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How Does Barstool Make Money? The Barstool Business Model In A Nutshell

Barstool, otherwise known as Barstool Sports, is an American digital media company with a core focus on pop culture and sport, founded by David Portnoy in 2003 in Massachusetts as a print publication serving the Boston metropolitan area. As an online publication, Barstool has a diverse revenue generation model, spanning from podcast, video and display advertising, betting, subscriptions, pay-per-view, and e-commerce.

Origin Story

Barstool, otherwise known as Barstool Sports, is an American digital media company with a core focus on pop culture and sport.

The company was founded by David Portnoy in 2003 in Massachusetts as a print publication serving the Boston metropolitan area. Portnoy had a desire to create a business that allowed him to pursue his passion for sports. He was also a keen gambler and noted the lack of online publications writing about gambling topics.

As a result, the original Barstool publication featured mostly gambling advertisements and fantasy sports projects. It then incorporated social commentary about men-oriented topics with the first online version appearing in 2007.

In 2016, The Chernin Group purchased a majority stake in Barstool Sports and the company headquarters moved to New York City. In 2020, the sports betting mobile app Barstool Sportsbook was launched.

In response to the COVID-19 pandemic, the company also released the Barstool Fund to provide financial support to struggling small business owners. The fund has already raised over $39 million from several significant donors including Elon Musk and NFL star Tom Brady.

Barstool revenue generation

As an online publication, Barstool has a diverse revenue generation model. As we will see below, much of is related to advertising in some shape or form.

Podcast advertising

Barstool podcasts represent the majority of company revenue. Advertisements are played throughout each podcast and Barstool receives a fixed fee based on how many listeners it can attract. Barstool podcasts are very popular in the United States, ranked third behind NPR (National Public Radio) and New York Times podcasts.

Video advertising

Barstool video content is also available on many different devices and platforms.

Advertisements commonly feature in these videos and the company is compensated for every impression it generates.

Display advertising

Display-ads are also prevalent on the Barstool website. However, this is unlikely to be a significant source of revenue for the company given how many users employ ad-blocking browser extensions.

Nevertheless, Barstool earns a fee for every impression.

Betting

On the aforementioned Barstool Sportsbook app, the company also earns money as a bookmaker when betters lose their money

The company charges users a commission for placing a bet. Known in betting parlance as vigorish, Barstool essentially offers less favorable odds on a single bet to ensure it wins more bets than it loses. This reduces risk and allows the company to collect more revenue.

Subscriptions

Barstool also offers a premium subscription service called Barstool Gold, giving readers access to premium content for one year ($50) or two years ($100).

Barstool Gold was made free for all users due to the coronavirus pandemic.

Pay-per-view events

Periodically, Barstool also charges users to watch pay-per-view boxing as part of the so-called Rough N’ Rowdy amateur boxing league in West Virginia. Tickets to these events are usually $19.99 per viewer.

eCommerce

The company has also developed a cult following. Colloquially known as “stoolies”, devoted fans can buy a range of merchandise from the Barstool website.

Key takeaways

  • Barstool is an American sport and digital media company founded by David Portnoy, who wanted to start a business around his love of sports and gambling.
  • Barstool generates revenue in many ways, but the bulk comes from advertising placed in its podcasts and videos.
  • Barstool also offers a subscription service giving readers access to premium content and sells a range of branded merchandise. It also manages an amateur boxing league and charges viewers via the pay-per-view model.

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Related Business Model Types

Platform Business Model

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A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Marketplace Business Model

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A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Network Effects

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A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.

Asymmetric Business Models

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In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

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In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Wholesale Business Model

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The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

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A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

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A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Crowdsourcing Business Model

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The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.

Open-Core Business Model

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While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Open Source vs. Freemium

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Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

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The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

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A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

Franchising Business Model

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In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.

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