Former Condé Nast Editor Plans a Vanity Fair for the Substack Era

A former editor at Vanity Fair has been working for several years to create a digital publication with a business twist: Its writers will share in subscription revenue.

Think of it as Vanity Fair meets Substack, the subscription newsletter platform that has attracted big-name authors.

The new company behind the publication, Heat Media, hopes to unveil it in the coming months, four people with knowledge of the matter said. The start-up is partly the brainchild of Jon Kelly, a former editor at Vanity Fair who worked under its previous editor in chief, Graydon Carter.

If all goes according to plan, the start-up’s contributors will include writers whose contacts include the power elite of Hollywood, Silicon Valley, Washington and Wall Street. An annual subscription would cost $100 and could include a daily newsletter, a website and access to events, the people said. The publication does not yet have a name. One under consideration is Puck, the name of an American humor magazine of the late 1800s and early 1900s.

Writers have been offered equity and a percentage of the subscription revenue they would generate, the people said. It’s one of the first attempts to align the new talent economy with more traditional media institutions. Mr. Kelly has already been in talks with several well-known journalists, including Wesley Lowery, formerly of The Washington Post.

The publication would rely on an algorithm to gauge how many readers bought a subscription because of a specific writer, the people said. Mr. Kelly is recruiting some of his former colleagues, the people added.

Another novel aspect is the funding. One of the backers is the private equity firm TPG, which would take three seats on the Heat Media board, with one going to its co-chief executive Jim Coulter, the people said.

Another investor is 40 North, a related investment arm of Standard Industries, a global industrials company, the people said. David Winter, its co-chief executive, would also take a board seat. Heat Media has raised around $7 million so far, according to the people.

Mr. Kelly and TPG declined to comment. 40 North did not respond to a request for comment.

Mr. Kelly left Condé Nast, the publisher of Vanity Fair, in March 2019 and joined TPG shortly afterward. The leader of the firm, Mr. Coulter, is friends with Mr. Carter, and TPG backed Mr. Carter’s post-Vanity Fair venture, Air Mail.

The start-up’s business model is an early attempt to combine Substack’s entrepreneurial system, under which writers can make money directly from subscribers, with that of traditional publications.

For TPG, the investment is its latest in the media business. In 2018, the firm joined with a former News Corp executive, Jon Miller, to invest in the “geek culture” website Fandom, which recently acquired the gaming website Focus Multimedia. Last year, a TPG affiliate acquired the soccer site Goal.com, and the firm recently announced plans to acquire a stake in DirectTV.

The cash from the two firms would give the start-up some security when some of the biggest digital media players, such as BuzzFeed, Vice, Vox Media and Group Nine, have stumbled as the pandemic ravaged the ad industry. They have discussed taking part in mergers or going public to satisfy their early investors.

Mr. Kelly and his business partners — Joe Purzycki, a founder of the podcasting company Luminary Media, and Max Tcheyan, who helped build the sports site The Athletic — are driving toward a different idea: the creator economy. Heat Media wants to give writers a sense of agency but with the added the protection of salaries and resources.

It sees its potential competitors as the Washington news site Axios, the tech news site The Information and Vanity Fair, according to two people who have seen a pitch deck on the company’s plans.

As media businesses large and small rely more on revenue from readers, connecting a writer’s pay to subscriptions may become an inevitable feature of the industry.