized:
In its earnings report for 2019 published in February, Uzabase said it expected Quartz’s sales and profit would experience fluctuations in the coming year because of “the business environment in the USA” and as a result of the businesses transition.
For the first half of 2020, Uzabase reported that Quartz’s overall revenue had fallen to $5 million from $11.6 million in the same period the year before. In 2019, revenue fell 22% to $27 million. Earlier this year, Quartz eliminated about 80 positions.
Quartz reported a loss based on earnings before interest, taxes, depreciation and amortization of $18.6 million for 2019 and a loss of $11.2 million in the first half of this year. In 2018, the company took in $35 million in revenue and recorded an Ebitda loss of $10.7 million.
For this year, Uzabase reported that it expected Quartz to bring in about $1.9 million in subscription revenue. Quartz said in August that it had nearly 21,000 subscribers at the end of June. The site charges $99.99 for a year’s access, or $14.99 a month.
And if I pull a Thornton Mellon reading the wind, much like many media outlets recently (just yesterday, for example, Bonnier sold off several outlets to a venture equity [new term for me, maybe it’s a mix of VC and PE? Don’t know!] firm, North Equity Partners) some private equity firm will pick up Quartz.
Quartz was a great idea, executed very well, and then not as much. It experimented with forms, both editorial and advertising, building an audience along the way. But in the end, compromise begat compromise, mobile-first morphed regressed back to the desktop mean, advertising went from high-touch creative to run-of-the-mill display, stories focused on and for the business executive bled into stories about everything meaning the once-valued content became a commodity.
Quartz is a familiar tale of modern media, where a company chases that pot of gold only to find out that it’s difficult to get there. Here’s to hoping that whoever picks it up, lets Quartz return to its innovative, Twitter-powered-lightbulb ways.
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Van Halen, “You Really Got Me”
Some interesting links:
For independent publishers throwing huge rocks at competitors
As Hollywood Consolidates, Independent Media Is More Important Than Ever (The Wrap)
For legal matters:
Congress drops its 450-page report. I am still working my way through it. It’s...a lot! (House Judiciary Committee)
Supreme Court to mull Google bid to end Oracle copyright suit (Reuters)
Drop charges against Des Moines Register reporter, Columbia University demands (Des Moines Register)
For platforms:
For society’s breakdown:
QAnon High Priest Was Just Trolling Away as a Citigroup Tech Executive (Bloomberg)
America may need international intervention (NYT)
For tech profile:
The Inside Story of MacKenzie Scott, the Mysterious 60-Billion-Dollar Woman (Marker)