Lessons of 2023

Small beats big

I was joking with my former colleague Jack Marshall of Toolkits that between predictions, trends, megatrends, storylines and lessons there are so many ways to dress up the end-of-the-year roundup stories that proliferate. Publishing is an execution business, there are only so many ways to dress up formats.

I decided to expand on the 2024 storylines with one that delves into big-picture truths that have emerged over the past year and will continue into the new year, a variation on the typical highlights of the year post. 

As a reminder, I’m kicking off the year with a trip to CES. The Rebooting is holding a private dinner for marketers, ad buyers and publishers. Let me know if you’ll be around the Aria and Cosmo. My email is bmorrissey@therebooting.com.

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Things we learned this year

The first newsletter I sent this year was titled “hangovers,” predicting a “less exuberant 2023.” That held up. Here’s some takeaways from another tumultuous year in the media business.

There is a human premium

Most media had a terrible year. Mass media is facing a raft of challenges, from traffic deflation to ad targeting changes to increased competition for ad dollars not just from tech platforms but also from retailers and others.

The hand-wringing over loss of trust will continue for years. The explosion of synthetic content (aka the tsunami of crap) will marginally help institutional publishers, but they will need to adapt to take more of an “open kitchen” approach to their work. That will mean journalists will need to be more open about the provenance of stories – so many negative pieces rely on information supplied by the self-interested with an ax to grind – the background of the reporters and editors, and the “priors” brought to the articles. 

That’s easier to do with humans, who are complex and contradictory and flawed. Faceless institutions tend to become blank canvases on which others project biases and slants that often don’t exist or are simply a result of groupthink and the tendency of every organization to hire people of a certain type under the guise of “culture” or “fit.” I spoke to Julia Black of The Information about how a podcast like All-In is an important part of the Information Space, with the types of conflicts of interest that would get the journalists they regularly pillory fired. 

Old playbooks are obsolete

Futurism has carved out an interesting niche policing the ham-handed uses of AI at publishers like G/O Media and Sports Illustrated. And the use of AI at those publications was clunky, gimmicky and ill-advised.

To me, the lesson was that the old playbooks, built around driving down costs to produce traffic to webpages to show ads, are obsolete. We will continue to see publishing executives who, like generals, tend to fight the last war. Most executives have a playbook they run. As one longtime exec told me earlier this year, the old playbooks aren’t working. The changes happening to publishing are structural, not cyclical. You aren’t going to growth hack your way out of the business model challenges that have emerged with the evaporation of a lot of indirect traffic.

The situation isn’t that different from DTC businesses that were build around arbitraging low-cost traffic bought from platforms. The costs rose for those businesses and made their playbooks mostly obsolete. A similar change has occurred to publishing. RIP traffic as a goal and way out. Better to focus on events and embracing models that don’t scale.

RIP scale

It’s been a decade since Jeff Bezos bought The Washington Post. He’s on track to lose $100  million. Listening to Bezos on the Lex Fridman podcast, I wish he’d speak as much as Elon Musk does. I’d prefer more conversation around the inadequacies of PowerPoint as the default corporate tool than the Beavis and Butt-head reprise. 

That Bezos has found the media business hard is instructive. It has long been a business that has bigger brands than businesses. There are far easier ways to make reliable money in the world. Media punches above its weight culturally and within power circles. It will continue to attract people who want to make media. AI isn’t going to change that. But it’s a hard business that will likely get harder. Brand isn’t much of a moat anymore.

It became clear this year that the best media business models do not depend on brokering audience attention to advertisers. That is a job done far better by Google, Facebook, Amazon, TikTok, Kroger, Instacart, Walmart, Uber and on and on. Restrictions to ad targeting under the guise of privacy and erosion of open web traffic from social and search has made this approach nearly uneconomic. 

The year ends without the disassembly of BuzzFeed, but that’s coming. When it went public in late 2021, Jonah Peretti said the digital media business needed to have a bellwether company. The market has passed judgment on these models that BuzzFeed has symbolized: The parts are worth more than the sum. Having little control over distribution is nearly untenable.

Better to be in a high-value market like Punchbowl and create media that can both attract subscriptions and high-priced advertising where tech platforms are your customers rather than competition. Then you can add a data component. That’s how you get the kind of revenue per employee numbers that are more like a tech company than a publisher.

Time to embrace more with less

In the post-ZIRP era, all businesses will need to focus more on basic fundamentals and finding ways to be more efficient. Silicon Valley sets the pace in the business world, and its sweaty embrace of slashing costs will provide a model that other companies are following. It’s why the Wayfair CEO is telling employees that the idea that he supports work-life balance is “laughably false.” Happy holidays.

Most publishing business models lack much leverage in cost cutting. The ways you cut costs tend to come down to people. It’s why 20,000 jobs have been lost in the media business this year – and why many comparatively high-priced execs have been defenestrated in Q4. Tough business.

In this context, it’s understandable that the first applications of AI will be simply to replace people. Publishing models will need to be changed so that they can generate more revenue and margin with fewer resources. Being lean isn’t going to be a choice but a necessity. Operating at a large scale is no longer a competitive advantage but more often an albatross and drag on businesses. Skip owning the waterfront and embrace a smaller future.

Smaller, more nimble players are far better positioned to deal with the roiling changes that will continue into 2024 and beyond

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Thanks for reading. I’ll have a final edition for 2023 tomorrow. I hope you have a great holiday season and after reading the last edition of The Rebooting for the year, you take time away from a computer and phone.