Politico, the inside-the-Beltway news site so many love to hate, is now a billion-dollar company. This morning, after weeks of rumors, the German media conglomerate Axel Springer SE announced it was buying the whole operation for what appears to be something north of that magical 10-digit number.

Politico (née The Politico, bub) debuted in January 2007, entering what was a very early version of the digital news world we know today. (Facebook had just opened up to non-college users; “twttr” had just spent the domain-name cash to become Twitter.) In the years since, it’s evolved from brash upstart to mainstream news source to an excellent way to separate lobbyists from their money. It’s been hailed as a rare digital news success story and slammed as everything that’s wrong with digital news (and political journalism writ large).

I thought I’d mark the occasion by noting some of the (many) things I think Politico has done right over the years as a business. Some of these ideas are available to nearly any news organization; others only make sense for an outlet that’s targeting a very particular audience or working a very specific beat. You wouldn’t want a world where every media company approached news the way Politico does — but that doesn’t mean there’s not a ton to learn from their successes.

Back in 2006, D.C. media mogul Robert Allbritton was considering whether to buy an existing Washington political outlet — The Hill — or to start his own. The Hill’s asking price back then was $40 million. He, of course, chose to build Politico from scratch instead.

Last week, The Hill sold for $130 million; Politico will fetch nearly 10× that. Pretty good decision, it turns out.

Making your money in Business Class, not Coach

Most news sites that offer high-end political reporting — the Times, the Post, the Journal — have put some or all of it behind a paywall of some sort. It’s a smart move, financially; while only a small fraction of your readers will pay, it’s a more scalable, predictable, and often more lucrative revenue source than advertising.

Politico is still free to all. How? It recognized early on something airlines have known for a long time: It’s a lot easier to make a lot of money from a few of your customers than a little from everyone. Especially on international flights, an airline might sell 12% of its tickets in Business Class or First Class — but those tickets can generate 75% or more of an airline’s profits. There are people happy to spend $4,000 for a lay-flat seat and unlimited bellinis to Heathrow — so it makes sense for airlines to figure out a way to make them.

In 2010, rather than a paywall, Politico launched Politico Pro, an almost completely distinct service aimed at people with real money: trade groups, lobbyists, defense contractors, banks, health care conglomerates, and the like. With high-value, minute-by-minute updates — often on inside-baseball subjects too boring for the broader audience to be interested in — Politico Pro took the premium-research business into the digital age.

When you can sell a few subscriptions for $10,000/year, there’s much less need to sell a lot of $100/year ones. Fully half of Politico’s revenue now comes from Pro, a product 99.9% of its readership will never see.

It’s perfectly reasonable to think that’s awful (why do rich people deserve a better, secret news source than everybody else?) or to think it’s genius (no skin off my back, better than putting everything behind a paywall), probably depending on your Amazon review of Capital in the Twenty-First Century.

But Politico, at least, has always known what it is. As its about page puts it: “We inform the powerful, particularly those who have a political, professional or financial stake in politics and policy.” Or Jim VandeHei back in 2010: “We don’t spend a lot of time ever thinking what’s on the world news and how does that effect us, or what’s happening on the front page of USA Today and how that affects Politico. Those are mass audience outlets. We’re not a mass audience — it turns out there’s a big audience that wants in on the type of stuff that we’re covering, but we’re still very much about Washington.”

Remembering unfashionable revenue streams

What was one of the problems a politics-and-power news site faced in 2007? The people who had the power in politics weren’t spending their days online yet. (It was only six months after Ted Stevens’ famed series-of-tubes speech.) You weren’t going to reach an octogenarian senator with a blog.

So Politico launched with a print edition, distributed for free in Washington — and it still has one in 2021. A capitol newspaper is a well-established business model, one that interest-group advertisers already understood, and a print edition served as brand marketing within the cloisters of power.

Most importantly, it gave a mostly digital company revenue to play with in its early days. More than a year after launch, when Politico was already having big audience success online, its free D.C.-only print paper was still driving 60 percent of its total revenues. That steady revenue stream made it possible to make longer bets in digital.

Betting on email newsletters

If you’re a new digital outlet, you need to reach potential readers where they already are. One example: Politico was one of a relatively few news outlets that built its own app for the BlackBerry — a full three years after the iPhone had launched! Why? Because the BlackBerry was the only phone approved for use by government employees at the time.

The BlackBerry faded, but the email inbox has stayed strong. Politico Playbook, its morning newsletter, launched in June 2007, promising “a handy, BlackBerry and Treo-friendly peek at the news driving each day.” Look back at its first issue today and you’ll see something that looks an awful lot like the morning emails you can get from any top news publisher. It didn’t take long for Playbook to become the email “the White House wakes up to.”

Thinking of a newsletter as a distinct, standalone editorial product — not a marketing tool for the website or a glorified RSS feed — was still not very common back then, and the 384 newsletters that clog your inbox every day owe something to Politico’s success.

Expanding geographically and tactically

Politico has long been willing to buy smaller editorial companies that it thinks align with its core product. It bought Capital New York (R.I.P.) in 2013 to try to reach NYC, finance, and media. It bought a site called European Voice (with Axel Springer) in 2014 as a starting point for what would become its Politico Europe franchise. And just last year it bought E&E News, a lauded vertical that covers energy and the environment and which fits well into its Pro model.

It’s also expanded geographically, both abroad (that Europe product, a new franchise in Canada) and down into the states (California, Florida, New Jersey, New York, Illinois, Massachusetts). They haven’t all worked; Capital was a step too far away from the core Politico audience, and not all the state-level operations have been hits. But their willingness to expand the models they’ve proved out into new markets is relatively unusual among traditional media companies, even though digital makes such scale much easier.

Pushing talent to feel entrepreneurial

A lot of the news startups that have followed it carry a decent amount of Politico’s DNA. Axios is the most obvious example — ex-Politico founders taking the Playbook newsletter model and blowing it out. Punchbowl, started by former Playbook writers, takes a different angle on it. Ex-Nieman Labber Laura McGann’s upcoming startup too. And within traditional newsrooms, a lot of national political reporting is being done by former Politico hands who’ve been hired away.

To be clear, I’m not suggesting Politico as a company likes it when its people leave or start something new. After all, they mostly leave to start or work for Politico competitors. But there’s something about the place that makes people want to start something on their own. Possibilities:

• the fact that Politico started with some journalists’ rejected pitch at The Washington Post gives the path some credibility;
• by proving out the specifics of its business model, Politico makes it seem like a relatively uncomplicated lift to start your own;
• by foregrounding individual reporters (via blogs, email newsletters, and endless cable news appearances), it strengthens the brand they can then take to a new project; or maybe
• it has at times been a pretty punishing place to work.

Probably (e), all of the above.

Learning from the web around you

It’s kind of funny reading early coverage of Politico from the aughts. “If a reporter at a Capitol Hill press conference whips out a hand-held video camera and starts shooting, Washington could be seeing the journalistic envelope being stretched by Politico, the political newspaper and Internet operation that begins tomorrow.”

Or: “If The Politico succeeds, it could signal that the Web has become a more plausible alternative for mainstream journalists. (Most bloggers offer their Web logs free, and rare is the site that pays reporters for original content.)”

Or: “There is a manic quality to ‘Playbook’: Allen capitalizes entire sentences for emphasis and formats each paragraph break so that copy can be read easily on a BlackBerry. (Times executive editor Bill Keller likened the e-mails to “a political junky’s fraternity newsletter.”)”

But most of the early complaints about Politico focused on its speed. Breaking news all day! An obsession with round-the-clock scoops! Two-sentences-and-a-blockquote aggregation! Win the morning!

The complaints weren’t all wrong — but they weren’t all right, either. In the past decade, traditional political reporting has become more like Politico than Politico has become more like traditional political reporting. (Voicey newsletters, spirited aggregation, stories updating in real time — in a way, Politico anticipated Media Twitter as much as it did political journalism.) And yeah, there are all sorts of problems with this more enervating style — but it’s an inevitable outcome of widespread digital media adoption. They took the organic web that was happening all around them and brought some of its ideas to a traditional news beat — just as The Huffington Post and Gawker did before them, and just as BuzzFeed News and Vox did after.

At a staff meeting in 2008, editors passed out a memo from Politico co-founder and spirit animal Mike Allen. “We are not the AP or The New York Times…If we ONLY do what those two great organizations do, WE WILL NOT SURVIVE AND WE WON’T HAVE JOBS…THE REWARD for cracking this code is that you’re part of an enterprise…that is one of a tiny handful of news organizations in the WORLD that is actually GROWING.”

Despite the egregious all-caps, he wasn’t wrong. A new player in a crowded space needed to differentiate itself, and Politico differentiated on speed and scoops. That gave it both a good-sized audience of political junkies and credibility in the halls of power. After a few years, it could slow down (A BIT) and start producing some great long-form political reporting along with the speed. And it could then turn the speed-and-scoops game toward a high-end market through Politico Pro.

As I said up top, Politico is an unusually polarizing media company. Some people love to hate it and think it represents the worst of what the Internet has done to the news. I’d (mostly) disagree. But even if you don’t, you have to applaud a news company that can employ well over 300 journalists doing quality work and build a business worth more than $1 billion — during the worst decade in modern history for the traditional news business. They’ve won the morning — let’s see if they can win the next decade.