The unbundling of publishing (2/x)

The archetypes of sustainable media businesses

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Thanks for the podcast producer suggestions. I’m hoping to have the show up and running in the next month. This week, in the second part of this ongoing series about the unbundling of publishing, I’m taking a look at  what models will emerge during a time of a lot of change. But before that, here are the big trends going on right now that I think will shape these archetypes of sustainable media models. Check out the first part here, and if you’re not already a subscriber, please sign up to get The Rebooting every Wednesday. 

The archetypes of sustainable media businesses

Last week, I went over the various changes happening to publishing that added together will result in a fair bit of creative destruction in the industry. Many current models are strained. These are the principles I think will gird the changes already underway.

• New economics. Across the entire economy, we’re seeing a shift to address the persistent inequality across society. The backlash against CEO pay has returned. Unionization is spreading. Taxes will likely go up on passive income derived from capital. Basically, the pendulum is swinging back to work over moving money. In publishing, that means we’ll see a clearer link between those creating the products that drive much of the value in media with the returns. New forms of ownership will emerge with concepts like Decentralized Autonomous Organizations.

• Business model alignment. The shift to subscriptions is a needed alignment, however imperfect, of the quality of the product with the quality of the business. Many times in indirect models, publishers have business models that work against the interests of the audience. The utopian ideal remains a business model that improves the product. You could argue that Google pulled this off in early paid search (before half of results pages became ads) by designing an ad system that, in theory, improved the product.

• Personalized media. When people in media talk about personalization, they tend to think about algorithms that will put different pieces of content in front of people. Even more often, they’re really just talking about targeting ads. We’re seeing new forms of media emerge that are tied to actual people rather than an antiseptic corporate brand. The success of podcasting and newsletters are a testament to their uniquely personal effects. Listening to a person’s voice, getting email from them -- these are more personal forms of media that narrow the gap between the creator and the community. 

• Lowered infrastructure costs. The current debate over the infrastructure bill hinges, in part, on how you define infrastructure. In my view, the Biden administration rightly considers people an essential part of infrastructure. So it is at publishers. The many functions a publisher must perform leads to high infrastructure costs. For all the complaints about Substack’s cut of subscriptions revenue, it drastically lowers the infrastructure costs of running a publication. More platforms are emerging that can suck out costs and allow more money to go directly to those creating value for their audiences and communities.

I don’t mean this as an exhaustive list of the types of sustainable media companies. There are a lot of ways to make the business work. But these are areas I think we’ll see the most growth.

Collectives/micro media. Many focus on the solo practitioners heading off to Substack, but there is a limited market for those personal brands. Few will be able to pull off the solo act. Right now, the conversation typically presents a false of choice of being part of a typical publishing company as an employee with a set salary and benefits or creating what’s in effect a small business. Companies Every.co, Defector and The Dispatch are all different, yet they’re trying to establish a model that allows both the personalized aspect of individual newsletters with the advantages of a mini-bundle. Banding together means spreading infrastructure costs -- and allowing for ownership to those creating value with their content. The latest to try the model: Creative Kitchen.

Solo acts. Substack might not live up to its billing (or valuation). There is no denying, however, that the company has accelerated the unbundling of publishing by proving that individuals can break off on their own, enjoy more freedom and upside and publish on their own terms. What’s more, Substack has proven out the attachment that people can engender with their followers/audience/community. Those dismissing the Substack phenomenon will likely be proven wrong, just as the naysayers were off with the blogging boom. People get too caught up in the culture war stuff from popular newsletter writers. But people like Casey Newtown at Platformer are building solid journalism products -- Casey has the background to Basecamp’s sudden no-politics-here decree.

Commerce and products. One of the most exciting trends in publishing has been the rise of commerce/affiliate business lines. Beyond the new source of revenue, commerce has proven that new forms of monetization allow publishers more control over their businesses than normal advertising. Sports media is in the midst of being revolutionized thanks to the rise of legalized gambling. The success of Penn National’s with Barstool has led DraftKings to start building out its own media operation, including a new $50 million deal for the rights to Dan Le Betard’s podcast. Media will be used increasingly to develop products -- I love that a podcaster developed a new pasta shape -- and by product companies as a more efficient way of customer acquisition. Overtime has an ambitious plan to turn its big social media audience built on the back of Zion Williamson high school warm up dunks into an entirely new basketball league.

Scaled intent. Media is a hard business, but it’s also a profitable business at many companies. The focus on the big digital media darlings often overshadowed quietly successful media businesses that are focused on helping people solve problems. Companies like Dotdash, Red Ventures and J2 are very profitable. We’ll see them move up the food chain as they use their strong balance sheets to acquire others who aren’t as efficiently run.

Corporate media. This is a term like fake news. I’ve noticed the anti-journalism tech crowd likes calling publishers they don’t like “corporate media.” To me, corporate media is a broad category that encompasses media built as a marketing vehicle. It can include the publishing efforts of venture capitalists like Andreesen Horowitz as well as ancillary media properties, like Mailchimp’s Courier magazine and Hubspot’s purchase of The Hustle. I’d expect more of these deals. There isn’t much reason why Shopify shouldn’t have a publication devoted to entrepreneurship.

Modernized B2B and prosumer. For decades, business-to-business media was a backwater. But the dynamics of B2B -- readymade communities, diverse business models -- well position it to evolve. The success of publishers like Industry Dive, Skift, Digiday, The Business of Fashion show the opportunity to build sustainable media, particularly when subscriptions can be expensed. We’ll also see the continued blurring of consumer and professional media. After all, Politico proved the power of focusing on regular people into politics and marrying it with deeper, vertical products that provide a B2B business model. Both Web Smith at 2pm and Paul Munford at Lean Luxe straddle these sides.

The rebirth of local. Solving the local news problem is the hardest of the hard problems. The winnowing of newspaper newsrooms has hurt society, without a doubt. Getting news from Facebook and Nextdoor is a good way for democracy to truly crumble. It’s still early, but the efforts of companies like 6AM City, Axios and many others are making progress. I want to dig into the particular issues in local more. The real test will be whether these newsletters can move from aggregation and into original reporting with enough depth to have real impact.

That’s all for the week. Please share this with others you think would enjoy it. And reach out with any feedback.

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Closed ecosystems continue to grow their ad share

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Key takeaways:

• Pandemic shifts in consumer behavior to digital and social commerce, as well as streaming, will become the new norm.

• Data shows pent-up consumer demand that should translate into a booming economy once pandemic restrictions fall away.

• Advertisers need to adopt an omnichannel approach in order to continue to communicate with consumers on their own terms -- and to be able to track and improve their disparate campaigns.

Mediaocean has created an infographic that tracks the year of closed ecosystem spending. Download it here. 

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Other things to check out

The Daily Beast has nine open positions. That a classic middle-tier digital publisher is expanding like this is a sign that the coming economic boom will end up leading to labor shortages. 

Former Facebook and Amazon exec Jeff Rose has a good thread about building a career and the mistakes he’s made. The biggest one: chasing titles. The true key is growth.

I’m continuing my mission of trying to understand the underpinning of crypto. This is a good rundown of a truly wild podcast Tim Ferris did with Balaji Srinivasan. Once you get past his Silicon Valley victimizing about The Media, he lays out a provocative case for Web3 and the “pseudonymous economy.” Also, check out Dave Nemetz’s exploration of implications for the media business.

Digiday’s Kayleigh Barber turns the tables on Insider with a story inside their fights over metrics for assessing the work of reporters. I’m sympathetic to the attempt to come up with a quantitative guide -- and, of course, marrying it with basic qualitative measures -- but I’m not sure these “goals” are worth the trouble.