Thanks for reading. If you haven’t already, check out the People vs Algorithms podcast I do with Troy Young and Alex Schleifer. This week, we discuss:
- The future of bundlers, which you can safely bet will be tech middlemen
- What premium even means in publishing anymore
- Alex also advocates for the end of advertising, which I very much do not agree with at all, particularly for email newsletters and podcasts
Glide makes a cloud-based publishing platform used by leading publishers like News UK. Glide CEO Denis Haman explains why publishers should aspire to be product companies, but that doesn’t mean being tech companies:
“For me, publishers are the finest product companies out there. Improvements to the product based on feedback each day… each hour even. Look at ‘old fashioned’ print newspapers: all-new every day within a well-oiled framework that’s able to be adjusted at will. That’s a dream to even the most agile digital product teams! What publishers don’t have to do is go and build their own presses. Likewise, there’s no need to build the digital presses. You buy ones that allow your content teams to make fast decisions easily. There was a period where media companies were told they could become tech unicorns by having a go at being platform builders - at huge expense - only to find out it’s a millstone not a differentiator. I congratulate Vox Media for exiting platform dev to go back to doing what they excel at - building fantastic content-driven products.”
Axel Springer wants to be a big deal in the US
I visited Axel Springer’s gleaming headquarters in Berlin in 2017 for some meetings, along with a trip to its tech accelerator. This was around the time its leadership was presenting itself as more Silicon Valley than conservative Germans. They had even decamped to California in 2012 and the Bild publisher came back wearing hoodies and sporting a “lumberjack beard.” Imagine.
Inside the Springer HQ, I was struck by the swagger of executives, who spoke of their disputes with big tech companies not with the weary resignation I typically heard in the US but with the confidence that Google and Facebook would need to negotiate with Springer on a peer level. Springer is the biggest media company in the biggest economy in Europe. There’s a giant hot air balloon emblazoned with Die Welt (Springer’s high-brow newspaper) you can see from the headquarters, which is on Axel-Springer-Strasse. At the accelerator, a graffiti-filled wall – this is Berlin, after all – included an adaptation of a Bismark quote that Germans only fear God, adding Bild (Springer’s mass tabloid). This isn’t a company lacking confidence.
The gleaming office tower feels like a bit of an anachronism as a symbol of ambition. Don’t tell Springer, which is eager to tout its ambitions to become a major player in American media with a new US headquarters in New York that the WSJ bills as “a new futuristic building designed by award-winning Japanese architect Toshiko Mori” that will “act as a representative space for events gathering guests from politics, culture, science and the media.” In other words, it’s meant to mark Springer’s arrival as a major player in the US market.
Being a big deal in Germany isn’t the same as becoming a big player in a market like the US. Ask late-career David Hasselhoff. Cracking the US market is notoriously difficult for international publishers. The US attraction is obvious. The US market remains far and beyond the biggest media market in what Döpfner calls “the democratic world.” On a GDP level, the US economy is five times the size of Germany. The European ad market is large but fragmented, and news is localized by language and culture. With the weight of publishing business models shifting to subscriptions, the US again dominates. Americans are far more likely to pay for news. According to Reuters, 19% of Americans say they pay for news vs 14% in Germany (and a piddly 9% in the UK).
Springer has assembled a collection of US assets through acquisition: eMarketer, Business Insider, Morning Brew and in last year’s $1 billion bet on Politico. Springer doesn’t have a flawless record in its US push. It poured money into Ozy, after all. It also put money into Mic and GroupNine. The purchase of Business Insider in 2015 will go into the M&A hall of fame for the insane 9x revenue multiple Springer paid after losing out to Nikkei on the Financial Times. The BI multiple likely still appears on comp slides during publishing M&A negotiations. (That said, it was smart enough to make an early investment in Airbnb in 2012. Can’t win ‘em all.)
Springer is in the midst of something of a PR blitz and comes with a good narrative. CEO Mathias Döpfner clearly sees himself as a Murdoch-like media titan. The Washington Post sees a “contrarian” billionaire media mogul, while The Economist settles for “controversial,” in a nod to a sexual harassment scandal at Bild, which while broken by Ben Smith at The New York Times in 2021 remained a mostly German issue. New York magazine introduces him as a “press baron for the digital age.” He’s an outspoken advocate of democracy and support for Israel (Springer employees need to sign a pledge of support, although it isn’t required of Politico journalists) who is naturally talking up using AI to create articles.
Döpfner’s texts to Elon Musk suggesting Döpfner run Twitter is exhibit A of boundless ambition. (Musk came to Berlin in 2020 to receive the Springer Award and be interviewed by Döpfner, a former music critic who sensibly chose the business side and now owns a 20% stake in Springer, a remarkable stake considering he isn’t a founder or part of the founder’s family.)
Springer wants to become a big player in the US now. It has an interesting collection of assets to build from, in particular Politico, which has the blueprint of what a scaled journalistic news brand looks like now, since it has a high-priced B2B subscription operation to fund the kind of deep reporting that’s hard to do profitably these days. The strategic question becomes whether Politico follows the trend of putting more of its journalism behind a paywall, like The New York Times and The Washington Post, as Döpfner has hinted in the past. Or if it will see free access as a strategic advantage.
Choosing Politico as the flagship is a bit of a shift from Insider as the focus of Springer’s US ambitions. Times change. Politico’s model with a high-priced B2B subs operation and focus on elite audiences is more au courant. That said, Politico is an insiders’ brand, far more niche as a brand than The New York Times of The Washington Post. God forbid it adds food, shopping and games verticals. Those are tough lanes to switch into. Döpfner hints at further acquisitions in the WSJ. Ultimately its ambitions will come down to whether its brands can tend to their core while expanding.
Nothing in publishing is set-it-and-forget it, and that goes for affiliate content too. The industry loses an estimated $5.5 million monthly due to link rot, the catch-all terms for broken links and those pointing to out-of-stock items. This is money publishers are leaving on the table. Trackonomics by Impact.com’s LInk Scanner is a handy tool to hunt down link rot on your pages that’s costing you revenue. Claim your 25 free link scans today to see how you can save thousands of dollars in commissions every month. Get 25 link scans.
I’ve learned to ignore the sky-is-falling rhetoric from industry mouthpieces anytime some obstacle is placed in their preferred way of conducting business, either by governments or tech platforms. The pivot to privacy is a case in point. Changing privacy regulations are a form of disruption, the same way a new tech development – hello, AI – is a pain in the ass for many. Guess what, in capitalistic economies, the market adapts. Unsurprisingly, a new wave of startups is coming that are built for the new rules of the road around user privacy. Former Facebook execs have launched a new startup to solve the thorny issue of ad attribution, which has become far more difficult after Apple’s privacy moves and a raft of government regulations. Capitalism always wins.
My former colleague Lara O’Reilly has what we used to call an “autopsy” story of Mediamath, which I should add is not dead. (We called it an autopsy since there’s utility in examining what went wrong – and every autopsy needs an anecdotal lede of a lavish party during flush times, which is why I advise no startup to ever have a fancy party on a yacht.) The company never met its lofty ambitions, and Lara got the goods on the missteps and bad luck and timing along the way. The lesson: Take the money, don’t get greedy or hung up on measuring yourself against peers/rivals.
In my AI week in review, I noted that the notion of “woke AI” is silly because there will be AI chat bots tuned to all kinds of political ideologies. You will be able to have a conversation with Q, no doubt. Elon Musk is already on building out an alternative to OpenAI, which he confusingly also co-founded, in an attempt to do away with the restrictions placed on centralized AI. I suspect AI will again drag the debate into centralized vs decentralized. As Musk has found out with Twitter, content moderation is the product. With AI, that will be even more the case. The idea of these models being completely neutral is impossible in this day and age. Berserk Bing showed that any use of AI is going to involve editorial decisions about what is off limits.
Sassy, Jane and xoJane founder Jane Pratt is reading the launch of a new editorial brand, DeedDa, that sounds in line with her previous brands with plenty of first-person oversharing. What I find interesting is that the business model will be around commerce while her previous publications relied on ad models. Outside of certain niches – political influence ads, for your consideration ads – few new publications are launching with ads at the heart of their business models.
Be sure to check out my conversation with Patrick Trousdale, founder of The Daily Upside, a business and finance newsletter that’s amassed 850,000 subscribers since launching in 2019. We talk about his growth playbook and expansion plans with new newsletters focused on tech and the intersection of Washington and Wall Street. Get the podcast here.
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