Saturday is the Preakness Stakes, the second jewel in the Triple Crown. Orb, who won this year’s Kentucky Derby, is the favorite by far, and come Saturday, tens of millions of dollars are likely to be wagered on the event (Preakness’s "handle," or amount bet, was over $80 million last year). A significant, growing fraction of that money will be bet online—and a significant, growing fraction of that will be bet through a website you’ve probably never visited: DRF.com.
Daily Racing Form is a 118-year-old brand; the core of the business has long been a daily newspaper that sells for $7.50, 364 days out of the year. Ever since John Hartig took the helm at DRF at the end of 2008, he’s been transforming the storied brand into a new type of media business: one that makes its money not by selling ads or subscriptions, but largely by selling its readers other services, like the option to place bets through the site.
While betting on races declined during the recession—there was $14.7 billion wagered in 2007, versus $10.8 billion in 2011—online betting actually grew during the same period, from about $1.5 billion to $2.5 billion. Hartig began to realize that DRF wanted, and deserved, a piece of that market.
So Hartig made the aggressive decision to enter the online betting space. "Think the Wall Street Journal meets E-Trade," he says. What if a reader of WSJ.com could take the financial wisdom she gleans from those pages and buy stocks directly through the site? Visitors to DRF.com can now do something analogous: place bets based on the reporting and commentary from DRF’s editorial staff, directly through the site.
To accommodate this new vision, Hartig flipped DRF’s editorial strategy on its head. Whereas before, reporters were filing news by 5 p.m., so the next edition of DRF could report on what had happened the day before, Hartig now wants to have copy in by 5 a.m.—speculating on who the favorites are to put money on in the day to come. Throughout the day, too, his reporters are filing, tweeting, and streaming video from the tracks, helping gamblers make informed decisions. "As the day's unfolding, people may see the weather change, or that the track is sloppy, and suddenly that 20:1 long shot is looking like a 5:1 sure thing," explains Hartig. Call it the Bloomberg Terminal of horse racing.
For the past year or so, Hartig and DRF have given away much of this coverage for free online. But as DRF pivots into even more specialized coverage designed to help gamblers improve their ROI, Hartig has come to feel he’s offering a valuable service for which users should pay. In July, DRF will launch a paid content area of the site. "It will piss off a lot of folks," he acknowledges. "But it costs a lot of money to invest in this editorial, and in the technology to give you real-time information."
It’s in large measure a play to get loyal users of the other online gambling sites to switch their accounts over to DRF; DRF’s main competitors in the online betting space are TwinSpires.com (owned by Churchill Downs, home of the Kentucky Derby), TVG.com, and Xpressbet.com. "If you’re a DRF Bets customer with a funded account, I’ll give [access to paid content] to you for free," says Hartig. Paid subscribers to other DRF products and services (a "Stallion Roster," anyone?) will also have access to the site’s paid content for free.
To what extent is Hartig’s gambit an example publishing at large can emulate? He acknowledges that the fact that horse racing is the only legalized form of online gambling means there’s something of a "regulatory moat built around the business." Still, should media companies largely get into the business of selling the things they write about?
Hartig sees a trend in the opposite direction: namely, that the people who are selling things are investing in editorial content to stoke the flames of demand. The Wall Street Journal doesn't sell stocks, but he notes having spotted editorial content on the sites of E-Trade and Charles Schwab; likewise on the sites for Walmart and Amazon. "You’re seeing this real blurring of online players," he says. Some content providers are building commerce platforms; even more commerce platforms are building out editorial content—or trying to. "Commerce guys think content’s easy...it’s really not. You need to have an editorial culture," he says, since readers and consumers "do see through bullshit."
Hartig has long believed, though, that publishers should be thinking more directly about how to monetize their audience—and not merely through advertising. "Advertising, I don’t care much about," he says, noting that just 10% of DRF’s revenue comes from selling ads.
"Most publishers don’t think that way," he acknowledges. Most try to sell subscriptions, and ads. "My view has always been to find an audience and attack that audience, serve them great content to earn their loyalty, and then figure out what to sell them."
He warms to the idea: "The content allows you to create a business to sell people stuff. Some of it’s content, some of it’s products, and some of it’s services. It’s pretty simple in the scheme of things, but most folks can’t get out of their own way."
And he's off!
[Image: Flickr user Paolo Camera]