Defector's just-released annual report shows a fascinating model for new media launched just over a year ago, formed by Deadspin employees tired of the necrophilic private equity firm extracting value from the former Gawker site at any cost. The new media venture took an employee-owned, subscription-based approach to running their business — for much the opposite of the venture capitalist cost-cutting evisceration that the former Deadspin writers had endured for years.

Defector just published its first annual report of sorts — not because of any stakeholder obligation to do so, but rather, as they explain, "because it's a known business concept. We are not sure we will write this report every year, mostly because we might not have new or interesting things to say every 12 months." And it turns out, their first year of business providing mostly-subscriber-based content by decently-compensated employees was pretty successful, earning $3.2M in revenue, 95% of which came directly from subscriptions. Not bad!

Here's some more:

The gross number of people who have ever held a paid subscription to is 41k. Net of churned subscribers (i.e., people who once held a paid subscription, but no longer do), we have 36k active subscribers as of September 30, 2021. Approximately 65% of subscribers are Readers, our base tier, and nearly all of the other 35% are Pals, the next tier up. About 100 people initially subscribed at the $1,000/year Accomplicelevel, nearly all of whom signed up right after Defector was announced in summer 2020. More than 80% of our subscribers are on annual plans rather than monthly ones. So far, the rate of retention of annual subscribers—i.e., the percentage of people who've now renewed for a second year—is approximately 85-86%; that number is slightly higher among Pals and slightly lower among Readers. 60% of Accomplices have renewed at that same tier for a second year. For subscribers on monthly subscriptions, our average churn rate is approximately 3-4% each month, though that number varies meaningfully depending on cohort and month.

The company left the task of audience development to its writers, with very little oversight … and apparently, this worked. They also report that Twitter ads were mostly useless, while Google ads did decently well for them; they attribute this mostly to the fact that Google has account managers who work closely with small businesses to help them optimize their placement, while Twitter's account managers were mostly useless. Otherwise, Defector's non-subscription revenue came largely from podcast partnerships and Twitch.

The report is a fascinating and transparent look at what it means to run an equitable media company in 2021. This could be an interesting model for the future (and certainly it's not that different from the success rates that Substack claims). I personally find this part pretty interesting:

1. Every employee receives the same "base salary," with twice monthly paychecks.

2. Different positions have different "target salaries" above the base salary, within a narrow range. There are quarterly payouts towards target salaries, and those payouts are dependent on the financial performance of the company during the previous quarter.


Compensation is entirely transparent within the company. Every one of the 23 employees knows what every other employee's target salary is and what additional cash they've received at the end of each quarter.

Defector Annual Report, September 2020 – August 2021 [Defector]

Image: Public Domain via Pixabay