Dutch Start-Ups Go International

Blendle CorrespondentTwo Dutch startups are exploring new horizons. De Correspondent, a Dutch digital only magazine, and Blendle, an article republisher, both recently announced plans to conquer the international market. De Correspondent wants to take the plunge into the US while Blendle is putting their investor’s money in the German market. Publishing however has never been a tougher business than today so the question is what are their chances to success?

De Correspondent is a digital subscription based magazine that describes itself as a Dutch-language, online journalism platform that focuses on background, analysis, investigative reporting, and the kinds of stories that tend to escape the radar of mainstream media because they do not conform to what is normally understood to be ‘news.’ De Correspondent claims to have 34.000 subscribers each paying €60 a year. While you can’t access the articles directly without a subscription the content is not entirely behind a solid paywall. The Correspondent tweets about new articles adding a link to the article on the website. Their business model is based on the readers perceived value of De Correspondent’s content which ultimately translates into an old fashioned annual subscription fee. With just 34.000 paying subscribers De Correspondent will not make a big financial splash. Then again starting a magazine doesn’t make its founders overnight billionaires.

So far there are enough people that pay for De Correspondent’s content. In its 18 months of existence De Correspondent has proved that content creation can do without advertising revenue and still be a viable albeit small business. The founders now have the ambition to expand abroad and are pondering a The Correspondent in the US. They already own the name: www.thecorrespondent.com. Different culture, language, reading behavior and choice of topics will make it a challenging expedition. To get it right and before moving in they intend to make good use of the knowledge of long term media professors Jay Rosen from the University of New York and Jeff Jarvis from the City University of New York. But being successful in the US publishing business is not the same as starting up an online magazine through a crowd funding campaign in the Netherlands. The US market is big, the costs are higher so to succeed they need a lot more than the crowd funded first 18000 subscriptions they needed for the Dutch publication in 2013. The big question the founders of The Correspondent need to answer is whether there is a US audience that buys into a Correspondent style and model of magazine.

Blendle is a Dutch start-up that is referring to itself as a digital kiosk where you can purchase individual articles from over 50 newspapers and magazines. They have made deals with a series of publishers to sell individual articles for prices around 0,50 Euro. The revenue split is 70% for the content provider and 30% for Blendle. It also promises a money-back guarantee: if you think the article wasn’t any good you can ask your money back within 24 hours of the transaction.

The basic idea behind Blendle is to let people pay for what they read but from a much bigger and varied pool of articles. The idea certainly caught the attention of other publishers. Last year the New York Times and Axel Springer invested € 3 million in Blendle in exchange for 23% of Blendle’s shares. It was just in time as Blendle was almost without money. Since the financial injection Blendle has increased its efforts to open up new markets. But moving into Germany is not so much an ambition as a must. The Netherlands is way too small to even break even, as founder Marten Blankesteijn made clear. Blendle currently has some 200.000 users of which 20% are actually buyers. Blendle’s growth strategy therefore needs to be much more aggressive than The Correspondent’s. Blendle is a content (dis)aggregator and not a content creator. As such it has to share the revenues and deal with small margins. Blendle’s biggest challenge is to scale up big and fast. There is also another unknown: micropayment so far have not been very successful. iTunes and stock photos are notable exceptions with prices around one dollar. But iTunes is getting competition from Spotify and Apple Music (flat monthly fee) and stock photography is not a mass market. As to the reason why micro-payments have not taken off Clay Shirky offers a simple explanation: “users hate them” because they ”waste the users’ mental effort in order to conserve cheap resources, by creating many tiny, unpredictable transactions. Micropayments thus create in the mind of the user both anxiety and confusion, characteristics that users have not heretofore been known to actively seek out” Fortunately the payment model could, if necessary, converted to a monthly fee for an all you can eat model or for specific bundles.

De Correspondent and Blendle both have international ambitions. De Correspondent is however much more cautious when it comes to its international expansion. A crowd funded start will either ensure a solid starting base for a US publication or a miss which may result in a bearable loss of invested time and limited funds. After that: back to the drawing board and off to another attempt.

For Blendle the stakes are much higher. They have to capture international markets or they will soon run out of financial steam. Being backed by two international publishers they have bought time as well as marketing power. Whether the micro payment model works, largely depends on the acceptance of the millennial generation. No doubt we will soon find out. But by and large both ventures are excellent initiatives to revive the publishing sector.

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About Marcel Warmerdam