Taking on the media barons with the power of freemium: Mike Soutar, Shortlist Media

Only five years-old, Shortlist Media is the UK's fastest growing media company, boasting a £16m turnover, a one million readership base and a who's who staff list from across the industry.

 

In an environment where print magazines that have existed for more than 100 years are closing down, Shortlist Media has managed to achieve success with its free publications which are handed out at train stations across Britain.

 

The man behind the business' success is Mike Soutar, a passionate entrepreneur with a CV comprising over 25 years at some of the industry's most prestigious titles. 

 

Soutar gained his experience in both the creative and business side of publishing, most notably during his stints in the men's consunmer industry as editor of FHM and for his role in the launch of Nuts magazine whilst editorial director and board member of IPC Media. He explains it was IPC's buyout from TimeInc. in 2006 and a change in the company's strategy which made him decide to step out on his own.   

 

"I set up a consultancy business called Crash Test Media, which still exists today," he explains. "It's a small boutique agency that works with major media companies to launch new brands in print and digital mainly, as well as helping invigorate struggling brands.

 

"Part of the logic behind Crash Test Media was that we could create an interesting, new and unorthodox media business that we could either then get funding for and manage or sell onto other people. It was there that we first started to think very seriously about the project that became Shortlist Media," he says. 

 

Soutar was fascinated by how free media models were changing the expectations and behaviours of whole groups of upmarket consumers. The dramatic decline he saw in the men's consumer and general interest market by 2006 helped formulate the type of titles he wanted to launch. 

 

"We were asking ourselves: 'Is this because men don't want to read magazines anymore, do they just want to go online, or is it because the magazines available to them just don't meet their needs?'

 

"So it became our hypothesis that we could create something that working professional young men in their 20s and 30s would be proud of reading but also using the power of free to deliver it. That allowed us to achieve a scale that was unmatched in the men's market and also allows us to do so at high frequency."

 

Souter explains how he came to embrace the concept of 'freemium' and create a media platform that comprised a mix of free and premium content. From the very beginning, Soutar knew that if they could create a new blockbuster launch driven 100% by advertising revenue, they could revolutionise the consumer magazine industry. 

 

"Somebody once told me your first idea doesn't have to be your best idea and that's certainly been true with us," he explains."Our first idea was a consultancy business [Crash Test Media], it was an alright idea, it wasn't particularly distinctive but it was reasonably successful.

 

"Most importantly, it allowed us to build our capabilities and raise the necessary funds we needed to create Shortlist Media. Had we waited around until we thought of the 'freemium' concept, I don't think we'd ever have got started. It was more important to get cracking and plunge in and do something. There's plenty of time to come up with a better idea down the line," he says. 

 

Within four weeks of taking the business plan to investors, Soutar secured the £4m needed and in September Shortlist Media was born. "Everybody said we were completely insane to be launching an advertising-funded business right at the very started of the recession.

 

"In a funny way, we knew when we launched in September 2007 that there was a recession on the way although nobody knew quite when it was going to impact, the depths of the downturn or the length," he says. 

 

Founding the company on the brink of an economic crisis, Soutar was focussed on keeping the cost base tight and ensuring the team worked extremely efficiently. He understood the limited timeframe the company had to operate in before the recession hit and advertisers retreated to trusted brands as well as reducing the number of platforms they would advertise on. 

 

Soutar says: "We knew we had probably six to 12 months to get to the centre of advertiser schedules to prove to them that we worked and were a cost-effective way of reaching an audience before that happened. It gave us an incentive to put real momentum into the business because we knew the portcullis was going to come slamming down at some point in the future."

 

Deciding to launch the business at that crucial time was a gamble, but one that paid off. Choosing to become the insurgents and launch into a deeply-traditional and established market was also another, perhaps surprising, factor to their success. Soutar faced competition within the consumer magazine industry that had been established for a very long time. 

 

"For any start-up, what you've always got to remember is that these are the incumbents, they've got real strength and they will do their utmost to put you out of business. That's what you do when you're an incumbent; you use your muscle to push everybody out of the way," Soutar explains. 

 

"But even though they're very powerful, they have a lot to lose so they tend to act in a much more conservative way. All incumbents do. The best thing you can do when you're an insurgent business is be more nimble as you've got the ability to move far more quickly and be much more decisive to reach the market opportunity earlier. 

 

"You have to take advantage of your speed and flexibility. If you build a business which you can imagine the incumbent companies would find very painful or difficult to replicate then you're in a good place, and that's a place that we're in. The orthodox publishing companies in the UK could do what we do but it's very challenging for them to do so."

 

Since 2007, Shortlist Media has experienced phenomenal growth. Soutar focussed the business on establishing its print titles during the company's first two to three years, launching Shortlist in 2007 and Stylist in 2009. The company now distributes almost a million total copies across its unique nationwide distribution network each week.

 

Its digital operations began to take shape in autumn 2010, when Shortlist.com was relaunched on a new platform and Stylist.co.uk was born. Currently, the Shortlist site experiences 600,000 unique visitors per month, with Stylist following behind with around 30% less. Most recently, the company launched Emerald Street, its first bespoke email targeting 70,000 women daily.

 

Shortlist Media has received recognition for its achievements across the media. In 2010 Stylist magazine won New Product of the Year at the Growing Business Awards and earlier this month Shortlist Media was awarded winner of the Santander Small to Medium Sized Business of the Year at the National Business Awards.

 

Reflecting on the company's success, Soutar concludes: "It's given us yet more confidence that we're doing the right thing and are a well-run business. 'Freemium' as a concept in consumer print magazines doesn't exist anywhere else in the world; we've created something truly unique."