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.

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

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.

Today, I’m continuing to look at the storylines of 2024. We discussed some of these, in addition to others, on this week’s episode of People vs Algorithms. Get PvA on Apple, Spotify or other podcasting platforms.

First, a reminder if you haven’t already to check out The State of Publisher Subscriptions, a research report The Rebooting did based off of a survey of over 200 publishers. One key finding was that while getting new subscribers ranked as a top priority, churn was tabbed as the top looming trend in subscriptions. Inevitably, the maturation of these businesses mean that the focus will shift from top line growth to driving higher revenue per subscriber, as the Times is doing with its bundle strategy.

Get the report

Storylines of 2024

I’ve never been a fan of predictions – they’re usually exercises in throwing darts in the dark – and instead favor storylines because changes are usually gradual and come in the form of accelerations rather than sharp breaks that are nearly impossible to see ahead of time. Here are five storylines that I think will emerge in the media business in 2024, with five more to come on Monday.

Platforms and publishers strike new deals

This is an addendum to last week’s piece about platforms and publishers breaking up. The announcement that Axel Springer cut a deal with OpenAI will become the norm in 2024, as AI models realize they are in a mostly untenable situation with their use of publisher content in their large-language models. Sure, they’ll find lawyers to argue the other side – amazingly, if you have tons of money, you will find a ready supply of lawyers to forcefully and effectively advocate for your position – but the mood is anti-tech in many ways. This isn’t the social media era. So new deals will be struck, and they’ll be in some ways a return to publisher platform dependence. The difference will be this will be more akin to alimony payments in the form of content licensing. The overall picture will remain that publishers cannot pin their futures on the good graces of giant tech companies who have shown time and again that their interests usually don’t align with publishers’.

Mass media continues its decline

The decline of mass media is like most massive changes: it is happening gradually and then all at once. Look at TV. The streaming wars are over. Netflix won. Cable TV is a wasteland. And linear TV overall has become a delivery device for live sports and, in the case of cable news, of pharmaceutical advertising. That isn’t coming back. In news publishing, in a fairly resilient U.S. economy in 2023, publishers have shed 20,000 jobs. Unfortunately that “rightsizing” will continue in 2024, as publishers adjust to a more-with-less era. This will be eased somewhat by the inevitable economic rebound that’s bound to come with interest rates easing and cyclical events like the U.S. presidential election. The return of the Trump Show should help to a degree, but the novelty has worn off, so I wouldn’t bet on any Trump bumps, even if he keeps musing about dictatorship. Like ad creative, there’s a wear-out point.

Individuals step into the void

Call them creators, influencers, Substackers or, God forbid, B2B influencers, but the replacement of mass media will be individuals. The most promising brands will continue to be those that put individuals front and center, as the Tsunami of Crap from AI comes ashore and trust continues to erode as legacy publishers in their death throes keep doing dumb stuff because they’re operating outdated playbooks. This shift is exacerbating the old internet boogeyman of fragmentation, which always, always, always benefits centralized tech platforms. The biggest unsolved conundrum of digital media will continue to be how to embrace the good of fragmentation – who exactly is pro-gatekeeper? – without the side effects of it leading to the need for centralized platforms to control distribution. The idea of being truly independent of platforms as any kind of content creator is a myth. But publishers, big and small, can mitigate that dependence through “controllable audiences’ via newsletters, podcasts and even the homepage.

Advertising loses its luster

Let’s be clear: advertising isn’t going away, it works and it will be with us for as long as capitalism persists. That aside, the digital advertising economy is changing. The shift away from a generation of cookie-based ad targeting techniques will inevitably shake up the industry. What’s more, reliable distribution channels like search will continue to get less reliable. Publishers will continue to rebalance their businesses away from a dependence on attracting users to webpages to show them ads. That will soon sound incredibly outdated. That doesn’t mean publishers and brands will stop working together, only publishers will focus more on events and activations, as well as unique ad categories that don’t pit them up against tech and retail media platforms that are going to win any fight on who has better first-party data for driving a transaction.

Web3 makes a comeback

Now that my crypto holdings are in positive territory, I can forgive Troy for convincing me to explore crypto in the first place. After the crypto winter and SBF and CZ and the monkey JPEGs, many sensibly moved on from crypto entirely. But the industry hasn’t gone anywhere. Like the dot com bust, the industry shed some of its silliest elements – ok, many remain – and has continued to evolve. For better or worse, crypto is driven by sentiment that’s tied to prices, and as the prices go up, attention will return. Web3 will make a comeback, likely with more sober and workable solutions than the first time around. I’ll be interested in how the blockchain and tokenization can be applied to media business models. Many of the shifts listed above add up to the need for new paradigms, and I suspect crypto will emerge as a possible path.

We discuss 2024 storylines and more on this week’s episode of People vs Algorithms, available on Apple, Spotify and other podcasting platforms.

Thanks for reading. Send me feedback by hitting reply. 

First up, a message from BlueConic.

In collaboration with BlueConic, The Rebooting surveyed over 200 publishers to understand the progress they’ve made in implementing audience-first subscriptions strategies. The findings are part of The State of Publisher Subscriptions report. Included in the report:

• The strategic goals publishers identify for their subscriptions programs

• Expected growth rates for 2024

• The biggest challenges publishers face with subscriptions

• How well integrated subscriptions are with other revenue lines

Get the report

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Normal Gossip is by most measures a breakout podcast. The Defector Media podcast, now in its fifth season, draws 450,000-600,000 downloads, it does live tours that sell out 750-capacity venues. 

And yet, as one media executive pointed out at a dinner The Rebooting held recently, Normal Gossip is also a small business. It has 4,000 subscribers to a paid tier and overall podcast revenue, along with events, at Defector amounted to $750,000.

So it goes for podcasting, which over two decades has existed as an anomaly of digital media. Most of the open web was swallowed by giant platforms and micro-targeted advertising. Podcasting has proven resistance to that, as evidenced by Spotify’s stumbles to build a podcasting juggernaut despite every advantage possible. Apple has treated podcasting with the urgency you’d expect a business that’s a rounding error. Ads are hard to target, hard to measure and hard to automate. 

Celebrity star power hasn’t much translated. The most famous podcasters are homegrown to the medium. Narrative podcasts, which proliferated after Serial, have proven difficult to make work within the reality of podcasting economics. The beauty of podcasting is the low cost of entry; it’s also a necessity because the revenue ceiling tends to be lower.

Yet for all its failings in efficiency, podcasting has plodded along as arguably one of the most vibrant areas of digital media expression, an antidote to the algorithmic chum that’s clogged search engines and YouTube. The knock on podcasting is discoverability, yet that’s also a way of saying podcasting isn’t ruled by a dominant algorithm. There’s little optimization in podcasting, so creators are more likely to try new things instead of spending most of their time trying to reverse engineer distribution. Normal Gossip itself is a show concept – “juicy, strange, funny, and utterly banal gossip about people you’ll never know and never meet” – is a show concept that’s hard to imagine in other media.

I’ve found over the years of podcasting that it creates a human connection that’s rare. Podcasts trend longer at a time when most media is going in the opposite direction. 

That depth of audience engagement doesn’t easily translate to spreadsheets and the scale-focused digital advertising system, but I’d argue it has more enduring value than the fleeting impressions that have propped up much of digital media. 

The coming tsunami of crap from AI will disproportionately affect text-based content. The inevitable humanist reaction to this onslaught of synthetic content should benefit podcasting, even as it is now in one of its regular down cycles. 

On The Rebooting Show this week, I spoke to Matt Reustle, CEO of Colossus, a business-focused podcasting network that’s home to Invest Like the Best, Business Breakdowns and Founders. Matt also hosts a media business podcast I recommend: Making Media. 

“To me, it's the highest trust media. Everything else now lacks nuance. There are shorter attention spans. Where do you actually get time to hear someone talk about opinions that aren't scripted? It is a proper back and forth conversation, not just a bunch of us talking at one another on Twitter.”

We spoke about why podcasts excel at nuance, the business models underpinning the business, and why subscriptions haven’t yet become as widespread in podcasts as other digital media formats.

Recommendations

Cheddar fire sale. There are two ways to look at the rise of Cheddar. One is Jon Steinberg did a masterful job of relentlessly willing Cheddar into existence and a maniacal focus on cutting distribution deals everywhere from nail salons to gas pumps. He also got the timing right, selling to cable operator Altice for $200 million in 2019. The big exit stood in contrast to BuzzFeed, where Jon was on the side of selling to Disney for 10x BuzzFeed’s current market cap. Always know the top. The other way to look at it: Cheddar never truly had a loyal audience and Altice clearly had no idea what to do with it, as evidenced by its “advanced talks” to unload Cheddar to a PE firm for no money and a coupon on a future transaction in the form of an earnout. This is a rough market. (CNBC)

SI’s new owner cleans house. Speaking of two ways of viewing a story, Sports Illustrated's new owner, Five-Hour Energy founder Manoj Bharga has continued executive  bloodletting by taking out Arena Group CEO Ross Levinsohn. This follows a pair of top executive firings. All this comes in the wake of one of the first mini-scandals of the AI era when SI used outsourced commerce content shop AdVon to publish pages with AI-generated content and fake author profiles. The obvious conclusion is to draw a straight line, but the reality of business is a crisis is a terrible opportunity to waste. It can provide cover for a new owner to unload a bunch of expensive execs with his own people. New owners of underperforming assets by rule aren’t going to have a high regard for the existing management team (or PowerPoint for that matter). The press release using “termination” in the headline is a sign that not all was well. Bhargava is now interim CEO – and I would highly recommend against walking him through a deck. (Futurism)

Upday’s pivot to AI. Axel Springer poured a lot of resources into Upday, a global news aggregation app it launched in 2016 when news aggregators like Circa were having a moment. The twist was Upday had distribution baked in with a deal to come pre-installed on Samsung phones. Springer is pulling the plug on this vision, shifting instead to – surprise! – AI. That means gutting the service of many of the humans. Sounds more efficient, but I have yet to understand how these pivots to AI are creating better products. Upday had six years to figure out product-market fit; how can applying AI get that done? (Reuters)

Media’s annus horriblis. The team at MediaVoices is out with their annual Media Moments report, a reliable roundup of the big themes of the year and a look ahead to storylines of 2024. Of note: A growing focus on battling churn in subscriptions vs racking up big numbers of subscribers through intro offers. (MediaVoices)

The Humanist Renaissance: “My sense is that culture in the next few years will involve scoping out this Humanist Renaissance. I harp on and on about “conventions,” but they’re key to our humanist revival: The most human part of humanity is not our animal instincts nor our computer-like rationality, but our mutual social creation of meanings and values around arbitrary choices.” (Culture:)

Media always goes first. A general rule of thumb for disruptive technologies is that the media business goes first. That’s the case with AI. The 2024 Awards Trend Report digs into the promises and anxieties of AI across productivity, personalization, imagination and social impact. (The Webby Awards) 

Thanks for reading. I have another couple issues of the year before taking a bit of time off to recharge for 2024.

I’m starting the year off by heading to Las Vegas for CES. The Rebooting is partnering with Outbrain and Adelaide to put on a private dinner there on Thursday, Jan 11. We are getting together a group of agency, brand and publishing executives to discuss the outlook for the media business in 2024. Send me a note by hitting reply if you’re interested in joining. We have limited capacity, and the dinner is limited to brand, agency and publishing executives.

Before I get to that, a quick reminder to check out the recent report The Rebooting did in collaboration with BlueConic about the state of publisher subscriptions. Without a doubt, the weight of the publishing industry has shifted from advertising as a bulwark of business models to subscriptions. That adjustment is both profound and messy, as publishers reorient to be consumer-focused businesses and learn to integrate their various revenue streams into a single coherent strategy.

Get the report

Splitsville

A publisher told me of a fascinating negotiation recently: The publisher was in discussions with a tech giant that is readying the release of its own large-language model to license its corpus of content for under $5 million. In the short term, this would provide a tantalizing revenue infusion after a rough year at this business, and most consumer publishing businesses. 

Such payments would put pressure on other competing LLMs to CTC (cut the check), as 2024 looks to become the year when the acrimonious marriage of publishers and giant tech platforms heads for a divorce. Consider:

• The drumbeats continue for regulatory capture relief. Australia and Canada have provided a blueprint for publishers to turn to relief from governments. Google and Facebook have pulled back on its journalism-support programs because they didn’t work. They cut the checks, didn’t feel like they got much in return for those cocktail parties at Campbell Brown’s apartment.

• Silicon Valley and news are in a culture war. Elon Musk is representative of a constituency within tech that sees The Media as enemies. I used to believe this was mostly posturing; I’ve now decided to take this crowd literally and seriously. The e-acc vs decel civil war will lead to the development of a parallel tech-friendly media ecosystem to serve as a counterweight to the perceived bias of The Media. The tech platforms have moved on to AI; publishing in general and news in particular is a nuisance 

• The traffic currency is devalued. Tech platforms and publishers had imperfectly aligned interests. Google and Facebook controlled distribution through search and social media, getting free access to professional content to keep people engaged and fuel their big ad businesses. In return, publishers got lots of traffic they could monetize. That’s going away already, with about half as much traffic coming to publishers from social media in the span of three years. ChatGPT and infusion of AI in search will accelerate the decline in search referrals. 

• The scale model is over. It’s hard to find a publisher outside of an arb chop shop that’s seriously yoking its business model to the good graces of platforms. BuzzFeed’s own publisher admitted that the entire premise of publishers amassing large audiences off the back of platforms was fatally flawed. “The value of distributed-only audiences, has been rapidly diminishing, and now it’s approaching zero, and some might argue that its value is in fact negative,” Dao Nguyen wrote in a departure note. The coming tsunami of crap won’t improve the outlook. I can’t think of a publisher who still believes in this approach that was until quite recently believed to be the future. Publishers will instead focus on what Hearst’s Bridget Williams calls “controllable audience” through newsletters and direct traffic.

• Advertising is out of favor. The digital ad market is undergoing vast structural changes from ad targeting restrictions that mostly serve to benefit non-content publishers with vast stores of data to be applied to digital ads. The rise of retail media will serve to erode even more the share publishers reap from the digital ad market. Advertiser block lists make ad-funded news an uneconomic activity. Even a traffic juggernaut like The Daily Mail, which unlike most publishers commands enviable direct traffic, is exploring subscription models. Publishers would rather be in the ad agency business than rely on making money from display ads on webpages.

Divorces are reliably messy, and the publisher-platform relationship was fraught from the start. There will always be ties between publishers and tech platforms, of course, but publishers will need to forge an independent path to gaining control over their businesses. Too many years were wasted moaning about how unfair it all was. There will be ham-handed attempts to “leverage AI” that are ripped out of the playbooks of the past, but more examples will merge of smaller but more durable publishing business models 

Recommendations

Racquet’s struggles: Racquet is an elevated take on a sports magazine, focusing as much on the cultural aspects of tennis than who is set to dominate the next stop. It struck me – yes, I know – as an ideal fit for an agency services model that uses the media as the front for what’s in essence a marketing services business. But as always, media is an execution business – the good ideas are all well known – and the more-with-less era prioritizes both discipline and sequencing growth. (Defector)

Web3 media returns: If you thought the Bored Apes meant the end of Web3 talk, think again. The yearlong run-up in crypto prices means web3 will inevitably get new momentum. Decrypt, one of the leading chroniclers of crypto, is merging with “decentralized media” company Rug Radio to form a new entity that’s devoted to finding crypto-native business models for content – and yes, a token is involved. (Axios)

Deprioritizing ads: The writing is on the wall for media business models that rely primarily on display advertising. For conservative media — Carlson is a veteran of advertiser “boycotts” — the shift is all the more pronounced. Tucker Carlson is launching his new media company with subscriptions at the center, charing $72 a year for “founding members.” (WSJ)

Stepping off the career treadmill: “It took getting run over to figure out that I was making myself deeply unhappy. I was never satisfied. I had set myself up so that I could never, really, succeed. Because every time I succeeded, I found a way to sabotage that success, to suggest that it was less than it actually was. That someone had more success, and therefore, in the zero-sum game way I looked at the world, I must have less success.” (Chris Cillizza)

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The decline of mass media

It was somewhat fitting that Forbes did the job of unmasking Beff Jezos, the anonymous X account that became the avatar of a strain of techno optimism called e-acceleration, or e-acc. It is positioned as the antidote to effective altruism, the creed espoused by Sam Bankman-Fried and now lumped in with all kinds of supposed enemies of progress, from AI safety researchers to possibly George Soros. 

Forbes itself is an avatar of Old Media, a now faded magazine era star, with an aggressive business model that, like it or not, embodies a lot of what many legacy brands need to do. The profile of Beff as Guillaume Verdon, a quantum computing engineer, is interesting and pertinent. After all, if we are to take the high priests of AI literally and seriously, they are on the cusp of remaking society. We should know who they are, what they believe and what they want.

Beff has become an influential figure, far beyond their 67,000 X followers. Influential people subscribe to what Beff’s goal “to increase the scope and scale of civilization as measured in terms of its energy production and consumption.” Along the way, they aim to “solve culture through engineering” with a memeable religion that worships technological progress. 

Depending on your persuasion, this sounds inspiring or completely ludicrous, but The Information Space is filled with these kinds of characters: individuals who on their own hold incredible sway, even if they’re anonymous social media accounts. Look at what Lit is building with Litquidity. The information Space will only accelerate, as AI tools flood the zone with synthetic content. The existing loss of trust in institutional media will accelerate, even if by no fault of its own. There are too many operators in the Information Space with vested interests to decry the influence of institutional media.

The transition from analog to digital was rough for publishers, but the deconstruction of mass media is likely to be far more painful, with far more casualties. The continued fallout at Sports Illustrated from its ham-handed use of AI to create SEO chum is indicative of the pickle publishers find themselves in. On a recent episode of People vs Algorithms, Troy defended the attempt to “augment” humans as inevitable if not executed to perfection. Maybe. Seems the 5-Hour Energy guy doesn’t agree, since he blasted staff: “The amount of useless stuff you guys do is staggering.” (He also goes after PowerPoint, and I see no lies.) Two top execs have departed. 

There’s a larger issue here than vendor selection. We are on the cusp of a tsunami of crap being unloaded on the world. The trust issues that persist will grow far worse. Of all the set of bad choices, I can’t think of a much worse one that to try to compete on this front. Simple economics are that as the supply of fake stuff goes up, the value of the real should go up as it achieves a degree of scarcity. 

The Information, which celebrated its 10th birthday this week, is a good example. Tech journalism has gone through vast changes since Jessica Lessin launched the publication. It was clear about its differentiation by relying on well-reported scoops. People will need and value reliable information, particularly when it's about lucrative business sectors. That’s not going to change. 

I can understand trying to extend the pageview game for as long as possible and lean on updated playbooks from the scale era of churnalism. That said, it’s hard for me to see a long-term workable model that puts at its center the act of attracting visitors to webpages to expose them to advertising. That will be a shrinking part of just about every media business model. 

Instead, many publishers will need to confront the need to get smaller and more focused. The year of efficiency has given way to a more-with-less era. The Information Space will mean far more publishers, with far different businesses. Better to look at the situation prior to mass media to understand the direction we’re heading. In 1850, for instance, America had a newspaper for every 9,000 people. And that was with the need for an expensive printing press. Now do that with AI. Publishers need to prepare for a world of infinite content, and the inevitable effect that has on marketplace dynamics. 

Elon Musk isn’t wrong when he talks about X as a competitor of institutional media. Everything and everyone competes for attention and influence in the Information Space, whether a legacy magazine brand, newspaper, newsletter, degen X account, full-stack creator, you name it. 

Verdon is a good example. His media created influence that has attracted $14 million in funding for Verdon’s AI startup. That’s a better business model than creating content to catch the eye of Google’s algorithms and show some autoplay video ads above the fold and running awards programs.

Conspirituality, Celebrity, E-Acc vs Decels, GTA

Troy, Alex and I discuss the rise of conspirituality, as people struggle to cope with a world that’s accelerating faster and gyrating more than in memory. We live in an age of cults, narratives and fleeting fame. Centralization is giving way to a fragmented culture and media landscape that is open, chaotic and not for the faint of heart. This week, we explore the fault lines of the Information Space.

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The reality is, of course, messier and uneven. The recent research study The Rebooting undertook with BlueConic showed this. The main goal of subscriptions programs is simple: revenue not alignment.

Even the most honest of subscription programs become dominated by optimization exercises that often force choices of what is best for the business and what’s best for customers. Is dangling a $1/month intro offer and then staying quiet when it rises 30x aligned? How about call to cancel? In a truly aligned model, every customer would get a notice ahead of renewal with an easy option to decline. That doesn’t happen, at least not for many publishers. You just get the receipt or your card is hit. The reality of subscription programs is over 40% of subscribers are usually sleepers, aka people paying for a product they don’t use.

Publishers typically fall into fighting a two-front war to get people in the door and keep them from leaving.

Trends never last. I don’t think subscription services are going anywhere, but I do think the market will struggle with so many that are built on a recurring model. The benefits of recurring subscriptions pool completely on the side of the seller. Many streaming services are already seeing a deterioration. Lucas Shaw at Bloomberg detailed this in Screentime:

This is how markets work. The anecdotal evidence of subscriptions fatigue will eventually show up in the numbers. In the spirit of always betting on things that don’t change, bet on companies going overboard with trends and flooding the market with too much. 

In streaming, that’s led to a regular behavior of turning subscriptions on and off. It’s a pain to manage – friction! – so streamers have seen it as a cost of doing business. Publishers see this behavior to a lesser degree, but plenty of people dip in and out on intro offers. For all the talk of relationships, that behavior is a market signal that many customers want more flexibility, not less.

37signals is often good at picking up market shifts. It is rolling out an antidote to SaaS subscriptions models with Once, which is a heretic to what it calls the “Church of Recurring Revenue” by selling software the old fashioned way: pay once and host the software. Just because software isn’t sold in a box doesn’t mean it has to be a subscription. “The post-SaaS era is around the corner,” promises Jason Fried, CEO of 37signals. 

More publishers will adopt flexible subscriptions. Before I get a message from every micropayments system under the sun, yes, the time might finally have arrived. There will be more one-off payments for discrete products. Look at the path taken by Barstool, which is now freed from Penn but also in need of an independent business model when its ad business will always have a ceiling because of all the things Elon Musk rails against. Rather than a broad subscriptions program, Barstool is selling season passes to “Surviving Barstool,” a reality TV show that based on the highlights clips is not made for me. According to Barstool founder Dave Portnoy, 57,000 people have bought a $10 pass to view the show. It has a growing stable of pay-per-view products. 

In many ways, this is an even more honest model. Because the downsides of one-time transactions is you need to keep earning them rather than benefiting from the inertia of customers who are no longer using your product but continue to pay for it. 

For more on the state of subscriptions at publishers, check out “The State of Publisher Subscriptions.” 

Big Cabal’s Tomiwa Aladekomo on mobile-first media

On this week’s episode of The Rebooting Show, I spoke to Tomiwa Aladekomo, CEO of Big Cabal, a Nigerian digital media company that’s home to a pair of properties: Tech Cabal, which I describe as similar to TechCrunch but with more memes and Zikoko, a BuzzFeed-like culture publication. 

Big Cabal has raised $2.3 million in venture capital as it builds an independent digital media company in Africa’s largest economy. Tomiwa and I discuss how Big Cabal looks to find white spaces in the market, making hard calls when to pull back on efforts like it recently did with a citizen journalism project, when brands can be pan-African vs market specific, and an on-the ground assessment of the impact of Semafor in its Africa push.

Listen to The Rebooting Show on Apple, Spotify or other podcasting services.

The post-pandemic hangover

The ad market appears to be stabilizing. Forecasts are calling for robust growth for next year. The big unknown is how much of that will reach publishers with so much upheaval in distribution, ad signals and a broad shift to the type of performance marketing better done by platforms and retail media. This GroupM chart highlighted just how unusual a year 2021 was:

Thanks for reading. Send me feedback by hitting reply. For sponsorships, check out The Rebooting’s programs for 2024 and get in touch. Looking forward to expanding our Dinner Series with partners that are helping create a sustainable and resilient media ecosystem.

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Elon’s from Mars, Brands are from Earth

Simpler times all the way back in April,, when Elon Musk was a surprise guest at the Fontainebleau in Miami Beach to appear at one of the many industry events to cater to brands and the ecosystem that surrounds them.

Musk was off to a rocky start as the disruptive new head of Twitter, but showing up always goes a long way, and marketers love the attention of a celebrity. Musk was able to allay some fears by simply by not frothing at the mouth in a mostly softball interview at Possible with NBCU’s head of ad sales who he would hire as Twitter CEO shortly afterwards. And bringing one of his many kids on stage with him is never a bad ploy to humanize himself. We’re all in sales and branding, after all.

The picture is quite a bit darker now. The debates over Twitter’s approach to content moderation have morphed with Musk’s own congenital Beavis and Butt-Head urges to utter the outrageous has brought him to telling the same people in that room at the Fontainebleau to GFY with the bet that he can wage a culture war against “woke” corporations. Maybe he saw Napoleon and got some ideas.

The entire affair has baffled many far less intelligent than Musk that have spent their lives in the media industry. From the start, when Musk has talked about the core of Twitter’s business – this is still an advertising business – he’s betrayed not fully grasping the dynamics, or perhaps more likely finding them utterly distasteful and nonsensical. Welcome to the media business, Elon. 

In an early Twitter Space during his tenure, Musk reasoned that if Twitter could recommend a tweet to someone, they could use the same mechanisms to put an ad in front of them. As was pointed out to him before Musk cut him off, modern platform digital advertising requires layering data on impressions to micro-target specific customers with specific characteristics. Twitter never excelled at this, X does not excel at this. Instead, Musk apparently expects companies to “support” his vision of free speech that includes him personally making unhinged and inflammatory comments. The sensible brand retort to Musk would be: STFU. 

That’s because supporting Musk’s ideological cause is simply not the business they’re in, despite all the gauzy purpose talk of recent years from paper towel manufacturers. As a product genius, Musk must recognize that the advertising part of the product is simply impossible to work within a 4Chan meets Four Loko communications platform

In fact, content moderation is a feature for advertisers. There’s a reason the Shannon Tweed movies were on Cinemax, not NBC. And on the internet, chat has never monetized without it. Internet message boards weren’t big businesses – and it’s taken Reddit so long to build a big ads business.

And yes, some of this is unfair and hypocritical. Twitter is a Web 2.0 platform. It’s easier to find terrible stuff on Twitter than a pure algo feed like TikTok. I can only imagine the person who had to explain to Musk the screenshot industrial complex.

Brands care about their reputations and are generally rather conservative. They have to please many constituencies, including within their own businesses. Even if Twitter could perform well – it rarely did compared to its peers – there is the problem of associating not just with the free-for-all vision Musk clearly holds for what’s now called X but with him. As Disney CEO Bob Iger explained, Musk is a “larger than life figure” who is the mascot of his various companies. This is why he can brag about not needing to advertise. It also means his brand and X’s brand are the same. There’s a downside to everything.

Everything about Musk’s actions show him to be thin skinned and in need of praise, so the rejection of him personally stung. But from the point of view of marketers, it makes sense. Twitter was never a must buy for most marketers, and there isn’t exactly a shortage of ad impressions in the world. As the great Ricky Watters said, “For who, for what?”

This is one situation where Musk has found himself without the leverage he has in most areas. In the media business, all the leverage exists on the brand side. Again, it’s why they have all the halls of fame. The only ad sellers with leverage are Google, Facebook and Amazon. They create that leverage through dominance in their particular markets and by accumulating millions of advertisers. Susan Wojcicki didn’t have to cry about censorship when advertisers “boycotted” YouTube. Mark Zuckerberg would make ritual apologies and move on with his life. Big brands aren’t the lifeblood of their businesses. They are a part of a far larger universe of demand, and big platforms have the leverage to ride out periodic outrages.

Musk could have created that leverage by doing what he has preached constantly for corporate America: Focus more on the product. That doesn’t just mean the features of X, but the advertising technology that underpins the system. Maybe ad tech is owed an apology. Perhaps it is more difficult than rocket science.

Musk is no dummy. He knows the way you get leverage with customers is by having them need you more than you need them. That would mean building ways for performance marketers to realize the same returns, with the same self-serve systems, as on Google and Facebook. That would attract far more advertisers to X and make the GFY strategy far more plausible, if still ill-advised. Twitter was always so far behind on that front, and instead catered to the brands in that room at Possible that Musk now believes are “idiots.” You make the bed you lie in.

Thanks to BlueConic for its support. Be sure to check out the subscriptions report. Send me a note with feedback by hitting reply. 

First, a reminder to check out research The Rebooting did in collaboration with BlueConic into the state of the subscriptions business at publishers. We surveyed over 200 publishers, and found a shift in the strategic priority of subscriptions business lines to become more integrated within the overall business. Filling the top of the funnel with more subscribers is still a top priority, but increasingly publishers are focused on wringing more revenue per subscriber and making sure their different business lines work together seamlessly rather than be viewed as almost contradictory objectives. 

Get the full report here, and listen to my podcast discussion of it and the state of publisher subscriptions overall with BlueConic director of sales Patrick Crane. Thanks to BlueConic for supporting this research.

Message received

Not to be all Ben Thompson, but yesterday’s GFY heard around the world from Elon Musk didn’t surprise me. On Tuesday, I wrote this:

“Musk is throwing in the towel on ads. I don’t like to play psychotherapist to billionaires. I also do not think Elon Musk is “crazy.” Whether he’s wrong is an open question. But it’s clear he’s tanking X’s ad business because he believes it does not align with what he sees as the mission for the company. That leaves the question of why he brought in Linda Yaccarino as a CEO an executive who is known for her ad sales prowess. Never a great sign when the people you’re trying to sell to are urging you to quit. Expecting Musk to not say something outrageous that aggravates ad buyers is the definition of insanity.”

This has been a clear direction almost from the start of Musk’s Twitter takeover. The way he sees the world, and crucially what’s made him remarkably successful, runs completely counter to being in the ad business. The idea of the world’s richest and possibly most powerful person kowtowing to The Brands was always ludicrous. He showed up at Possible last spring and likely decided this is not a great use of his time. Was he going to head off to Cannes to do a “fireside chat” with Martin Sorrell and host cocktails at Eden Roc? I don’t think so.

Instead, he chose violence, using the DealBook conference to call advertisers leaving X blackmailers and telling them to “go fuck yourself” rather than do a faint-hearted “listening tour,” or apologizing if he offended anyone. It was a billionaire’s version of Michael Douglass in “Falling Down.”

Everything I’ve read about Musk and the hours of interviews with him indicates he’s got a singularly engineering mind. I’ve seen throughout my career the divide between those with engineering minds and the bizarre world of traditional advertising, replete with smoke and mirrors, fake air kisses and squishy talk of purpose and “lovemarks.” This isn’t Mars and Venus. This divide is galaxies away.

Silicon Valley has eaten the advertising business by bending it to its will. For the most part, it has skipped the high-touch portion of the business for the rough-and-tumble of direct marketing, now reimagined as “performance marketing.” Sure, Google, Meta and Amazon play along with the brands, but they’re impervious to advertiser boycotts because big brands are a small portion of their overall customer base of millions. And their dominance in their sectors makes them unavoidable. The type of advertising Amazon does with its search listings business is nowhere near the type of demand generation pizazz Linda Yaccarino was selling at NBCU. This is more like the Yellow Pages than the Super Bowl. 

Silicon Valley is insular like any community. And that means trends come and go. In Web 2.0, the trend was advertising models for free software. Startups would talk about amassing scale and then “turning on the revenue spigot” with ads. Those days are mostly over. Subscriptions have proven a better model for software. 

The clip of Musk’s profane response to advertisers who are pulling out of Twitter is jarring. There’s an uncomfortable silence you tend to get when someone utters the outrageous and uncomfortable. The entire interview is worth listening to. And it was an interview. Andrew Ross Sorkin came prepared, and he stayed on point when Musk tried to go off on tangents. It stood in contrast to a congenial conversation with someone like Joe Rogan. There’s room for both, but the upside of a newsmaking interview by a professional like Sorkin is moments like that.

An obvious conclusion from the interview is that, with his hand-picked figurehead CEO in the front row, Musk was not just tanking X’s ad business but the entire company. He’s set up the narrative for his failure as being not he who killed Twitter but the faceless brands. Musk has clearly learned plenty from Trump. Blaming faceless marketing people is not all that different from blaming the Deep State. 

Never mind the truth, we all have our own versions of it. The narrative is more important. One of the more interesting pars of the interview is when Sorkin gets Musk to talk about his turbulent mind and the chaotic downsides of it. There’s naturally talk of failure – you don’t invent reusable rockets without seeing failure as literally an important part of the process – and he notes that on balance, more good than bad comes from the chaos he creates. Twitter might die, sure, but in the grand scheme of things, it will be a footnote in Musk’s story.

And, to be fair, there is a kernel of truth in the substance of what Musk said. Advertisers do grandstand and seemingly spend a lot of time swanning about the conference circuit built to cater to them. Brands have their halls of fame and constant honors for bravery, all on account of controlling ad spending. Most of the problems of the media ecosystem can be laid at the feet of those who control the budgets. One longtime digital media exec texted me after GFY: “When he said it, he won me for life. I am getting a Cyber Truck.”

Of course, publishers like to point fingers at outside forces for the pitfalls of their businesses. On the latest episode of People vs Algorithms, Troy Young gives a spirited, Captain Capitalism defense of Arena Group’s use of AI-generated SEO commerce gunk. In essence, Troy’s defense comes down to: Do you know how hard it is to make money as a publisher right now? Grow up, this is just part of the process of finding a path to sustainability. Nobody said it would pretty or charming.

That’s because, as publishers know well, the ad business is often illogical and possibly more mercurial than Musk. It can gyrate wildly. And publishers have little control of their distribution, putting themselves in a double bind. I don’t think it took very long for Musk to figure this out. The parts of the ad business that the engineering mind like are in the direct marketing part that’s driving by math and quantifiable results. Ironically he bought the one scaled tech platform that is more reliant on the other part of advertising, the part that’s more about branding, since Twitter doesn’t have the kind of intent signals other platforms have. 

Big brands care about flaccid concepts like brand safety and alignment. And sure, they’re hypocrites – aren’t we all? – but you only get a pass if you perform. Twitter has never been a must-buy on the basis of performance. Musk made sure to specifically call out Bob Iger in the audience during his GFY, since Disney is among the advertisers who have paused spending due to Musk’s latest controversial post that strayed into the territory of Protocols of the Elders of Zion. The truth is Disney’s business is not going to be hurt by not advertising on X. 

I believe he knows this. The subscription model is the only path for X, at least as teh core of its business if it is truly going to maximize free speech. I believe that’s why he shrunk the size of the organization. The ad business will be niche, more digital SkyMall than vying for the TV ad budgets Linda Yaccarino has been adept at grabbing. I’m unclear the point of her role at the company with that focus.

Musk’s bet seems to be that his millions of acolytes will turn around and boycott The Brands out of pique for “killing Twitter.” Never say never, but that’s a hard narrative to spin, even for Rocket Man.. 

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For sponsorship information, check out The Rebooting’s 2024 packages and get in touch. 

The Rebooting recently wrapped up a research project in collaboration with BlueConic. Patrick Crane, director of sales at BlueConic, joined me on The Rebooting Show to discuss the state of subscriptions at publishers and the maturation of the market. (Get the report here.)

“One of the reasons I call it a forever business is to call out the fact that there is going to be ongoing work,” Patrick told me, “but also that it sets you up to play a very sustainable game.”

Among the topics covered:

• The shifting role of steep discounts in subscription programs

• Why ad avoidance is really more bad UX avoidance

• The wisdom of making subscription products for specific slices of your audience

Listen to the full episode on Apple, Spotify and other podcast platforms. Thanks to BlueConic for its support.

The AI tragedy of the commons

The “tsunami of crap” is upon us. Peter Kafka used this evocative phrase as a safe bet for the near term application of artificial intelligence tools in publishing. 

The Arena Group is the latest publisher caught with its pants down by Future, which has decided to flood the zone over AI content mills. Arena, like many publishers, outsources much of its commerce operation to a specialist marketing agency, which used fake AI generated profile photos on content that sure reads in the distressingly dull default ChatGPT style, punctuated only by oddities like: “Volleyball can be a little tricky to get into, especially without an actual ball to practice with.”

It’s a parable of the currently sorry state of modern digital publishing. Publishers have long been big brands but small businesses. The late-stage existence of many magazine brands is to be harvested for their SEO juice and licensing power. You can rent out the logo and name to a gambling service. 

Peter’s prediction was prescient because of course publishers would look to it to create more cheap content for algorithms. That’s what the scale playbook calls for. But that playbook has grown dog-eared. It’s hard to see how long it can be a competitive advantage to rent your site out to AdVon Commerce. Then again, using contractors for dirty work does provide the veneer of plausible deniability, a key feature of internet publishing since the start. 

The story caught on more broadly than most of these face-palm moments because Sports Illustrated is still a brand with resonance. Middle-aged people remember it from childhood. This wasn’t some SEO chop shop ginned up to hawk mattresses. This was home to writing by Deford, Reilly, Faulkner.

In this way, it’s not like this hustler who bragged about pulling off an “SEO heist” of nearly 500,000 visitors in Google traffic by copying a competitor’s topics and having a bot write versions. But then, is it? The tragedy of the commons of digital publishing is the misaligned incentives.

OpenAI’s CEO-for-a-weekend noted these kinds of shenanigans are a direct result of the misaligned incentives set up by Google, which like it or not essentially sets the rules of open web discovery. Publishers have long adopted this “don’t hate the player, hate the game” mantra. After all, as Shear notes, Google is pretty good at finding counterfeit content on YouTube. Incentives are everything

SI has been through the wringer since its heyday, passed around from Time Inc to Meredith to what is now Arena Group while Authentic Brands Group milks the IP through “brand extensions” like a sportsbook, JCPenny swimsuits and hotels in Orlando.

Arena itself is now tied up with  the 5-Hour Energy founder who sees a similar opportunity in media as he did in gas stations, where he mocked up prime real estate near the register and lawyered up to protect the brand (and scare off competitors). Publishing needs new energy, ideas and approaches. Best to keep an open mind. Safe to say, this isn’t auspicious. Leave aside the questionable taste; it’s hard to see how an AI content farm is much of a long-term strategy, at least if a publisher wants to cling to the notion of premium.  

SI is a premium brand mostly owing to its legacy. Too often publishers have leaned on legacy as a differentiator. Quality is subjective. I once asked YouTube’s longtime CEO Susan Wojicki about premium content, and she told me she focused instead on “premium audiences.” The digital meat grinder chews up brands. 

Google will be loath to simply ban AI content from its index or even automatically downfall it. ChatGPT is the ultimate will or could tech: many of the results it produces now are uneven at best. And yes, it will improve. And perhaps SI’s partner just used the tools wrong. In the information space, anything and everything goes. 

That means picking a lane and being clear about how you’ll win. It’s hard to pass yourself off as premium when you’re running bot nonsense that makes low-rent “contributor networks” look prestige. Not to be too snobbish, but when you’re outsourcing tye actual content as a publisher, you need to turn in the premium card. There are many premium brands in digital publishing that have long since passed into being stuffed with so much SEO gunk that on a page by page basis, it’s hard to say these brands are much different than the SEO sites, no matter who wrote for them a generation ago.

I’d like to think a new parallel web will emerge that’s less dominant but more artisanal. I fully expect the tsunami of crap will produce a counter reaction of artisanal content. I’d like to think there’s a place for the media version of the Japanese chef who “skewers the 1.2 inch-thick cut with rods made from piano strings and judges when the steak is done by listening to the pitch of sizzling and dripping.” Of course, the price of a steak at Aragawa is around $1,000. 

In reality, more brands will go downmarket. There’s more money to be made there. Black Friday has been a reminder that for all the talk of premium, most are like Gap: the 50% off sale is around the corner.

I fully understand the short-term revenue choices publishers make the quarter. Long term brand concerns are easy to be seen as a luxury. But brands aren’t forever. Like going bankrupt, their decline can be gradually and then all at once. 

Get the world talking about your work

80% of Webby Winners say more people talk about their work because of their win. When you enter The Webby Awards, you give your team and work the chance to stand out on a global stage. But you can only win if you enter by the The final entry deadline is on Friday, Dec. 15. 

Enter now

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Bloomberg Media CEO Scott Havens is leaving to become the president of the Mets. I’ve always enjoyed talking to Scott, and the top job at Bloomberg is one of the last great media jobs with a rich owner who takes the long view. (Bloomberg)

Google is a for-profit company, so it shouldn’t be a surprise when it throws its weight around in ways big and small. Some publishers have found, surprisingly, that suing Google is a good way to get frozen out of post-third-party- cookie discussions. (Marketing Brew) 

Musk is throwing in the towel on ads. I don’t like to play psychotherapist to billionaires. I also do not think Elon Musk is “crazy.” Whether he’s wrong is an open question. But it’s clear he’s tanking X’s ad business because he believes it does not align with what he sees as the mission for the company. That leaves the question of why he brought in as a CEO an executive who is known for her ad sales prowess. Never a great sign when the people you’re trying to sell to are urging you to quit. Expecting Musk to not say something outrageous that aggravates ad buyers is the definition of insanity. (Forbes)

Vultures are due to get a new look. Maybe TikTok can give a fair shake to the birds of prey, which are “masters of innovation.” They’re the perfect avatar of the post-ZIRP era. They’re patient and persistent, decisive and make a little go a long way. (NYT)

The digital ad supply chain starts with the publisher. Easily understand and visualize ad requests and bid responses for common ad tech services: Install HTL Debug from Hashtag Labs for free today. (Sponsored)

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Newsletters aren’t business models

Email newsletters aren’t new. They’ve been the bulwark of many digital publishing models for a long time, particularly in niche areas and B2B. I’ve lived through a few waves of email crazes, dating back to the pre-CAN SPAM Act Wild West days when email lists were brazenly traded in open-air markets. 

In recent years, they’ve gotten a second look based on the “overnight” success of Morning Brew and Industry Dive, which appear all the more impressive when set in the post-scale apocalyptic landscape of zombified brands sent off the the SEO glue factory, shriveled distributed media operations.

Email is a handy alternative to all that. It’s cheap, builds a direct connection with an audience that’s less intermediated than other digital distribution channels, and gives off useful first-party data as exhaust. And in a world of algorithmic crap, email newsletters have emerged as a form of human media that’s often an antidote to the over-optimized world publishing. But email is still, at its heart, just a distribution channel, and no publisher should build around a single distribution channel.

Even as a distribution channel, email is not without its sins. The data always tells you to hit send, and email has long attracted those who find the line between performance marketing and spam. The cost of sending an email is close to zero. There’s a reason Black Friday/Cyber Monday/Cyber Week means inbox disaster. Scaling email newsletters usually comes at the expense of quality, as Emanuel Cinca notes.

Thousands of email newsletter businesses have sprung up, in the hopes of being the next Morning Brew or Milk Road or Industry Dive. Many of these Morning Brew of X will go the same way as the Uber of X businesses. Different always wins, and you can’t reverse engineer originality.

Over the last few years I’ve noticed that many of the flaws of scaled digital publishing creeping into email newsletters: the heavy reliance on optimization and growth hacking, drift into arbitrage, the worship of easily gamed vanity metrics, and the short-term approach to building resilient business models.

Growth hacking: Email newsletters biggest challenge has been growth. Organic growth takes a long time, with writers relying on begging people to forward their email around like the chain letter your uncle used to bombard the family with. Instead, new recommendations tools have emerged that have taken “friction” from the discovery process. That’s risked negating email’s biggest strength as a pull medium by making it more like a push medium.

Arbitrage: There are too many email newsletters, of course, because there are too many of everything, especially when the cost of creating an email newsletter is near zero. You can always hire a ghostwriting shop to make one for you, or better yet turn to AI to gin up synthetic newsletters. “If pure AI is your only strategy, it will just become a gigantic numbers/arbitrage game,” one publisher told me. “ Kind of like how pure Amazon affiliate sites thrived from 2009 - 2016. Very thankless and extremely tough to win.”

Vanity metrics: List size is mostly pointless since you can buy a subscriber for $1. But most still focus on how big their list is, even if many are filled with weak audience ties that are hardly better than the drive-by impressions of the social-and-search traffic era. 

Business models: Publishing businesses need multiple revenue streams. Subscriptions were painted as a silver bullet, and as our State of Subscriptions report showed, they are a forever business that quickly become optimization challenges to secure incremental growth, not rocket ships. On advertising, as one publisher noted to me, “There’s no newsletter line item” for most marketers. That’s given rise to a subprime feature of email newsletters in which newsletter pay for recommendations only to then defray the acquisition costs by selling recommendations to the recommendations. Call me old fashioned, that doesn’t strike me as the hallmark of a long-term business.

Greg Isenberg recently advised avoiding the email newsletter “trap.” That trap is often the impossible treadmill of write, grow, sell. The frothy ad market of 2021 was an anomaly and will not return. What’s more, email is constrained as an ad business by a lack of “surface area.” Which leads to increased frequency and the risk of the leaky bucket.

“Don't be in the newsletter business,” Greg advises. “Build a business powered by a newsletter.”

The most successful newsletters have branched into other areas. I don’t consider Morning Brew an email publisher for several years now. Even individual newsletter writers like Lenny Rachitsky and Packy McCormick are moving beyond emails into areas like podcasting, advisory and investing. Events are obvious expansion areas.

For some companies like Workweek, email distribution is step 1 to generating direct revenue from subscribers, whether that’s the purchase of an event ticket or subscription to a software product it has rolled out under its franchising newsletter. 

What Workweek found was that a pure newsletter model – it has “creators” attached to various industry sectors – is tough to make work on the sales side. Just because you have a big number of email subscribers does not mean you will be able to “turn on the revenue spigot” with advertising. That meant cutting its number of creators by from 17 to 11, and cutting the “operators” paired with those creators.

“Too many creators and operators get caught up in subscriber size or open rates,” Adam wrote in two-year review after Workweek eliminated 11 positions. “These metrics are as effective as when we measured pageviews back in the day — not too helpful and can lead to many false signals.”

Email is usually a means to an ends.

What’s with Silicon Valley’s culture?

Every group becomes insular in its own ways, particularly the power industries. Last week on People vs Algorithms, we discussed the OpenAI drama through the lens of Silicon Valley’s unusual culture, where grownups debate e/acc vs decel, people subscribe to a quasi religion like Effective Altruism, and Brother Spirit is consulted about business decisions.

Get People vs Algorithms on Apple, Spotify and other podcasting platforms.

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We’re all in pursuit of strong and consistent growth to make our media brands lasting businesses amidst the push and pull of revenue requirements, shifting audience consumption behaviors, and turbulence in the market.  House of Kaizen has a Growth Diagnostic used by publishers, and other recurring revenue products, to identify and drive sustainable growth with audience-first experience optimization. Through their decades of working with the world’s best subscription products, they know what creates sustainable net-growth and will help you to find better alignment between your audience expectations and the product experience.

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The media business is all hard, but local news is the hardest of the hard problems. The challenges of creating sustainable local news models are well known. At this point, we’re mostly numb to dire warnings of the disappearance of local news as profitable economic activity. Medill recently found that this year, local newspapers disappeared at a rate of 2.5 per week, leaving half of American counties without access to local information.

Bridget Williams is a veteran of the industry. I first got to know Bridget when she was at Business Insider prior to heading to Food52 before landing at Hearst Newspapers in December 2017, where she is chief commercial officer. On this week’s episode of The Rebooting Show, we spoke about the progress toward a sustainable business model for Hearst news outlets like The Houston Chronicle, The San Francisco Chronicle and others around the country. All told, Hearst newspaper properties have 400,000 digital subscribers.

Bridget jokes that she is a “thoughtful mercenary,” as opposed to the slash-and-burn approach of private equity firms, which tend to be mercenary mercenaries. In the language of today, being a thoughtful mercenary means keeping two seemingly contradictory beliefs top of mind: the mission of local news and the eagerness to do whatever is needed, ethically and with the long term in mind, to build a sustainable, resilient business. You need both.

Being a thoughtful mercenary means taking a hard-headed approach to making money, with the realization that much of the hard-news work of local news – investigating corrupt city councils, the school board meetings – isn’t profitable and needs to be subsidized. Bring on the puzzles, dog park reviews and deals.

“We understand the need to do all sorts of fun and utility and make money in lots of different ways, but we are going to use those profits to fund the news,” Bridget told me.

A year ago, Hearst launched My San Antonio, a lifestyle offshoot from its San Antonio Express-News for the booming San Antonio area, which boasts the highest population growth rate among big cities by one measure. The site is meant as a newcomers guide to the city, with news on issues like a taqueria offering $5 breakfast specials, a photo montage of JFK’s trip to San Antonio before his assassination in Dallas, and a steady flow of commerce-friendly content on deals at Walmart and discount designer sunglasses. 

Hearst is reading the launch of a new digital brand, Weekend, that will focus on interesting and fun things to do in local areas, whether that’s concerts or leaf-peeping hikes. It’s a local twist on the commerce plays at many publishers. Rather than products, the opportunity for commerce in local is more around ticketing, travel and services.

This is an updated version of the old newspaper playbook in many ways by focusing on utility. News will always be part of that, but there are ways to be useful to a local community beyond the crime, fires and corruption. In fact, broadening the aperture to include more commercially viable areas is a necessity – and not new.

“In the olden days, people subscribed to print newspapers for that bundle,” Bridget said. “And inside that bundle was coupons, shopping, puzzles and comics.”

Normal people’s lives are not all about “chaos at the border” and culture war battles. People want to know about the new dog park. The local newspaper was always a bundle of lifestyle information – I can remember as a kid reading in the Philadelphia Inquirer Ann Landers repeatedly and intrepidly weighing into the fraught issue of men leaving the toilet seat up  – that  is both popular and profitable. This approach needs to be adapted for a different time, and to be clear without a lot of the artificial advantages local newspapers enjoyed for years that arguably resulted in ossified businesses that mismanaged the digital transition. 

 “These are real brands and there isn't a ton of competition,” Bridget said. “They are really one of the only major brands serving their markets. And so if you do it right, there's actually a very large opportunity to differentiate.” 

The New York Times is now relying more on their non-news products to drive subscription growth as part of its bundling strategy. With Wordle and Connections, The Times is now something of a games company with a news operation. The Hearst twist on this is Puzzmo, a gaming platform. These are the kinds of approaches that are needed rather than hoping for a savior.

“We know that there is a ceiling of people that want to read a general news product in the local market,” Bridget said. “But we know there's lots of other pockets of people that care about specific things.”

I like this messaging because there is a realism to it. Many times people throw their hands up in the face of the challenges facing local news, turning instead to fantasies of silver bullet solutions like benevolent billionaires, government handouts, tech company subsidies and the like. And all of those approaches have a place. I suspect “solving” the local news challenge will be a lot like how the U.S. approaches health care: a crazy-quilt patchwork of disparate approaches that imperfectly get the job infuriatingly and partially accomplished.

Check out the full conversation on Apple, Spotify or wherever you get your podcasts. 

Video advertising is a gamechanger

For many publishers, achieving 100% monetized video coverage on your site is not an easy task. Read more about why it's not as difficult as you might think, and the benefits you can expect with having video on every page - not only higher ad revenue but also increased user engagement and article recirculation.

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Thanks for reading. I hope all the Americans enjoy the Thanksgiving holiday. I’m heading to London after Thanksgiving for a week. Get in touch if you want to meet up. You can reply to this email or send me a note at bmorrissey@therebooting.com.

This week, I wrote about how the drama at OpenAI is a sign of how the power of the media has receded as it becomes one of many nodes in the information space.

Narrative violations

The timing couldn’t have been better. The Friday before Thanksgiving week is an ideal time for a news dump, when companies or politicians try to bury bad news. Instead, the Friday afternoon shock that OpenAI CEO Sam Altman was being removed entered into prime time for the always-on information space.

There was no waiting for the inevitable behind-the-scenes tick-tock from The New York Times or Wall Street Journal. The information space, like crypto, doesn’t have opening or closing hours. The lack of information only served to fuel the basest of our current instincts: narrative creation. The creation of narratives has moved from the media establishment to the free-for-all of the information space, where professional media rubs up against corporatist interest groups, anonymous shitposters, PR-savvy venture capitalists, conspiratorialists, shameless careerists and pretty much a chaotic Noah’s Ark of humanity that’s sometimes reminiscent of the 700 Level at the Vet. 

For some, Altman was deposed in a coup led by Effective Altruists, DEI bureaucrats, anti-tech doomers in the media, woke academics and probably San Francisco politicians. The saga caps a year of tech meltdowns, from FTX to Silicon Valley Bank to OpenAI.

The normal impulse to the original news that lit up my text messages was “it must be bad.” That would be true in the old world. In the old world, the statement would include a canned PR quote and effusive thanks for his undeniable contribution to pushing artificial intelligence in the mainstream. This statement instead came close to the euphemisms for corporate skullduggery by saying Altman was “less than candid.” This is a story of misalignment between the mission of a non-profit, mission-driven oriented and the cut-and-thrust of profit-seeking capitalism.

I’ve spent much of my career observing the uncomfortable gap between “New York” and “Silicon Valley.” Those are the symbolic poles of the old and new worlds. New York is the stand-in for media and advertising and San Francisco for the tech elite that have supplanted media and marketing as a power center.  And no matter what this story ultimately is about, it is about power, just as Putin vs Prigozhin wasn’t a disagreement about military strategy in the Donbas.

We all tend to be terrible judges of ourselves, since we all cast ourselves as the protagonists in the dramas we write. Silicon Valley is no different. In its narrative, intrepid entrepreneurs are conjuring the future out of thin air, usually against the predations of a corrupt establishment. The totems of this narrative have stayed remarkably consistent over the years. The garage, the napkin, the lonely toil against doubters, the air mattress in the office, the near-death experiences and the struggle of the capital allocator in the arena, trying things and podcasting. 

The defenestration was quickly shoehorned into this simplistic narrative. In the information system, establishing a narrative is critical. And that means simple messages repeated ad nauseum until they’re willed into plausibility. In the information space, political campaigning is the norm. That means simple messages and repetition.

Silicon Valley types know the advantages of first-move advantage. For all the talk of innovation, Silicon Valley has always focused on messaging, even if it outwardly disdained marketing and advertising. Think of the embrace of “sharing economy” as cover for unregulated taxi services and hotels.  The shape shifting is a feature, not a bug. See the sudden embrace of patriotism by the Silicon Valley establishment that was until very recently ardent globalists. I expect the decentralized networked state enthusiasts will twist themselves into knots to find victory in Microsoft emerging more powerful. Shoutout decentralization.

The battleground formerly would have been through media leaks, but instead, Twitter/X has become the heart of the information space. Altman easily slid into the role of Steve Jobs, martyred by retrograde forces, never mind the truth is always complicated and rarely lines up with good guys vs the bad guys.

It was telling that through a weekend of high stakes negotiations, Altman took time to play Twitter/X tea leaves. Some speculated his message “i love you all” was a threat to his now enemy Ilya Sutskever, an assumed coup plotter. Employees responded with emojis, part of an apparent concerted plan to exert pressure on the OpenAI board by making clear where loyalties were. Altman, who is no stranger to carefully cultivating a narrative, created his own Boris Yeltsin on a tank image by showing himself grimly holding up a guest pass at OpenAI headquarters on Saturday. 

In the end, despite the information-space posturing, this power fight ended in the typical way: a back room deal that landed Altman, and presumably much of the OpenAI team, at Microsoft. The chess board changes.

All this playing out in public is remarkable. Sure, it might be “nerd drama,” but it is more proof that for all Silicon Valley inveighs against the controlling power of the media, it has mostly successfully outflanked its power. Instead, the media has mostly been bystanders to the real action on Twitter and Reddit. I joked, on Twitter/X of course, that we’d all just have to wait for All-In to understand what was going on here. In fact, over on Reddit David Sacks did have one of the more plausible theories by unpacking the curious position of Altman now owning shares in OpenAI but controlling the non-profit foundation, which itself provided narrative cover to the extend Microsoft’s president could wave it around as preferable to the evils of a for-profit corporation having such power. Heavens, just imagine such a situation.

And as time went on, the narrative pendulum ever so slightly began to swing from the rush to canonize “Sam” (this is Silicon Valley, everyone gets first-name treatment) to scrutiny of the gap between the public narrative and the inevitably messy private reputation of a powerbroker. You do not rise to that position in Silicon Valley without raw power projection. And much of what we’re seeing play out at OpenAI is a display of raw power. Microsoft was not going to say “too bad, so sad” after it yoked its future to OpenAI. You don’t give the CEO of a $2.3 trillion company that committed $13 billion in funding a minute heads-up on threatening a critical partnership. That doesn’t go over great.

The big unknown is whether the triumph of the information space over the media will yield better results. I’ve long seen many of the invectives the tech industry hurls at the media are done in bad faith. Using the media as an enemy is a well-worn topic for the powerful, and the tech industry’s scrappy narrative is wearing thin as it has accumulated unprecedented power and loudly tells the world it wants to remake how societies function.

That will bring about more conflict, both with other societal power centers and within tech itself, hardly a monolith but filled with its own factions that will inevitably look to create leverage through narrative. One person’s “doomer” and “safetyist” is another’s “responsible” and “ethical.”

The future of growth in publishing 

We’re all in pursuit of strong and consistent growth to make our media brands lasting businesses amidst the push and pull of revenue requirements, shifting audience consumption behaviors, and turbulence in the market.  House of Kaizen has a Growth Diagnostic used by publishers, and other recurring revenue products, to identify and drive sustainable growth with audience-first experience optimization. Through their decades of working with the world’s best subscription products, they know what creates sustainable net-growth and will help you to find better alignment between your audience expectations and the product experience.

Learn more

Thanks for reading. Send me a note with feedback by hitting reply. 

Last night, I held a private dinner for the leaders of subscription programs at publishers. A big theme of the evening is that the numbers-go-up era of subscriptions is over, which echoed the findings of The Rebooting’s The State of Publisher Subscriptions report.

Like much else of the ZIRP/pandemic era, these numbers were juiced. Publishers often relied on paid advertising to accumulate large numbers of subscribers from platform advertising that was priced abnormally low. One publisher with a high-priced subscription offering lamented teaching the market their premium brand was valued at $1.99 a month. Most ended up churning anyway. The name of the game now is a back-to-basics focus on ARPU (average revenue per user) instead of the sugar high of growth hacks.

The Rebooting surveyed over 200 publishers last month as part of a research project done in collaboration with customer-data platform BlueConic. It showed that for most publishers the days of hyper growth are over

Pivot is too strong of a word, but the weight of focus is moving for most publishers from subscriber numbers to ARPU. Many publishers are seeing acquisition flag, or become more expensive, leading them to focus instead on squeezing more revenue out of existing subscribers. That’s a theme across many subscriptions, with providers taking the risk of igniting churn.

For many, the scramble to acquire customers meant a lack of a cohesive strategy. There was little connection between subscriptions and advertising. The first-party data collected through ads wasn’t fully put to use to power ad businesses. In its earliest days, subscriptions are often seen as an alternative to advertising rather than the complement it is in most cases. 

Publishers often start subscriptions as an e-commerce business, depending on the drip of one-off subscribers. In the business category, matured subscriptions programs require an enterprise offering. But that requires selling the subscriptions. Rarely is the ad sales team the right fit for this, since inevitably subscriptions become a tool to get big ad deals across. I can remember regularly talking to sales about why “taking down the paywall” for Hulu for a week was a losing strategy in the long term. The business lines cannot be separate, but treating subscriptions like mud flaps to toss in to get the car off the lot isn’t the move. 

Subscriptions are a forever business. Everything in publishing takes longer that you would think. And building a subscriptions business is the ultramarathon. After early wins, subscriptions become a grind, with optimization tactics coming to the forefront. Strong brands will get you so far. Defector’s annual report is always a great read – I highly encourage all privately owned publishers to follow suit – and it showed how the business has matured in three years. Subscription revenue in 2023 ticked up 4% rather than the 20% recorded a year earlier. The big win was a 90% retention rate when half of Defector’s subscribers came up for renewal. 

Most brands have a pre-set number of loyalists who will eventually convert for myriad reasons. The real battle is adding more loyalists. That’s a long term challenge that you can’t solve with a $1 Cyber Monday offer. It requires instead sophisticated onboarding and user journeys.

The Rebooting’s research showed how publishers are largely shifting their focus to the long term while, of course, scrambling to hit short-term revenue and subscriber goals. Churn is rising as a challenge, and a regular theme at the dinner was, of course, the challenge of internal alignment. 

As one respondent to our survey put it: “We are losing subscribers faster than we are gaining new ones. Customer service and internal software challenges are mostly to blame.”

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The Guardian’s non-profit twist on subscriptions

One sign of the broad maturity of the subscriptions market is the sheer diversity of approaches now taken. Subscriptions were often presented as an all-or-nothing paywall strategy. That soon gave way to meters, freemium models and other tactical paths to what the ultimate goal of subscriptions are: Direct audience revenue. 

One of the more interesting twists is voluntary contributions. This NPR-style approach has proven successful for brands like Wikipedia. The Guardian has used voluntary reader contributions as a bulwark of its unique model that blends philanthropy, advertising and voluntary contributions. In the U.S., The Guardian U.S. now generates 57%, or $33 million, of its revenue from voluntary contributions, either one-off or recurring. 

On this week’s episode of The Rebooting Show, I spoke with Steve Sachs, The Guardian’s U.S. managing director and veteran of non-profit news models, about this approach and how extensible it is for news publishers. The key to making it work is being mission driven and have that mission to be specific enough to appeal to a group of people For The Guardian, a progressive viewpoint, as well as a global perspective, and commitment to freely available news and information aligns with an audience segment. 

Subscribe to The Rebooting Show on Apple, Spotify, or other podcasting platforms. Thanks to House of Kaizen for sponsoring.

The interface shift (con’t)

On this week’s episode of People vs Algorithms, Troy, Alex and I discuss the implications of AI driving a shift in interfaces. My working assumption of AI is that it will be overhyped in the near term, aka the parlor trick era, and underhyped in the long term. One of the biggest impacts will be a shift in computing interfaces.

I have a joke I use about the absurdity of seeing French people use computers. They often appear to treat them with mild to high disdain. And I’ve interpreted that to stem from their admirable embrace of humanism. Computing has often forced humans to think like computers. Search moved the interface closer to regular human interaction, but it was awkward. Natural language search never really worked. 

AI will get attached to all manner of new things. See the Humane AI pin. It will be easy to dismiss everything AI as yet another pallet of Silicon Valley snake oil. But that would be a mistake. The interface is changing, and that means distribution will also change. Media is always downstream of distribution. BuzzFeed throwing in the towel on the big-audience, distributed model is both inevitable but noteworthy. Publishing is on the cusp of a profound and painful shift. 

Subscribe to People vs Algorithms on Apple, Spotify and other podcasting platforms.

Thanks for reading. Send me your feedback by hitting reply.

Today, I’m returning to the topic of interface, and how all signs point to a massive shift in the interfaces that have defined the past generation of media. In Recommendations, BI is back, eSports were a ZIRP and more. First up, a message from House of Kaizen.

Diagnose your net-growth opportunity

We’re all in pursuit of strong and consistent growth to make our media brands lasting businesses amidst the push and pull of revenue requirements, shifting audience consumption behaviors, and turbulence in the market. So what does good growth look like in this era of media and publishing? House of Kaizen has a Growth Diagnostic used by publishers, and other recurring revenue products, to identify and drive sustainable growth with audience-first experience optimization. Through their decades of working with the world’s best subscription products, they know what creates sustainable net-growth and will help you to find better alignment between your audience expectations and the product experience.

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Recommendations

BI is back. We will agree to forget the historical injustice that was visited on a classic digital media brand in the name of scale. Now, bring back the slideshows. Henry Blodget’s departure as CEO marks the end of a remarkable run. The multiple he got from Axel Springer will forever be legendary. (Business Insider)

ESports as ZIRP. I find people constantly trot out the overwhelming size of the video game industry – and how it’s far bigger than the movie industry – so often because they believe it is surprising. And that’s because video gaming is a strange form of media that, in my view, is the rare case when it’s a bigger business than cultural force. The impact video games has on culture is subtle and atomized because there’s no center, no mass experience. The rolling failures of eSports highlights this, and makes the dynamics a harbinger for the overall media industry. (Decrypt)

The newsletter winter is coming: There’s too much of everything, and a rationalization of the “newsletter space” is overdue. Too many arbitrage plays without much in the way of unique differentiation. And the inbox is becoming a “wasteland.” I don’t believe in the death of X tropes, but I do think most trends end up retracting to a normal level. People building real brands will diversify from email as a delivery vehicle. (Matt Karolian)

Something interesting: I’m not sure if China-style live shopping will ever take off in most markets.

Win a Webby: Reward the long nights, and prove your team is the one to beat by winning a Webby. The final entry Deadline is Friday, Dec 15. Enter now. (Sponsored – The Webby Awards)

Video is a game changer

For many publishers, achieving 100% monetized video coverage on your site is not an easy task. Read more about why it's not as difficult as you might think, and the benefits you can expect with having video on every page - not only higher ad revenue but also increased user engagement and article recirculation.

Learn more

Interface shift

In a world of limitless content, interface is the commanding heights of media. The only way to make sense of the sheer amount of information is through filtering that invariably happens at the interface level.

There’s a reason that Google was cutting such generous deals with Apple. With the iPhone, Apple controls the interface and therefore can extract tolls. Google knew this game well, after all its meteoric rise isn’t so much a story as unbridled innovation as much as near flawless execution of using its dominant market position as the interface to the open web to extract all manner of transaction fees.

Barry Diller gets this. In 2019, Barry wrote Google chief business officer Phillip Schindler a searing email. The IAC chief noted that Expedia’s subsidiary, VRBO Travel, saw its search spend go from $21 million to $300 million in five years while receiving the same amount of traffic. “The only conclusion is Google has systematically moved every lever in its hegemony over search to disembowel our business.” Translation: This business model is closer to owning the only parking lot next to the beach in a resort town than a media business.

That’s the kind of thing you can do when you control the interface to the open web. There is an inexorable shift in two key interfaces, search and the phone, as the prevailing winds in interfaces shift to being more “natural.”

An exec recently told me of a publisher they’re advising that is moaning over the sharp erosion of search traffic. Publishers have broadly suffered an annus horribilis that didn’t snap back in Q4. This exec said their advice was blunt: “Wait until it happens to search.”

In truth the now advanced erosion seen from social platforms is coming slowly to search. If Barry didn’t like the price he was paying for traffic, he’s gonna prefer that to when the traffic disappears. The 10 blue links of search was a paradigm as flawed as the third-party cookie. It wasn’t a secret that what people really wanted from search was answers, not links to hunt for them. It’s why Ask Jeeves existed. The timing and tech was just off, not the inexorable shift from clicking links and then back buttons. It’s hard to believe we will go back to typing specific brand URLs into a browser to visit the homepage. That’s nostalgia.

By the same token, the dependence on the phone is silly. It is not meant to play the role it does as people’s interface to the world. That it is even a phone – meant for making phone calls – is a tell. The attempts to supplant that have been mostly farcical. Google Glass was absurd. The Snap glasses were not much better. Smart watches haven’t replaced the phone. And the new AI pin has inevitably been panned and snarked.

But underneath it all is a shift. The only question is timing. The role of media and brands will be different in a world where agents replace apps and answers replace links. Publishers, particularly those reliant on text on page, are gas station owners in a shift to EV. Troy wrote about this coming shift in much more detailed manner at People vs Algorithms:

“In the AI mediated world the process of finding and sorting and evaluating and comparing is displaced by the smart computer. Service is automated. Markets become more efficient. Brands struggle to reinforce their uniqueness.

What Troy is getting at, and we’ll discuss this later today in a recording of this week’s People vs Algorithms podcast, is the tide is shifting to develop something of a “universal interface.” The chat interface is typical sci-fi stuff. Tell the Super Brain what you want to do, the Super Brain goes out and gets it done. No downloading apps, no combing through search arbitrage sites, no “skip to recipe” buttons. There’s a reason big publishers are lawyering up instead of frothing at the mouth to be among the raw materials parsed by the Super Brain. 

In times of great change, best to focus on what doesn’t change. For Jeff Bezos, that meant not trying to predict the future — nobody knows – but on what will remain the same. For Amazon, it meant people would continue to want good prices and immediate satisfaction. For publishers, starting at such first principles means focusing on what won’t change in the AI era, such as the need for trusted information with a unique point of view, help making sense of complicated issues or areas, the human need to congregate and more.

Commodity text content has declining economic value. Evergreen content optimized for search has been, on a unit basis, been the most lucrative part of digital publishing. That economic value will inevitably erode. 

Viewing the Humane and OpenAI demos, I was left believing voice, literal and figurative, is one thing that will not go away. It’s one reason why I dismiss doomerism over podcasts. Maybe the format morphs and bad podcasts get crunched, but a shift from text to voice seems inevitable. Literal voice is an important trust and empathy signal. It’s why any texting argument is best to take to a phone call because people are more reasonable. The internet is an angry place in large part because it’s easier in text.

There was an idea during the pandemic that in-person gatherings would go away. That was a bad bet because it was a bet against something that doesn’t change. No souped-up webinar is going to replace getting like-minded people together in person. There’s a reason that “virtual” leads are priced so much lower than getting a company in a room with a prospect. That doesn’t change. Community is the last refuge.

Finally, I don’t think humans trusting other humans vs faceless brands changes. It’s in our nature. Sure, we’re tribal and often do horrible things to other humans, but overall human nature has a good track record of avoiding extinction. And that’s largely by trusting others, maybe not broad groups but on an individual level. I don’t see that changing.

Thanks for reading. I keep wanting to revisit my piece on twilight of the brands and the feedback I got. Next time. Be sure to send your feedback on interfaces and anything else by hitting reply. I hope to survive the email newsletter winter.

Today, I wrote about the demise of Jezebel, the end of the blogging era and the futility in nostalgia for a past that’s rarely as great as remembered. First up, a message from Omeda.

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Landing in Gmail’s Promotions tab hurts your newsletter’s visibility and keeps you from driving subscriptions from your newsletter. But trying to game Gmail’s sorting algorithm can threaten your deliverability and backfire on your brand.

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Jezebel died for the web publishing’s sins

Whenever a digital media brand goes under, or even is “paused,” there’s a tendency of journalists in particular to go into deep mourning, only for most people to forget the brand ever existed in the first place. With Jezebel, it is different. This was a brand that was differentiated and ambitious, with a loyal audience. It was one of the remaining “legacy brands” of a now-bygone era of blogging before the algorithmic content mills.

I had a conversation last week on the blogging era, and why many who were in junior high during it still pine for it. The nostalgia for blogging is mostly nostalgia. It’s like how a party was always better earlier in the night. Blogging has gone from a thing, or an era, to a symbol of a web that was full of diverse writing and thought, with publishing brands that were confident to the point of cocky, and just plain more interesting.

That didn’t come to pass. The most interesting brands of that era either collapsed or became simulacra of themselves, destined to become “verticals” in a drab portfolio. Newsletters could follow a similar trajectory. 

Naturally, fingers get pointed when a brand like Jezebel goes out feet first. The obvious enemies are trotted out. Jim Spanfeller is a handy foil, and private equity is out of central casting for a villain, not to mention an entire generation of business-side publishing executives who have proven completely inadequate to the task, never mind that even Jeff Bezos is slated to lose $100 million with The Washington Post this year after owning it for a decade. (He’ll probably save that in taxes by relocating to the Billionaire’s Bunker in Miami.)

The most interesting new villain trotted out is timorous marketers who hide behind the fig leaf of brand safety. Brand safety is perfect for the often vacuous world of brands. It is an airy notion that is nearly impossible to not support. Think of it as the marketer version of optimism. Do you really want to be a pessimist? 

The problem with brand safety is it is yet another example of a “problem” being addressed by creating an entire class of middlemen who levy more taxes. Like most middlemen, these vendors work for the demand side, not the supply side. Even with ad spending in flux, brand safety companies are putting up good results. After all, they have a good pitch. Since the first time I started covering advertising, I’ve heard of the screenshot industrial complex. Marketers and agencies live in fear of some screenshot of their ads appearing next to “bad” content. Enter brand safety, the ultimate CYA solution. Is there collateral damage? You bet. 

The truth is Jezebel’s modern twist on feminism has no place in what remains of the open web today, which is at risk of bleeding out and being replaced by the information space. The economic value of text content is in decline, particularly in service of an ad model. Having a sharp edge isn’t great in the best of times for attracting advertisers, who often reward what I call an “eggplant premium” on bland, plausible brands that take on whatever flavors ladle on top. They want to connect with younger audiences and “the culture,” but only brand safe. It’s like clean corporate comedy, an utter contradiction only the deluded Boss Class could believe.

I had another conversation last week with a reporter working on a story about the All-In podcast’s potential as a media business. I found it perfect for the moment: Media as the exhaust of investors looking for deal flow. Low cost and filled with hyper-connected characters that give the semblance of bringing you “in the room” where power is dispensed. It doesn’t even matter if this is accurate, it’s aspirational. Something that won’t change: Creating rooms people want to be in. Honestly, that sounds like a better model than hiring journalists to create stories about serious issues and selling ads on webpages.

That’s because direct marketing has swallowed the ad industry whole. It’s now normal to hear of a big brand CMO who came up through data. This does not favor content publishers, no matter who runs them. I spoke to one CEO who kicked the tires of Jezebel. This was after the perpetually optimistic executive let out a long sigh after I asked how the year ended up. “Glad it’s nearly over” is the response I typically get. This exec’s reaction to the notion of taking on the site was akin to the current meme of Vince McMahon crying. Another hard truth: Unionization has made salvaging these brands more difficult because it reduces flexibility for any new owner. The coming. year will see lots of consolidation and capitulation in publishing, and these protections in many cases will end up working against survival.

The hopes for Q4 making a terrible year less terrible aren’t panning out. The rolling cuts at places like Vice, CNBC, Condé, G/O Media, The Washington Post and on and on are all you need to know. Nobody had a good year, even by the grubby standards of digital media. The old playbooks aren’t working, and they’re failing in a variety of ways by a variety of people. That speaks to a structural weakness vs cyclical “headwinds.” 

 The hard truth is we live at a time of ephemeral brands. This is a hallmark of the digital media industry, and it appears a feature rather than a bug. There is simply too much available now to expect many 100-year brands to emerge. I used to say that was the goal at my last job. Now I don’t know if that’s possible. Instead, brands will be more fleeting, more like bands that burst on the scene for a period of time before breaking up over fights about money and power or shuffling off to play nostalgic shows. The publishing version of this is heading off to the SEO glue factory. Give G/O credit for not turning Jezebel into a “commerce play” to be harvested for its SEO authority in service of endless gift guides for the modern woman in your life. Sometimes a dignified death is the preferable option.

My hope is Jezebel will inevitably live on in a new form, more suited for today than yesterday. I don’t care about AI and all the rest, talented and creative people will continue to make stuff and find a way. At a time of great change, better to focus on things that won’t change, and that’s one. The good thing about old playbooks no longer working is the door is open to newcomers with new models. Gawker alums at Defector have proven that a different path exists, and maybe the instincts of those making the product are better than “the business side.” Maybe the Five-Hour-Energy guy has a plan that will work. Might as well give it a shot. Pining for what could have been is wasted energy. Better to start fresh.

Thanks for reading. Send me a note with your feedback by hitting reply. 

Also, be sure to check out our subscriptions research, done in collaboration with BlueConic.

Subscriptions are a forever business

Yesterday, The New York Times reported hitting a remarkable milestone: It now has 10 million subscribers, with an eye on 15 million by 2027 with its reader revenue growing at a 16% clip from the year-ago period.. 

This is a stunning success for a business model pivot dating back to March 2011, when it first began its subscriptions journey with an easily circumvented paywall. At the time, the Times was just emerging from the lowest point in its history, when its survival was in question as it grappled with a transition from print. It’s hard to remember now, but the smart money was on the Times as a legacy brand in terminal decline. 

The Times has become something of the exception to the rule, or at least the model student. Its strength is in stark contrast to the stalled subscriptions growth at The Washington Post, once thought a credible rival to the Times, which has shed 15% of digital subscribers from 2021 to October 2023 and is on track to lose $100 million this year, despite being owned for the last decade by one of the greatest business innovators of recent times. 

My go-to analogy of the publishing business is a children’s soccer game. When the ball goes to one part of the field, a clump if kids surround it. It goes to another part of the field, the clump follows. The same pattern seen with SEO or video or commerce has happened with subscriptions, as publishers have looked to replicate the Times success. Even Condé Nast is pinning its future strategy on subscriptions (and commerce).

The question remains when we will hit peak subscriptions. The recurring revenue model is nearly too attractive. The market is not limitless for subscriptions, particularly of news. In fact, the Times has achieved its success by morphing its strategy from a paywall for news articles to a multifaceted news and lifestyle bundle that’s future growth is more reliant on finding the next Wordle than the work of the Baghdad bureau.

That’s a tacit acknowledgment that the subscriptions business is maturing. The Rebooting conducted a survey of 201 publishers in October 2023 to find the state of publisher subscription programs. The research shows that the heady days of subscription programs with rocket ship growth are in the past. The market has matured, and the name of the game is increasingly turning to retention – see the Post for a cautionary tale of what a churn spiral looks like – and wringing more money out of subscribers, even as they still need to fill the top of the funnel with discount offers.

A few highlights of the research report:

Publishers see diversification as the top goal of subscriptions. The research showed publishers are seeking a healthy balance in their businesses. The clear top priority was to diversify revenue, followed by the need to understand their audiences better.

Subscription businesses are maturing. We found was only a minority were still in hyper-growth mode of over 20% growth. Instead, most publishers are seeing modest growth in subscription revenue, with the most common growth rate (30%) being under 10%. That’s a natural evolution, as subscriptions become what BlueConic’s Patrick Crane calls a “forever business.”

Filling the bucket is still top priority. The biggest challenge identified by publishers was increasing their overall number of subscribers, with churn as the second biggest challenge.

Churn is a looming focus. While getting new subscribers ranked as a top priority, churn was tabbed as the top looming trend in subscriptions. Inevitably, the maturation of these businesses mean that the focus will shift from top line growth to driving higher revenue per subscriber, as the Times is doing with its bundle strategy.

Publishers are mostly neutral about the success of their subscription programs. There are no silver bullets in media. It’s all hard. Subscriptions are no different. A slim majority (52%) said they were either neutral or dissatisfied with their subscriptions progress. 

Get the report

Jeff Selingo spent eight years at the Chronicle of Higher Education, serving as editor in chief and editorial director, before setting off on his own path that combines an academic posting, a nano-publishing operation, book writing and more. Jeff and I have traded notes on the independent path over the years, and I wanted to have him on The Rebooting Show to discuss what we’ve both learned on the independent path. We discuss the transition from editorial to sales, why treating “lifestyle business” as a pejorative is strange, and fighting the pull to rebuild what you left behind. Check out the full conversation on Apple, Spotify or wherever you get your podcasts.

Do brand still matter?

One more podcast. On this week’s People vs Algorithms, I had separate conversations with Troy and Alex because of time zone challenges. Both revolved around whether the power of brands is on the decline, and how AI could accelerate the erosion of flimsy brands that don’t mean much to many, even if people pretend otherwise. You can get the full podcast on Apple, Spotify or wherever you get your podcasts.

Thanks for reading. I’m going to have more on the twilight of the brands on Monday because I got a lot of good feedback, and thoughtful critiques. I always welcome your feedback. Just hit reply to send it.

I’m returning to the topic of AI through the lens of what it means for the function of brands. But first, a message from House of Kaizen, which helps publishers take a systematized approach to subscriptions growth by aligning with audience needs. Seems sensible.

What does good growth look like?

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Twilight of the brands

The internet has mostly been a disaster for publishers. The promise of the internet was that, freed from artificial constraints, publishers would amass far larger audiences than ever possible in a world of printing presses. Yet the elimination of scarcity eroded much of the economic power of publishers, suddenly in competition for finite attention with everyone and everything on the planet. Meanwhile, performance marketing ate the ad industry, eroding the brand building function many publishers relied on. In a direct marketing world, the most data wins. Publishers were bringing a butter knife to a gun fight.

But there was always brand, the somewhat squishy concept that in a complicated and messy world – and the internet is all those things and more, needless to say – people would use brands as a guidepost. The key role of brands has long been a shortcut for people who don’t want to play Columbo for every decision they make over the course of the day. 

There’s math involved, but let’s be real, anytime ad people are talking “lovemarks” and whatnot, there’s a heavy dose of magic (and snake oil). Last night, I jokingly posted a screenshot of the “Brickin’ for Chicken” promotion at the Sixers games, where the crowd gets free Chick fil-A if an opposing player misses two free throws in the second half, noting that it deserved a Cannes Lion. One longtime creative director DM’d me: “It’s probably more effective than 90% of winning work at Cannes.” John Wannamker probably overestimated the 50% effectiveness.

That brand premium has continued to erode, as society overall is more skeptical of institutions of all kinds. I’d argue this accelerated even more as many brands willingly or were pushed into taking social stands that put them smack dab in the middle of our running guerrilla culture battles. It’s gotten to where companies are expected to weigh in on every global issue, even if it has nothing to do with them, since even shutting up isn’t an option. In many ways, they brought this on themselves, either out of conviction or expediency. Walking that back is going to be tough.

Storied publishing brands are on the ropes. 

• Condé Nast is mired in conflict and strategic drift. It made a sensible bet on using its brand heft to supply streamers with a steady supply of programming at a time when “IP” was the buzzword au moment. The problem is that voracious appetite for programming was artificial demand of the ZIRP era. Now, it’s onto commerce and subscriptions. Both of those will be a challenge. Commerce is an SEO strategy at a time when SEO is undergoing wholesale change, and we have all gotten the $1 offers for Condé publications on Instagram; I don’t see how the math works on those when subscription fatigue erodes the ability to jack up rates sustainably. There’s some rewriting of history that magazine companies had true dual revenue streams. These were always advertising businesses.

• At The Washington Post, new CEO WIll Lewis is charming staffers. He’s fortunate, because as a boss, you always want to enter a turnaround situation to set the expectations bar appropriately. The headline number is alarming enough – the Post will lose $100 million this year a decade under the ownership of one of the foremost innovators of recent times – but the previous regime clearly lost the room. “We have an editor who doesn’t know what she’s doing, a publisher who didn’t know what he was doing, and an owner who took his eye off the ball,” one staffer told Vanity Fair. Say what you want about journalists, they have finely tuned bullshit radars.

• The New York Times is one of the few success cases for a large news organization that has modernized its business model. To do so, it needed to dispense with the “paper of record” brand promise and instead has embraced being a “truth teller.” The truth can be messy. Just look at how it is under fire for its coverage of the Israel-Hamas war. Its hard pivot to be anti-Trump was savvy in the short term, serving to accelerate its direct revenue model from the aggrieved and outraged, but it also shrank its TAM. You can’t really be the paper of record if 40% of the market sees you as a “woke madressa,” whatever that means. At some point in the not-too-distant future, the “other” line of the Times’ revenue breakout that includes its gaming business line will surpass advertising.

• In a world where NYT wants to be CNN, CNN wants to be the NYT. The transition to a DTC business will test just how strong the CNN brand is. As we saw during the post-ZIRP reckoning in DTC, many of these brands were mispriced on the basis of cheap distribution and low-cost of capital. The same is likely the happen here. The two-bites-of-the-apple cable model mispriced the value of these brands.

Publishers have long complained about the power platforms hold over their businesses. The loss of control of distribution has doomed many to be vassals of tech companies, embarrassingly pivoting to whatever is the latest project of a Palo Alto product manager. Be careful what you wish for, because the biggest tech companies are divorcing the publishing industry overall but the news sector in particular. The experience in Canada is something of a warning. Publishers will need to pay for distribution just like brands got a rude awakening from Facebook and Google that organic reach never lasts. Publishers need tech more than vice versa. 

The 10 blue links era of search is coming to a close. Publishers have already seen far less traffic distributed to them from Google. When the dictionary is talking up short-form video, you know things are bad for text publishing. Many “brands” in a search environment are what I consider “minimally plausible.” They don’t really exist in any other environment. It’s like how Mr. Beast the brand can only exist in the over-optimized world of YouTube. In search, many publishing brands are not designed to be lovemarks or to be worn on t-shirts, they’re just good URLs whose authority is with algorithms, not the real world. Reddit can threaten exit; publishers cannot.

It’s no surprise that many ailing legacy brands have been dispatched to the SEO glue factory. Better to compete with the random minimally plausible brands of SEO when their real world utility has mostly evaporated. You can slap a legacy magazine brand on a “activation” all you want, but that’s for brand managers. These brands have to outsource the culture clout to influencers. These are not long-term strategies.

AI will scramble this picture more. OpenAI’s demo of new GPT tools showed the progress it is making to bring AI to “the real world.” The creation of “agents” to accomplish tasks is potentially profound. “GPTs will continue to get more useful and smarter, and you’ll eventually be able to let them take on real tasks in the real world,” OpenAI promises.

That will erode a big function of brands, and as people outsource more decisions to agents, the competitive advantage from building a brand will erode. Publishers are downstream of that, and it will be another blow. I can’t wait to tell the AI agent to get me home insurance. I don’t think the AI agents will be influenced by the lizard commercials. Knowing tech, they’ll offer an API for brands to pump their messages into LLM models. Pretty soon ad agencies will be deploying creative director agents – you know WPP’s will be called David after David Ogilvy – to advertise to other bots. 

I was struck by Sam Altman’s example of creating a custom GPT. He chose to create one that dispensed his advice to startup founders. I found it telling that he created this agent for Sam Altman not YCombinator. That human premium will endure far longer than institutional brands that, to be fair, are mostly coasting on value created long ago. Brands have long been like airplanes. Even if you cut the engines, they stay in the air for a long time before the rude awakening of meeting the earth.

Thanks for reading. Send me a note with feedback by hitting reply.

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System players

Watching James Harden play basketball has long been a frustrating experience, even more so at the tail end to his career. When James was mercifully traded to the Clippers, his introductory press conference featured a classic line: “I’m not a system player. I am the system.”

James isn’t wrong if he changed the tense. He was a system, a unique talent whose game transcended being pigeonholed into a coach’s schemes. He’s not that player anymore – he needs to be a system player at this point, which is why the end of his career will be a series of brief stints – but they exist in sports, music, fashion and other creative industries. It’s not like Pharrell joined Louis Vuitton to slot into a system. He’s a system. 

I spend a lot of time talking to people taking an independent path. Most of these people recognize the opportunities that exist today to dispense with being system players and embrace James’s approach, hopefully with better results than dribbling out the shot clock before a step-back jumper with less left and separation than he could muster in his prime days. But I find a common thread in struggling to put in place a system because otherwise you end up trying to do everything yourself and end up doing a mediocre job by spreading yourself too thin, an individual version of the Peanut Butter Manifesto.

That means covering up for weaknesses – nobody’s good at everything – and finding ways to compete with far larger, more resourced organizations that have ingrained systems for production, distribution and monetization. People often fall back to the cliche of “scaling yourself.”

I wrote last week about sales from my experience over the last three years. Part of building a system is understanding what you’ll do yourself and what you’ll outsource. Every company I’ve been part of struggles with understanding what is core to what they do and what can better be done by others. This becomes acute when on at nano–publishing scale. Functions where the individual can’t add much VORP get outsourced or even ignored. As Troy writes, better to sit at the intersection of product and revenue.

For instance, I stayed on Substack for the simple reason that I couldn’t track it hurting the ability to make money and worked enough that the time to replatform would better be spent on the core areas, content and sales. Same goes for the growth hacks many newsletter “operators” spend an inordinate amount of time and energy on. I understand the approach, only I don’t have much expertise in getting a low enough CAC on subscribers and crunching the payback period. 

My biggest expenditures as a business is in client service and account management. The thinking there is that the wrinkle of the more-with-less era is you’ll always be competing with people with more resources. And your clients will expect the same level of service and professionalism – there’s a grace period here, thankfully, but it doesn’t last forever – no matter the size of the company. If they’re paying money, they expect the same level of service. As someone who preferred working in the hot kitchen to the air-conditioned front of the house, that’s an obvious area to invest in.

In any of my conversations with individuals figuring out the independent path, I advise them to build a system around yourself because, unlike James, you are a system. That means having self-awareness around where you create value and where you create none or even negative value. 

Recommendations

New Washington Post CEO Will Lewis is he’s entering a turnaround situation, with the Post on track to lose a staggering $100 million this year. He’d be wise to put to bed the “democracy dies in darkness” hubris of the Trump sugar high. The Post has long been a strange creature, a local newspaper in a company town whose business just happens to be sprawling federal government. The pretensions of challenging the New York Times as a premier national, even international, news brand were an anomaly. The Post’s influence has sprung from its location. Ben Smith has it right when he says that the obvious approach is to look around and see that the most vibrant part of digital publishing is located all around the Post in the narrow niche players  – Politico, Axios, Punchbowl, et al - that have emerged with solid business models built around the gusher of money that goes into influencing national policy. There’s no reason the PostThat will inevitably mean pulling back from some non-core areas. Despite the gnashing of teeth, there was no reason for the Post to be so into eSports. “While “Ag Insights Daily” doesn’t have the same ring as “Democracy Dies in Darkness,” that’s where the money is.” (Semafor)

The picture isn’t much better at BuzzFeed, which is in danger of entering a doom loop, as its engagement and ad revenue keep dropping. Its latest pivots – long-form video, creators, AI of course – might be the right lanes, but are likely to take too long to get going. BuzzFeed’s unloading Complex – I don’t see how it will fetch $140 million for Complex when the entire company, with Complex, is currently valued at $47.5 million – will only buy so much time. Betting on homepage traffic to HuffPost is… not inspiring. What’s more, areas that were perky are fizzling. Commerce only grew 3% in the third quarter, which isn’t going to make up for 35% declines in ad revenue and 32% in content studio revenue. Content-desperate streamers have made a U-turn on their ZIRP-era spending spree to embrace austerity. (AdExchanger)

The good news is BuzzFeed isn’t banking on Web3. The price of Bitcoin has more than doubled this year so far, and the crypto crowd is popping back up, hopefully not without the “gm,” '“iykyk” and “wagmi” stuff this time around. Web3 continues to be a disappointment. I only half-joked with Blockworks CEO Jason Yanowitz that the term NFT simply needs to be discarded and never heard from again. There’s too much baggage from the monkey pictures. The Bored Apes people are apparently still believers. (Sunk costs suck.) Even Elon Musk is mocking the entire enterprise, pointing out the photos aren’t actually even on the blockchain. A recent Bored Apes gathering in Hong Kong temporarily blinded some attendees. A metaphor. No wonder OpenSea is cutting another 50% of its staff. That $13.3 billion valuation in early 2022 will go into the ZIRP time capsule. (The Information)

The PE rollup model is harder post-ZIRP. Blackstone-backed Recurrent is onto its third CEO in three years, with two in the past year alone. Getting very different pieces to work together is hard in the best of times — synergies are better on paper — but harder in tough ad climate and structural challenges like the erosion of search and social traffic. (Adweek)

The Silicon Valley playbook is to ask for permission after the fact. Time and again, “disruption” has come by ignoring regulations and laws in the name of innovation (and coincidentally massive amounts of wealth). That will be tested with the new computing paradigm of artificial intelligence intelligence, as genAI runs ramshod over copyright. Forget about fooling me once or twice, this is about the 15,000th time. Not all that funding is going to compute; lots of it will make its way to AI-fluent lawyers. (The Verge)

Something interesting: Romance novel covers have completely changed. “Bodice ripping” didn’t age well. (The Pudding)

Thanks for reading. Send me a note with your feedback by hitting reply.

The best product-led businesses are customer obsessed and it stands to reason that the most sustainable media businesses are similarly audience-first. That means segmenting, understanding and experimenting to meet the needs of each audience at every decision point in the delivery of their experience. Aligning business success with their moments of success to keep them coming back, on their own, without platforms as intermediaries. House of Kaizen works with publishers, subscription and recurring revenue products of all kinds to do just that. House of Kaizen has a proven track record built upon a growth framework that puts audiences first to grow revenue from advertising, commerce and subscriptions. 

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How Blockworks survived crypto winter

In addition to scams, the crypto market is defined by volatility. As a new asset class, this is somewhat normal, although like most things, crypto has taken it to the extremes, as the price of Bitcoin has wildly oscillated since it arrived on the scene in 2009, not to mention the rise and fall of the array of shitcoins the sector has produced. 

Blockworks, founded as a crypto events company in 2018, has rode these ups and downs. It began in the face of a crypto pullback. As crypto recovered and headed into a bull run that accelerated during the pandemic into what I’d consider a bubble, Blockworks expanded from events into podcasts and news. 

Mostly bootstrapped, Blockworks focused on its thesis that crypto would become a new asset class that would enter the mainstream market, and financial firms would need a trusted source of information and data beyond an anonymous Twitter account with an avatar monkey shooting lasers out of its eyes.

“We've got a lot wrong over the years, but one thing we got right was the thesis, which was that crypto would become this huge institutional asset class,” Jason told me on this week’s episode of The Rebooting Show. “As that happened, the number of investors who came into the industry would grow by orders of magnitude. And those investors were going to demand a much more sophisticated level of information about the industry and the asset class, something that looked and felt a little more similar to a Bloomberg or Wall Street Journal, instead of the anonymous blog that gets posted on Reddit.” 

Blockworks used events to generate the cash flow needed to expand. Jason is realistic about events: Beyond any airy notions of community, the job of most events is money. You can generate far more money from events than you can through selling newsletter and podcast sponsorships. 

“The main goal of a conference is not to build a community,” Jason said. “That's this nice byproduct. The main goal of a conference is generating a ton of free cash flow” that can be put to work growing other parts of the business that typically accrue higher multiples, like recurring revenue.

That approach let Blockworks escape the wreckage that came to many peers during the crypto winter. Consider the tally:

• The Block was thrown into disarray by a scandal in late 2022 in which its CEO was secretly taking payments from Sam Bankman-Fried, the crypto villain who has apparently become quite dashing in jail. Earlier this year, The Block cut a third of its staff and ousted its interim CEO.

• CoinDesk cut 40% of its editorial staff in August to prep for a sale by parent company Digital Currencies Group as it was embroiled in a legal tussles over its bankrupt subsidiary Genesis. It even brought in a former Trump impeachment lawyer.

• CoinTelegraph last month caused the price of Bitcoin to skyrocket by erroneously reporting that the long awaited Bitcoin exchange-traded fund was approved by the SEC. It wasn’t.

Of course, all digital media has had a tough comedown from the pandemic and ZIRP sugar high. In the days when crypto brands were splashed on sports stadiums, consumer-facing crypto publications would see traffic rise with prices. The opposite holds true. Advertisers looking to reach retail investors either went out of business or severely curtailed spending. But Jason says Blockworks has fared comparatively better because crypto-native infrastructure platforms continue to need to reach builders. And despite many tourists moving on, crypto builders have continued to build.

Blockworks, on the other hand, closed a $12 million Series A round in May, at a $135 million valuation, to build out its nascent data and insights arm. (Blockworks is not alone in the category. More consumer-focused crypto publication Decrypt has raised $10 million in May 2022. It’s betting on a Web3 publishing platform it’s building out.) Rather than look for subscriptions revenue in individual subs at a modest price, Blockworks is going big with an enterprise product geared to institutions with seats costing $2,500. It’s a big bet to build pretty much the digital equivalent of a company like CapIQ or Factset. Blockworks Research focuses on research, data and analytics and “protocol governance.” 

The media business operates at the top of the funnel, the events in the middle and Blockworks Research at the pointy bottom. The product is squarely focused on decentralized finance, or DeFi, rather than the entire crypto universe.

“We don't go a mile wide and an inch deep,” Jason said. “If you are an investor or financial institution, whether you're Morgan Stanley Visa, Stripe, a crypto fund or a traditional fund investing in DeFi, you have to subscribe to Blockworks Research.” 

I had a brief, mostly unhappy experience with a publishing brand in the bordering fintech space. I didn’t know much about the area, and I quickly realized that the industry was too sprawling for a micro-brand. By that, I mean that fintech is shorthand for tech that is impacting the financial services industry, a sprawling global behemoth that represents a quarter of global GDP. It wasn’t just fintech, it was regtech, insurtech and so on and so on. The attraction of the market was it’s big, the problem was it was too big.

Blockworks focused on the B2B story, even when the frothy days would invariably pull brands into the consumer side as people got the vapors by seeing eye-popping run-ups in prices. Time and again, the lesson is learned that even big companies end up starting with a small addressable market. That’s because massive markets mean massive numbers of competitors, as Peter Thiel preaches.

Blockworks is well-positioned now as crypto is sneakily back in some ways, as the price of Bitcoin has risen 113% this year and is even talked about by Blackrock CEO Larry FInk as part of a “flight to quality.”

Listen to the full conversation on Apple, Spotify or wherever you get your podcasts. Thanks to House of Kaizen for sponsoring this series of episodes focused on how publishers are integrating subscriptions into sustainable business models. Check out their audience-first framework for aligning business goals with audience needs.

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It’s no secret a lot of ad tech's issues are born from complexity in the ecosystem. Hashtag Lab's software and services help simplify things for publishers. For example, HTL's featured Chrome extension, HTL Debug, is an easy-to-use tool for inspecting a number of common ad tech services. Install for free today.

Gen-Z is built different

Every generation likes to complain about new generations. We were subjected to endless stories about millennials killing all kinds of things while having an odd obsession with avocado toast. Gen Z, the label affixed to those born in the late 1990s up until 2013, is the latest generation to get the tsk-tsk approach from older generations. This is growing more acute now that Gen Z is reaching adulthood.

On a new episode of People vs Algorithms, Troy and I discuss the role of new generations questioning how things are done, and why older generations with too much to protect always push back. This was highlighted in the person of 9-5 Girl, who is working her first job and cannot believe the insanity of the 9-5 work day. Young Boomer podcasters were not impressed. But then again, she sorta has a point. The 9-5 work day was a product of Henry Ford’s manufacturing innovation of the assembly line. Many of our structures today were put in place for a completely different era.

I was last in an office in March 2020, and while I miss working with people – the biggest downside by far of the individual path – I absolutely do not miss the office. It was a blunt tool for organization. I’d see people come in and sit at their desks all day with big headphones on. It struck me that many of the airy notions of creativity fostered by constant interactions were also convenient excuses for control. Anytime you have someone taking attendance, it’s a tell. Many young people are pointing out the obvious: More often than not, the office is a detriment to work getting done.

The generational divide is stark over complicated socio-political issues like the war between Israel and Hamas. Younger generations are far less likely to support Israel as Boomers. There are many fingers being pointed to young people being brainwashed by woke college professors and radicalized by TikTok. Maybe. But I also can remember hearing how video games, heavy metal and 2 Live Crew were warping young minds when I was growing up. This is a generation that puts a lot of emphasis on representation and inequality, so even when I’m surprised, I try to take their viewpoints seriously and literally rather than sweep them away as being ill-informed or under the sway of others. 

Listen to the episode on Apple, Spotify or wherever you get your podcasts. True to his European nature, Alex was on vacation this week, but he’ll be back next week. I’m hoping we can discuss the future of Condé Nast.

Thanks for reading and listening this week. Send me a note with feedback or any other thoughts by hitting reply.

Hashtag believes that the digital ad supply chain starts with the publisher. That sounds obvious, but the digital advertising ecosystem is often set up so that a vast array of middlemen and the buy side have greater visibility into a publisher’s audience than the publisher itself. With HTL Debug from Hashtag Labs, you can easily understand and visualize ad requests and bid responses for common ad tech services: Install HTL Debug from Hashtag Labs for free today. 

Thanks to John Shakman and HTL Labs for the support.

Adventures in sales

Sales might solve everything, but it’s notoriously difficult to get right. I spent my career on the editorial/audience side. I tend to think in terms of leverage. What are the advantages I bring that have a high VORP? I could make the product myself, and have deep experience in the field. That was a big one. I was “more than a content guy” in my last job because tech, product and memberships were part of my remit. One glaring weakness: I never sold, outside hawking papers in front of Orlando’s Bakery in Avalon.

I’ve now sold over for three years, so I’ve dispensed with the disclaimer I don’t know sales. I’ve learned a lot, and I’ve developed an appreciation for sales acumen that isn’t like the caricature of a big personality who knows enough to be dangerous and is adept at simultaneously kissing babies and petting dogs.

Sales is a lot like reporting: It rewards persistence. I noticed over the years in an open newsroom that the reporters with the most well-sourced stories, I heard on the phones all day. The ones with thinly sourced stories, who told me they “reached out but didn’t hear back,” were far quieter. More is not always more, but in sales, more activity tends to correlate with more results. You have to be competitive.

But more clients isn’t necessarily better. To build a nano-publishing operation, you need to have bigger partnerships, because otherwise you’ll end up needing a sales infrastructure to support a churn-and-burn approach of many small clients. The leverage in small operations is in being small. That doesn’t mean turning down small deals, but it does mean being realistic about which ones can become true partnerships. 

Many well-meaning people encouraged me to find a “business partner” to handle sales. I thanked them, but never considered that path because I wanted to run the business myself but that would also eliminate a piece of leverage. The person making the product is going to be the best at selling it. I don’t care if they’re not a stereotypical sales person – this is usually a bonus, actually – but they will develop a different level of connection with clients. 

David Hansson reflected on this with the example of two key partners for 37signals, and how “modern commerce” is evolving. There’s a human premium that small business owners can use to have clients “buy the seller.”

“This in-person encounter made me reflect on modern commerce. How impersonal it is most of the time. Which is probably more efficient, and, as an introvert, preferable much of the time. I usually would rather deal with a web form than a salesperson, but it's different when you can establish a connection to someone actually running the show.”

Too many people think of sales as being a gladhander.  But it’s really about establishing a human connection with other humans. Kayvan Salmanpour, chief commercial officer at the Boston Globe, told me a key trait he looks for is self-awareness.

“Having self awareness gives you space to not be defined as someone selling but more as someone who is helping to solve a problem,” Kayvan told me. “It also gives you the skill  to read whether the client is responding or not and to adapt.” 

You only learn about your customers by talking to them over and over again. Actually, scratch that. You learn by listening. The good part about being a non-traditional seller is you don’t have any bad habits. You tend not to be the “who needs another drink” person, and most people outside sales are intimidated by it because they think of sales as the home of the aggressive extroverts. 

That’s not the case. The best sellers are close listeners and act more like consultants by identifying a problem and matching solutions to the problem with what the selling company does well and uniquely. “You have to be able to understand what the client’s business challenges are and then figure out how your solutions can be the solution,” Puck COO Liz Gough told me. 

The nature of sales is shifting. The talking-a-dog-off-a-meat-truck stuff is from a bygone era. There’s a reason people dreaded going to a car dealership. Sales is more consultative and less transactional. Many sellers are stuck in a bygone era of hand-to-hand combat for transactions. This is sometimes called “coin-operated.” Those sellers are the ones who get replaced by programmatic and AI. 

I don’t know if the 20x sales person exists, but the 5-10x one certainly does. The more-with-less era will see a lot of sales functions automated. The hand-wringing about the impact to editorial is mostly because editorial people are writing the stories. The sales function has felt the impact of automation for a generation now. It will only accelerate as companies no longer can deploy the “feet-on-the-street” playbook of overwhelming the market with a big sales force like meat-grinder assaults on Bakhmut. That doesn’t work in a more-with-less era.

“If you start hiring like crazy, you have to hire an ecosystem around sellers with account managers and marketers,” Liz said. “You’re adding a lot of operating costs.” 

Like most areas, the sales function will do more with fewer people. This favors a niche approach. The verticalization of sales organizations is a decade old, even if some legacy players are just getting around to it. That speaks to the need for expertise – and the realization that in some narrow but deep markets you can cover a lot of ground without a ton of people. Puck has all of three people selling. That’s because it mostly sells into concentrated markets like corporate affairs and for-your-consideration efforts. It helps if your customers are also consumers of your products, needless to say.

Again like other areas, sales will favor doers over strategists. You’ll need to carry a bag. I always liked the FedEx commercial of the fresh-faced, overconfident MBA called on at his first day in the office to address a problem. He cracks his knuckles and is ready to strategize, only to be told he’s to create shipping labels and not to worry, it’s easy to pick up. “You don’t understand, I’m an MBA,” he tells the woman. Her response: “Oh, in that case I’ll show you how to do it.” 

I’ve seen sales leaders who never talk to clients or even fully understand the value of the products. You have to walk the floor. You can’t be a general in a tent with a whiteboard or, worse, PowerPoint. You’ll never get a true feel for the market without talking to customers and truly understanding their challenges. It’s not rocket science. As one longtime exec advised me, “Don’t overthink it.”

Reporting carries over here, because you’re always listening closely to understand what the real story is and making connections in your head while carrying on a conversation. This type of parallel thinking – I’ve compared it to being bilingual – is needed in sales. You start to process things faster the better you get.

Drew Schutte, who has held top sales positions at places like Condé Nast and who worked with me at Digiday, told me, ”Sales people should have two ears, one mouth, emphasizing the importance of listening over excessive talking. By actively listening, you gain insights into the clients challenges and problems.”

The challenge of sales is solving problems in ways that benefit clients, ideally adds to the product value and, by the way, are good for the business. Solving for all three is an art form.

A lot of editorial people think sales is distasteful rather than this kind of Rubik’s Cube. That’s mostly because there’s a moralistic streak that runs through editorial, and for good reason. And in its crassest form, sales can be somewhat adversarial. We’ve all been on the other end of transactions where we have felt ripped off – I mean, I’ve lived in Miami – and that breeds distrust. Trust will only get more valuable.

“Don't try and convince someone of buying into a deal that truly isn't there,” Jason Krebs, a longtime digital media veteran, told me. “It's short term thinking and it damages long-term prospects.”

Finally, I think a lot of sales is doing the basics well. Be upfront, be confident but realistic, and above all else, do your job. You don't need to overwhelm someone with the greatest idea ever,” Jason advised. “Be accurate, be available, be respectfully persistent. Make the calls, do the follow up, act like a human (not a bot or a miscreant) and good things will follow.”

Thanks for reading. Send me a note with your sales tips by hitting reply. If you want to have a sales conversation, check out the packages we’re selling for 2024. (I don’t see the point in keeping media kits secret. This game is about execution and delivering results, not a secret formula like the Coke recipe.)