Here's to a less exuberant 2023
I’m looking forward later to the first event The Rebooting has done, a collaboration with Outbrain on “The Sustainable Journalism Imperative.” If you’re reading this in Las Vegas this morning bleary eyed, sign up and come to Catch at the Aria at 11:30am for a lunch and discussion of the advertiser role in supporting local journalism. I plan to do more events this year. Get in touch if you’re interested in partnering: firstname.lastname@example.org.
This week’s issue is supported by Omeda, which has a platform that helps publishers make sense of their data in order to drive real business outcomes. Thanks to Omeda for the support. They’ve been great partners of The Rebooting, and I’m looking forward to collaborating with them more in 2023.
Too often in digital media, quantity has trumped quality. That holds true for user data. More data isn’t better data, it’s just more data. In fact, bad data isn’t just low value, it’s costly. According to a survey by Gartner, organizations believe poor data quality to be responsible for an average of $15 million per year in losses. Even worse, nearly 60% of those surveyed didn't know how much bad data costs their businesses – or how to fix it -- because they don't measure it in the first place. Understand whether you have a “bad data” problem – and the steps you can take to improve your data strategy to prioritize data quality over quantity.
Las Vegas is a good place to contemplate hangovers. I’m on East Coast time, so I was up before dawn and in the lobby for coffee. It’s a strange scene in Las Vegas at that hour. There’s an odd mix of fellow East Coast visitors here for CES and the regular Vegas party crowd stumbling in from a big night somewhere. Seeing the guy swaying in front of me in line at the cafe, I couldn’t help but think he has a massive hangover coming his way. And in 2023, many will be metaphorically in the same boat — at least this gentleman can avail himself of one of the many IV services offered throughout Vegas.
In our year-end episode of the People vs Algorithms podcast (available on Apple and Spotify), Troy, Alex and I discussed the year ahead through the lens of hangovers to come. The exuberance of the short-lived Roaring 20s has given way to the aftermath, as the Federal Reserve plays its role of party pooper by taking away the punch bowl. Hangovers are a good excuse to reset. This year will see a comedown from the pandemic highs in many economic sectors, inevitably filtering down to the publishing industry. Here’s some hangovers I’m watching in 2023.
Financial folly. The growth at all costs era is clearly finished. Even venture capitalists are looking closely at the business fundamentals here and now versus potential growth years down the line. We’ll see tons of funding slosh around artificial intelligence projects, but companies will look to get their financial house in order, shedding debt, casting off side businesses like outsourced CMS and looking hard at where efficiencies can be gained, whether that’s reeling in software costs or cutting employees. Former digital publishing stalwarts like BuzzFeed and Vice Media face a rough 2023, as Jacob Donnelly astutely pointed out.
Bloated infrastructures. AI will accelerate shifts to lean infrastructures. The current tools get a lot of attention for their capability to do creative work. I don’t think that’s where the impact will be felt, at least not initially. Instead, AI tools will infiltrate all aspects of enterprises to do grunt work. Many companies have spent years throwing bodies at problems. That will come to an end. With labor markets still tight, companies will turn to outsourcing to get fitter and prioritize tools that allow them to do more with less, even if that means making up a term like “quiet hiring.”
Data free-for-alls. The duopoly era is ending. Apple’s move to throttle platforms like Meta will continue to take its toll, while regulators pile on to throw up more obstacles to how much of digital advertising has operated over the past decade. Meanwhile the EU is Many will focus on the $414 million fine, but the requirements to overhaul its business model in Europe has far-reaching ramifications by setting more stringent standards in how Facebook (and others) get consent from users to target them with ads. Regulations in a market as large as the EU tend to become global standards, as evidenced by the GDPR. Every company targeting ads is going to need to adapt to an era of transparency and true permission.
Irrational exuberance. Beyond crypto and web3, the economic bubble that’s currently deflating led to many manias that are running their course. The creator economy looks set to hit a wall, as solo people struggle and advertisers focus more squarely on performance and efficiency. Podcasting is also facing something of an identity crisis as the industry matures and the big checks cut by the likes of Spotify vanish with the end of the land-grab phase. Subscription programs will also come under pressure as they shift to driving higher revenue out of subscribers beyond piling up big subscribers numbers with aggressive discounting.
Hubris. The reality for many in media is the future is smaller than once thought. As Ben Smith said, “The ceilings seemed a little lower than anybody thought.” That will inevitably mean we’ll see fewer instances of funding of social news startups or yet another Washington publication. The more interesting plays will be far narrower in their scope, often relying on a few individuals and backed by efficient infrastructure to keep costs low. I think of how many independent local sits find the models only work with a few staffers. Expect more focus on bootstrapping, complemented with a small amount of outside capital, than the big funding rounds dedicated to grand global ambitions.
Pop-Up Magazine announced it is shutting down, blaming the worsening economy scotching it attempts to recover from the pandemic stopping its live performances. That sucks. Pop-Up was a truly differentiated product in a sea of sameness. I went to a couple over the years, and I’ve always found Pop-Up president Chas Edwards one of the more creative execs in publishing, particularly in creating advertising that fits with the media experience rather than detracts from it. A mode like Pop-Up’s — live performances with no video allowed — was a counterpoint to the chase for scale. It was a good product.
ChatGPT coming to Bing could spark a revival of the search wars. Search has played a central role to the internet, but in truth, it hasn’t evolved all that much, at least comparatively. Consider what cell phones were like when Google started its search engine in 1996. I covered this market for several years, particularly around Google’s IPO in 2004. Many took shots at Google’s dominance, only to fail to make much of a dent. Give Microsoft credit for sticking with Bing for so long. It helps that Bing is wildly profitable because search advertising is an amazing business that being an also ran means $10 billion in annual revenue. It’s hard to use it and not see it as the basis for how search will evolve. This will have many implications for publishers, which typically rely on search traffic for half or more of their traffic. Those high-margin SEO chop shops many operate in the back could have a shelf life. Check out Benedict Evans for a pump-the-brakes viewpoint.
RIP duopoly. The year ahead will finally end the duopoly era as ad spending continues to disperse. Of course it will mostly go in the direction of other tech platforms like TikTok and Amazon, as well as retail media and streaming.
This is shaping up to be the year of the decisive battle over the return to the office. More bosses are ordering employees to get back to their cubicles now that the pendulum is swinging back their way. In the end, the market will decide, as many companies have begun during the past two years without the office as central to their culture, and others have used the time to work at adapting their organizations. Some people will value one, some the other. Let the market decide.
The Dispatch is losing one of its founding writers. David French is decamping for The New York Times opinion page. My bet is a lot of legacy publications will look to lure popular newsletter writers with the prestige angle.
I loved this article about the power of awe as part of the human experience. Too often we build up singular moments when awe is often found in the everyday.
Substack growth guru Reid Tandy has his own Substack devoted to all things growth. Reid has been helpful in answering my basic questions over the past couple years back to when he was building Yem, which Substack acquired last year. Check out Growth Croissant. Reid and I will be discussing growth strategies on next week’s episode of The Rebooting Show.
Thanks so much for reading. As a reminder, please take The Rebooting Audience Survey if you haven’t already. It helps me understand the audience better as I figure out expansion and to show to partners that they should want to reach you.