The return to scarcity

Value beats volume

Gen X is the last generation ever to have feral childhoods, often spent outside, as far as our bikes could take us and entertained with a limited number of records, magazines, FM radio stations and a handful of broadcast channels. Much of life revolved around scarcity, not food or fuel shortages, but the simple reality of a limited amount of options. I can’t imagine many kids with unlimited access to Fortnite, Roblox and porn spend much time hunting around the woods for a perfect stick.

I’m not one for nostalgia. I don’t particularly want to return to a time when we had no idea where we were going, ended childhood relationships if a friend moved 15 minutes away and were not consulted much for our views. The internet upended societies in profound ways we’re only now coming to terms with, but one of the most important is that we’ve moved from a life of scarcity to one of abundance – and it’s quite clearly breaking a lot of people. Binging, like drugs, is fun in the beginning but becomes a drag later on. 

I’ve long thought the type of deep jet lag that results from flying across the world is our body’s way of telling us traveling across several time zones on a regular basis isn’t natural. After all, humans existed for thousands of years mostly just staying put. I also don’t think our brains, at least those of us who grew up analog except for Atari, are meant for the sheer overabundance of information and entertainment options we now have. The internet didn’t alleviate scarcity; it obliterated scarcity, and along with it perhaps our brains. Covid just accelerated the warping. Doomscrolling was an inevitable end result, feeding a weird urge to mainline negativity. Visiting a popular news site like The Atlantic these days is a bracing experience more akin to an orientation session for the apocalypse. 

The risk for news publishers is this kind of negativity bias is effective in the short term by preaching to the choir of those who believe the “worst is still to come” in the pandemic, while alienating the pragmatic majority ready to adapt to endemic Covid and a semblance of normal life. According to the Reuters Digital News Report, the percentage of Americans who said they paid for news rose from 9% in 2016 to 20% in 2020 and has flatlined in the past year. The Trump Slump is likely a lasting phenomenon as a good portion of the country tunes out “mainstream” news entirely. According to Reuters, the percentage of Republicans “extremely interested” in news dropped from 74% in 2020 to 57% in 2021. Of all the countries listed in the Reuters report, the U.S. ranked dead last in trust with just 29% trusting news “most of the time.”

It’s no surprise that The New York Times paid a high premium for The Athletic and is aggressively expanding into games as it hunts for new subscribers.

The newfound nostalgia for the early 2000s internet – Tumblr is back! – is a classic case of remembering a simpler time when the internet was weirder, more random and less overwhelming, certainly less harrowing. Serendipity existed. The internet, at least how we remember it back then, was less adversarial, less optimized, less algorithmically organized – and there seemed to be just less of it. The knock on Twitter was it was where people went to say what they had for lunch; now it’s where people go for combat or, worse, to post endless threads of life lessons miraculously learned before turning 25. The hopes of Web3, to me, are pinned on a redo of the promise of the internet. The artificial scarcity of NFTs is easy to lampoon by right clicking on someone’s cartoon ape, but the shift to scarcity is worth noting. Nobody wants to go back to maneuvering rabbit ears to try to get Channel 17’s to show Gilligan’s Island. But I get the sense that many people want less but better when it comes to media. News organizations that take the time to listen to their audiences find that their needs are rarely for “more content.”

I’m fascinated by the backstory of Worldle and how it took off despite skipping the typical growth hacks employed by games to “go viral.” It was made as a gift from a programmer to his partner. Three is only one game per day, there are no ways to “level up” with some in-game currency or sharing incentives built in. Worlde developer Josh Wardle found that scarcity ended up helping.

“The breakthrough, he said, was limiting players to one game per day. That enforced a sense of scarcity, which he said was partially inspired by the Spelling Bee, which leaves people wanting more, he said.”

Digital publishing has long been a volume game. The overabundance of the internet meant that the supply of available ad impressions would always outstrip the demand. Publishers and platforms could manufacture impressions – just paginate or add more placements to a page – and combined with ad targeting meant that the value of a publisher ad slot plummets. The only way to make up for that is to create more ad slots, either more ads on the page or more pages – hey, why don’t we do both? And the end result has been an unmitigated disaster. Never has more information been produced and yet people seem less informed  and less content than ever. 

It’s telling to me that many of the new crop of publishing startups are hanging their hats not on cranking out large volumes of content – Huffington Post once bragged of putting out 1,600 pieces a day – but providing context to sort the important from the ephemeral. The success of The Information, for instance, proves that you can create value without massive volume.

Similarly, newsletters have taken off because, by and large, they have scarcity. Most Substacks are weekly. The data shows that increasing the volume of newsletters isn’t the greatest tool for driving more subscriptions. Weirdly, making better newsletters does that job, even if they’re less frequent. But the impulse is always to create more email. Sending another email doesn’t add any extra cost.

Just as the financial markets are correcting after a period of unnatural growth spurred on by pandemic-driven monetary policy, the subscription market is due for a reset. In streaming, Netflix set off alarm bells with lower-than-expected subscription growth. Turns out just continuing to pour money into more content has hit its limit. That means the main lever for growth is going to be hiking prices. That will just quicken the shakeout as people pare down their subscriptions. This isn’t a Netflix issue; it’s the entire category, likely driving consolidation among the absurd number of streaming services. (Does the world need a Sundance Now streaming service?) The same reckoning is due to hit publishers that have relied on the relentlessness of the Trump news cycle followed by the relentlessness of Covid to roll up big numbers of subscribers on cheap introductory deals that balloon in cost. That sticker shock, particularly at a time of high inflation, will cause higher churn. George Montagu of FT Strategies noted the dilemma.

“During periods of growth, it is very easy for organizations to get carried away with acquisition tactics – whether it's a new paid-media strategy or a change to a dynamic paywall. While these optimizations are important, they often draw focus away from the more existential questions: How can we make our product more valuable for our readers? How can we build long-term relationships with our subscribers?”

A lot of publishers talk about “quality over quantity,” but they tend to fall back on the latter when push comes to shove. Doing fewer things better comes with tradeoffs. You need a solid business model that ensures enough people will pay you or have value to advertisers and are hard to find through algorithmic ad platforms. (Ideally both.) That’s why so many publishers are focused on a “high-value audience” of elites and influentials. It also takes patience and fortitude. There’s no compression algorithm for quality. You can’t growth hack your way there like you can with distribution, and many running publishing businesses don’t truly understand how hard is to create quality content consistently because most running these businesses have never done it themselves.

The quantity of audience data doesn’t matter much if the quality is not up to par. Audigent allows publishers to future-proof their businesses with a first-party data platform that provides an omnichannel view of their customers and drives advertiser demand. The power is shifting back to publishers that can serve as the “source of truth” for media buyers, combining the best of both audience and contextual targeting through its proprietary five-point cookieless identity system. Audigent’s Hadron ID provides the ability to target audience groups across distributed publishers and SSPs in order to deliver the right message to the right person at the right time. Now and into the cookieless future, Hadron ID is a publisher’s secret weapon to make their audience data and inventory actionable to media buyers at scale.

5 things to check out

Politico looks ahead to the future of the news business, and unsurprisingly finds a very mixed bag. One prediction that stood out: Former Time editor Richard Stengel believes the news business will cleave between the rich Haves and the not-rich Have Not’s, with quality, expensive news for the former and sensationalized claptrop for the latter.

The transition from the third-party cookie is a total mess. It’s also exposing the ludicrousness that Google is pretty much in the position to dictate a major part of the industry’s future. Can’t make Google feel great with antitrust scrutiny rising – and explosive allegations regarding its stranglehold on digital ads. 

Bloomberg now claims 360,000 paying subscribers after adding 100,000 the past year. It’s an impressive volume, although there is no mention of how many of those subscribers are on a sweetheart intro offer or other steep discount. I wish publishers were required to disclose average revenue per subscriber if they want to brag about unaudited subs numbers.

Less is more in subscription features too. Jack Marshall details why throwing the kitchen sink of benefits out there – we used to joke about the Sports Illustrated football phone commercials – loses its luster in the long run. I don’t know why people overcomplicate things: Do a few things but do them well.

The jig is up for platforms to keep nearly all the upside for the attention brought to them by creators. Hank Green, who I remember being at the forefront of pushing YouTube to cut in creators, calls out TikTok for lagging far behind… YouTube. For all the smoke and mirrors of the creator economy, there is a needed shift in rewarding the value humans bring to platforms rather than act like algorithms are alchemy. 

Thank you for reading all this way. Please send me a note with your thoughts and what’s on your mind. My email is bmorrissey@gmail.com.