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Digital media hasn't created the next Condé
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Digital media ephemera
Earlier this week, I was taking a walk with a visiting publishing executive. We were catching up after several years, and he remarked to me that he and others were likely wrong in believing that digital brands would rise up to replace legacy brands. There was a time when this was a mostly unchallenged assumption. The question was not if a company would become “the next Condé Nast,” it was more which digital media company would fill that role.
In 2022, the evaluation is quite different. BuzzFeed has languished as a publicly traded company and has seen time spent with its brands decline 19% year over year. Bustle Digital Group, a collection of lifestyle properties that plausibly could be a digital equivalent to Condé, is cutting costs, titles and people. Vice Media, including Refinery29, faces an uncertain future after a scrapped SPAC and talk of chopping up the company. The candidates for the next Condé are dwindling when a collection of B2B newsletters gets put forth. The Times, once seen as hopelessly behind, is lapping the field, even if people there are also grumpy. Why is that?
The uncomfortable truth could very well be that digital media moves and shifts so quickly that it operates in a different rhythm than analog media. The permanence of brands built in the analog era was fostered over decades as these businesses were protected, to a degree, from the fierce competitive pressures of upstarts. You could not easily spin up a newspaper. Starting a magazine like Portfolio cost $100 million over two years before Condé shut it in 2007.
That’s gone. And the costs of starting a media brand have never been lower. Publishers used to brag about their fancy content management systems, but those platforms are often now a depreciating asset. Earlier today, I spoke to Reid Wilson, a former reporter from The Hill and The Washington Post, who has begun a new publication to cover politics at the state level, Pluribus News. The new brand has a readymade business model proven out by Politico and Axios: Get close to legislators and those influencing them, tap into corporate affairs budgets while pairing that, ideally, with high-priced and expensable subscriptions. These are not models that require millions in financing. The immediate success of models like Punchbowl News show the vibrancy of the market for influencing legislation. There’s undeniable opportunity in niches, particularly those catering to the rich and powerful, but there is scant evidence of many digital media brands establishing the kind of staying power of previous eras.
That’s an amazing benefit. The success of top creators on YouTube and elsewhere show that brands can be built very quickly and very efficiently. Such a low cost of entry means more entrants and more competition, more fragmentation. I’m unconvinced creators who build huge followings off stunt videos are creating 100-year brands. What’s more, digital media is fleeting. For years, publishers wanted big brand advertisers to find the same cachet in websites as they did in magazines. The “problem” was often assumed to be one of needing a “bigger canvas” or new “storytelling” formats for ads. But the reality is website-centric publishing brands never had the heft of their analog counterparts. I’m not sure if the newsletter boom turns any more durable, particularly as many of the most successful newsletters are tied to individuals. Casey Newton noted in our recent podcast that maybe it’s best to view these models as ephemeral by default.
I’ve come to believe that most digitally native brands will prove ephemeral, not because of poor execution but because the cycle of life in digital media is on warp speed. That doesn’t mean the life of every digital media brand is short. If anything, it’s hard to fully kill a brand online; thanks to SEO, almost any brand can live on in some kind of zombified state. But most will have a shelf life, a brief period in which they’re at their peak followed by a decline. The good news is, more will be created to take their place.
Semafor is coming
Speaking of new brands, Semafor is launching soon. I was glad to get an offer for a newsletter swap, which is basically a trade of promotional posts for two publications to each increase their reach. For those who have not gotten one of the Twitter ads, Semafor is a new global news company focused on transparent storytelling, distilled views, and global perspectives. It will launch with a slate of newsletters from must-read reporters.
Business: Liz Hoffman dropped blockbuster stories for the Wall Street Journal about the world of finance. Now she’ll be leading Semafor’s business coverage.
Technology: Reed Albergotti has broken some of the biggest stories, from the Lance Armstrong doping scandal to a wave of #metoo revelations in Silicon Valley.
Media: Co-founder Ben Smith is reprising his media column, sure to make waves every Sunday night.
Winter is coming. Jamie Dimon is warning of coming gloom to the economy, with the expectation of a recession in the next six to nine months. Even President Biden is allowing for a “slight” recession. Even with rate hikes, Inflation isn’t subsiding enough, meaning even more and possibly steeper rate hikes. More people I speak to, this feels like the Phony War at the start of World War II. Companies mostly aren’t yet seeing a dramatic pullback, but they’re preparing for one. Advertising is the canary in the coal mine, as pulling back on such discretionary expenses is preferable to other cost-cutting measures that have more lasting effects. I would assume that’s why the unemployment rate remains so low despite big rate increases – companies don’t want to find themselves shorthanded again, like they were after cutting workers during Covid. Publishers are already taking steps to rein in expenses, with Gannet rolling out a raft of cost-cutting measures, including suspending 401(k) matching (I have somehow never had this benefit in my life) and enacting a round of buyouts. If more companies follow this path, that will put more pressure on cutbacks to areas like advertising and travel to events.
Experimental stuff is always the first to go. That doesn’t portend a great future for publisher web3/NFT projects. In June 2021, when Bitcoin traded at $35,585, CNN rolled out an NFT project called Vault by CNN to allow people to bid on and “own” notable moments from the CNN TV archives. Fast forward 16 months, Bitcoin is trading at $19,125 and CNN is under new management that is in efficiency mode, so no surprise that CNN is pulling the plug on Vault.
There’s always room for contrarian bets. Many publishers are shifting their focus to areas like newsletters and podcasts, finding high-value, niche audiences and spinning up direct revenue and commerce businesses. The News Movement is going back to the future by betting on a distributed media strategy tied to social platforms.
Substack’s model might not work for a broad swath of writers, but for the top of the pyramid, it works very well. Matt Yglesias, who writes Slow Boring, shared his impressive progress, showing over 13,000 paying subscribers with a free list of 75,000. That’s a remarkable 17% conversion rate – and at his $80 a year annual subscription, a $1 million business.
Dark patterns are everywhere. The more data we collect and the more advanced artificial intelligence becomes, the line between “helpful persuasion” and “dark patterns” will blur even more. Consider the case of touch-screen tipping, which relies on social pressure to expand the number of places expecting tips and the overall amount tipped, thanks to the power of defaults and user experience tweaks.
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