Coconuts, once a fast-growing BuzzFeed-style site in Asia, takes a hard right into memberships.

The digital ecosystem is “all fucked up,” says founder Byron Perry. But will people pay for his content?

By Alan Soon
Splice Singapore
Coconuts founder Byron Perry now has a paywall on his popular news website.
"I thought we’d do two things: unlimited content on a paywall, plus giveaways like a tote bag." — Coconuts founder Byron Perry. (Photo: Alan Soon, illustration: Rishad Patel)

Coconuts has been around in Asia for seven years — something of a lifetime in the mass content market. Its content, often irreverent, makes for a fun read and that’s how it built its name. It started out as a Bangkok city guide and has now expanded across multiple cities in Asia, covering lifestyle, travel and general news.

Coconuts claims two million monthly unique visitors on its sites across Asia. When you include its audience duplicated across the social and video platforms, that number jumps to 10 million.

But founder Byron Perry is done with the mass market, which he says is fueled by clickbait and Facebook’s algorithms. He now wants to build a quality, engaged audience through a membership plan.

This interview is edited lightly for flow and clarity.

When we first met some years back, you were looking to bring the business out here to Singapore from Bangkok and grow it across other countries. How’s that expansion going?

We’re in seven countries and eight cities. We launched Bangkok first, then Manila, Singapore, Hong Kong, Kuala Lumpur, Jakarta, and Bali. The last new place that we launched was Yangon in 2015. It’s a question of resources. If we had unlimited resources I would like to launch in other places.

But the thing that I realized was that when you launch a new market you’re starting at the bottom. If advertising is your Number One revenue model, you really need to get to the top or near the top.

With our current resources we can’t handle launching in several new cities, and I don’t think that would be a good strategy. It’s hard walking into a new market and building audience from scratch.

How much of your audience strategy has changed because of the way Facebook evolved its algo? It’s harder for you to build a mass audience now, isn’t it?

Facebook has always been the most important platform besides our website for driving traffic. A lot of people only check out our Facebook feed without coming to our platform.

But Facebook has always been hugely important. The peak of Facebook driving traffic was around 2015-2016. Referrals have never been more than 50% — it’s more like 35% now, so it’s decreased. After the peak of 2016, they launched videos, they prioritized videos. Then it was Instant Articles, so it was no longer driving traffic to the website.

But even with the changes to Facebook announced in January, we haven’t seen a drastic drop. In fact, traffic has gone up. That could be temporary.

The main point is that all of these changes have made me realize that you can’t build a business off Facebook, and the only constant is that Facebook is going to be constantly changing.

So you can’t set in place a strategy that has much permanence because everything is always going to change on Facebook.

But you’ve been able to ride those changes as well. When they did videos, you did videos. And now, you’re on Netflix.

Video is great. We started video in 2013. We started as a YouTube channel — it wasn’t video on Facebook. YouTube was the destination for video, and it was embedded throughout most websites. Then Facebook got going so we tried creating shorter videos for Facebook.

We followed some of the trends, and then got fed up and decided to focus on what we really wanted to do. What we think has value is longer form, higher quality stuff, totally originally produced. It may be released on Facebook and YouTube first, but we want to build off that audience to try and get deals to create videos for Netflix, iFlix, broadcast and OTTs.

Where are you on that journey with regard to revenue? Is the monetization now coming from videos, or ads on article pages?

It’s diversified, which is good. The way I split it up is by advertising, and by licensing and production.

So licensing is like with Netflix. We license them our videos. With iFlix, they commissioned that so they own it. So that’s a production. We’re really just producing that for them, but actually it’s a lot more than that because it has our Coconuts TV name on it.

So that is 70/30 in the last year. 70% was advertising and 30% was licensing and production. I want to grow the licensing production to be a higher percentage. The new membership and subscription initiative would be the third pillar.

We don’t want advertising to be 70%. Definitely not 100%. We want advertising to be a third.

Coconuts founder Byron Perry at his Singapore office. (Photo: Supplied)
Coconuts founder Byron Perry at his Singapore office. (Photo: Supplied)

I like what you wrote recently about the digital ad market being fucked up. I thought it was really honest. In the seven years that you’ve done this, what was the one thing that made you say, “This is fucking bullshit, there’s a better way.”

I don’t think there was any one thing. It was everything about the entire ecosystem — social platforms, advertisers, publishers. It’s the chasing of raw audiences; our new direction is about chasing quality audiences.

If our audience drops in half, but it’s a more engaged and higher-value audience, I think that is going to have a higher value in every way and we will be able to monetize that.

Look at BuzzFeed, which I believe you probably know better than me. It’s still not profitable and their audience size is like 400 million people on all platforms, or more. They’re absolutely fucking massive. It doesn’t get much bigger than that for a publisher in terms of raw audience. But they still aren’t profitable.

So tell me about Coco+, your subscription plan. Fifteen free articles each month seems generous. How did you arrive at that number?

It was a huge decision and it took a fairly long time. I’ve been thinking about this since November. It could go both ways. But I believe this is the way forward for publishers and that not charging something might be the original sin that publishers committed.

We were inspired by WSJ+, which is constantly giving away cool tickets, event access and prizes. So I thought, we’d do two things: unlimited content on a paywall, plus giveaways like a tote bag.

Some people just want content, some people might be excited about the benefits. Some might just want the tote bag.

We did a big survey of our readers — about 4,000 people responded last year. We asked, what are we doing right? What are we doing wrong? What would you like to see more? They all wanted giveaways — which is easy for us. Brands and advertisers are always putting these things in front of us, but we prefer they spend money with us. But yeah, we’ll give you sweet, free tickets.

In terms of the number of stories, much of the audience is never going to hit the paywall. Google Analytics says 55% of our audience is new. But we didn’t want to put it too low because people would hit the paywall and get pissed. So we wanted to give it some leeway. But we totally reserve the right to and probably will decrease the number in the future.

Coconut's Bangkok office. (Photo: Supplied)
Coconut's Bangkok office. (Photo: Supplied)

How many people do you have now on staff?

We have about 40. We’re looking to hire a few key people right now. We’re looking to hire a food, lifestyle, travel editor because that’s a really key aspect of our coverage that can be improved. We’re focusing less on virality. We’re also looking to hire a senior producer to deal with all our video productions, especially with the broadcast TV stuff.

So what do you think Coconuts could look like a year or two years from now?

I call us an online publisher or a media company. I think that what we do is we create great content, and that’s not going to change.

I just hope that in two years, we’re profitable. We’re looking to become profitable this year and we have this diversified business that has revenue streams from those three main sources — advertising, licensing and production, and a growing membership — so we’re not chasing the whims of Facebook’s algorithm or anything else.

Alan Soon

Co-Founder, CEO of The Splice Newsroom. Covering the business of media transformation in Asia. Follow Alan Soon on Twitter.

From this week

Platforms

Zuck was prepared. The Senators weren’t.

Tuesday’s 5-hour Congressional hearings showed how little American politicians understand, let alone how to regulate them. The lawmakers, who came across as out-of-touch old men, had no points to make, apart from trying to score soundbites (compare this with Singapore’s grilling of Facebook a few weeks back). They couldn’t figure out what ad tech is, how advertising works, or what data Facebook collects. Zuck seemed nervous but confident — he’s been coached by internal and external consultants on this. His team even reconfigured a conference room to look like a congressional hearing room. Never underestimate this guy’s ability to learn. Investors were encouraged by Zuck’s performance, and the lowered risk of regulation. They sent the stock up 4.5% at the end of the testimony on Tuesday.
CNN

Governments & policy

Transformations

Talent

Shen Lu left China to study journalism in the U.S. She writes perfectly in both languages.

But she finds it hard to get the career she wants on either side. She faces press restrictions in China, while U.S. newsrooms aren’t keen on hiring Chinese journalists. “If I had it to do over again, knowing what I know now, I doubt I’d make the decision to study journalism again, because the news industry—both in China and in the U.S.—seems to be a world designed to keep people like me out.”
China File

Design

A year after they jumped on, The Economist gets over 7 million viewers a month on Snapchat.

Their daily Snaps are deep topical dives into things like racial divisions, vaping, the possibility of another cold — or World — war, and office predators. The experience is true to the medium (brisk, anonymous-but-personal) but also true to the brand (highly produced, perfectly-researched, documentary-style editing). Surprisingly, some of the visual design can be downright hideous: for a timeline of sexual harassment, they choose to go with white, drop-shadowed text against a background image of a cave painting. “Others are “top-Snap only” content. These often have lots of text on them... intended to be shareable/screenshot-able primers on a topic.” Huh. The ads are programmatically annoying (I got one that promised more Instagram followers). But I love how The Economist is using the platform, as do millions of Snapchatters. This day in the life of Lucy Rohr, their Snapchat editor, is revealing, and it's the only reason I have exhumed my Snapchat app after my short-lived and bewildered run-in with it many years ago. Okay fiiiiine, I also want to Boost My Brows.
Digiday

I saw The Curious Incident of the Dog in the Night-Time at Singapore’s Esplanade last week.

The design of the production, by the otherworldly talent Bunny Christie, is brilliant, sensitive, frantic, filled with more LED wattage than a slap upside the head, and it has many more decibels than are physically available in the world. Christie, winner of a mountain of awards, is known for designing “psychology as well as space”, and she certainly redesigned my psychology for good. Interestingly, but not surprisingly, the production comes in another flavour: Relaxed. I think this is excellent design that addresses a very real need for audiences in the market for a different pace. From the programme: “Sound and lighting cues are modified to be less startling. Leaving the auditorium to take a break is fine and there is a designated Quiet Area available. There is an easy-going attitude to noise and movement, doors remain open and lights are dimmed staying on throughout the show.” Nice. Now if only life came with a Relaxed mode.
The Guardian

Notables