Thomas Friedman and the Champagne Room

My first conversation with a strip club owner did not take place at a strip club, but at a restaurant. A friend took me to along to a dinner that included a former male dancer who had created a mini-adult entertainment empire throughout the South. Sometimes weird things happen.

The club owner blew my business mind when he taught me that strip clubs don’t make their money off of the strippers. There’s a bit of revenue from entrance fees, and apparently each dancer pays the club a nominal fee to be allowed to dance for the night, but these are negligible. Ultimately, a strip club is simply a business that sells extremely high-priced, high-margin drinks. Alcohol, a seemingly incidental part of the business, was the real moneymaker.

I was amazed that the (assumed) core product wasn’t what actually created the profit. As for the dancers? Think of them as marketing: their function was simply to attract an audience to whom the club could sell those high-priced drinks.

Do you see where I’m going with this?


I used to assume that the newspaper business made most of their money from subscriptions. It seemed intuitive: they offered the product of journalism, and people bought that product. It never occurred to me these businesses were just extremely sophisticated at selling ads; those seemingly incidental advertisements were the real product and the journalism was mainly there to bring in the audience.

Why is why I don’t quite get the whole information wants to be free vs. expensive debate. And it’s why I don’t get the news media panic around people ‘stealing content’ or media executives thinking they made a fatal error over the past decade by  ‘giving away the news for free’. Was the newspaper business ever predicated on selling journalism or is the problem simply that the product in which the industry specialized – expensive print ads – will never be the same?

Purely digital organizations like HuffPo and Business Insider have shown success in adapting the old business model: journalism brings in the audience and then they survive off of selling advertising against it. My alma mater, the FT, has shown that you can have a business that makes money from selling content, but this is in fact the most radical of departures from the traditional business model, not a validation of it. (Ken Doctor addresses the traditional breakdown of ads vs. subscription with the 80/20 rule).

Which is why there’s no need to panic. No one is questioning journalism’s ability to bring in an audience. How companies make money off of those audiences is up to them. You don’t have to sell advertising.

The Thrillists of the world seem to get this: the content brings in a very specific audience (22-40 year old males) and then they sell clothing (JackThreads) or curated experiences (Thrillist Rewards) that caters to that audience. Imagine going to a large corporation and offering to drive millions of people to their website every month. How much would they pay for that marketing?

It’s uncomfortable to equate a newsroom with a mere marketing department. I love the news and view good journalism as critical to our society.

It’s a bit more fun to compare journalists to strippers. They’re still doing their job and bringing in the audience, but suddenly no one is willing to pay for a $17 vodka-tonic. Do you get mad at your customers and panic or do you figure out what else you can profitably sell to a very specific audience?

I’m still working out where Business Insider headlines, ProPublica, and blog networks fit into this metaphor……

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