Figuring out how to win starts with figuring out your unfair advantages
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This week, I wrote about the importance of leverage and understanding how to use it, both as as a publishing business and a person. First, a message from The Rebooting supporter Omeda, a full-stack marketing technology platform that manages first-party data.
Those of us who send a lot of email newsletters end up worrying a lot about email fatigue. I’ve heard too many false reports of “the death of email” to bet against email. The reason so much email is sent is because it is such a powerful way of establishing a direct connection with an audience and is growing even more important as it becomes the leading contender for acting as an audience identifier for advertising. Omeda tracks trends in email based off the 1.6 million emails it sent in the fourth quarter of 2022. A few things that stood out in the Email Engagement Report:
Open rates are stabilizing. Apple’s mail privacy protection made email open rates harder to track. Omeda found unique open rates have stabilized and even grew 3.7%.
Click rates are declining. The click rate is a key health metric for newsletters. Omeda found total click rates declined 12%.
Unsubscribes have declined. On the upside, fewer people are opting out of email. Total unsubscribes fell 6.7%.
One of the subjects that should be taught in school is leverage. We get sent into life that will often be determined by leverage: Who has it and who uses it effectively.
The last era of digital media eradicated all traditional forms of leverage for publishers. The decision to separate the media impression from the audience data (and measure effectiveness by clicks) was the capitulation of the publishing industry. At that point, the leverage shifted to the buy side and platform intermediaries, while publishers fought for scraps. Those who were willing to pursue a whatever-it-takes approach to vacuuming up audiences with SEO chop shops, Facebook chum and assorted growth hacks fared the best, particularly if they pushed the envelope on monetization to the edges of plausibility. The excitement around artificial intelligence will produce more of the same. Shamelessness is the final moat.
Media businesses have different forms of leverage. There’s traditional financial and operating leverage prized by scaled enterprises. There’s also distribution leverage through preferred partnerships or by excelling at the growth hack du jour. Of course, having more resources than others is no guarantee for success, particularly in media. Ask Quibi.
Most forms of leverage in digital media have proved fleeting, resulting in few lasting brands. The latest death of Gawker is yet another reminder of that. Few digital publishing brands could be considered iconic, but Gawker was. It was the Spy magazine of its era. And that wasn’t enough, at least to save it from a bitter billionaire and its own excesses. The Gawker revival never quite felt like the real thing; more New Coke than Coke Classic. It was like an NFL team switching cities but retaining the name. At that point, it’s just a different team. Have the decency to change the name like the Sonics did after decamping to Oklahoma City, of all places.
Figuring out your leverage is figuring out how you’re going to win. To succeed, you need to create a competitive advantage, no mean feat in an industry flattened by feeds and algorithms, where brands are reduced to miniature icons in a stream of content constructed by someone else or, more likely, a robot. And now the robots are going to do the writing, although they seem just as bad at getting things right. The check on the rampant use of AI to churn out synthetic SEO content is the leverage Google has over publishers. It’s telling that CNET managers were less concerned about publishing inaccurate content and eroding trust with their audience but instead with the impact “irregular content” would have on how it’s treated in future Google algorithm rankings. The spreadsheet people don’t care about moral injury; they’ll tell you you’re being naive.
Google’s keen understanding of leverage is on display in the DoJ’s lawsuit. Its control of the piping of digital advertising gave it tremendous leverage it used to its advantage. Apple is no dummy, taking the same approach now as it uses the leverage of its dominant position with iOs to kneecap rivals and remake digital advertising in its favor. What’s more, Apple knows it has cultural and brand leverage to wave the privacy flag as feel-good cover. Good luck to the IAB and various data brokers no normal person has ever heard of, other than the credit report people, swinging public favor their way. No wonder there’s the rare trade group on trade group violence.
When I started The Rebooting, I thought a lot about what leverage I had. I knew I wanted to make a new publication for the media business that would be oriented to its next phase of evolution.
My personal leverage was nearly 20 years simply existing in the same field. Ideally, you develop something of a personal reputation. That is immediate leverage. It is what the NBA stat geeks call VORP: Value Over Replacement Player. If you’ve developed some kind of expertise, you have leverage over what Bill Parcells called a JAG: Just a guy. You can develop that leverage by having uncanny talent or putting in the proverbial 10,000 hours. AI might not be there now, but it will inevitably come for JAGs.
The other point of leverage I saw was I could make the product myself. It was like a chef opening a restaurant vs a restaurateur. Both models can work, but being the person making the product from scratch vs outsourcing that to someone, which I’d have to do if I came from the sales side or was a self-proclaimed “media operator” who excels at cobbling together distribution leverage.
The real leverage of the spate of small-scale publications cropping up is in the brand coherence. Building a brand is hard. And it’s based on differentiation built through repetition. Steve Hayes and I nerded out a bit in our conversation because he’s an editor and reporter, even if he still owes that piece on Trump’s negotiations with the Taliban. And one of the areas I most enjoyed was how building an institutional brand requires a kind of brutal molding of the content to mostly neatly fit into an institutional point of view. The Economist has fascinated me for decades – as a student, I actually visited St James Place to see where it was made, and just wandered around a gift shop – for its consistency.
The hardest part of finding that consistency I found over the years was you had this point of view on the world you ended up imposing on a bunch of individuals. I viewed it as a distasteful necessity, but in retrospect see it as a potential form of moral injury that many companies specialize in. Building from scratch means you can get away from that artificiality. Any inconsistencies will be our human inconsistencies. We all have them.
And of course, a network. Few in middle age are going to win by being savvier about TikTok or the latest meme, or being able to work 16 hours a day, no matter what the hustle people blather about on Twitter. What we do tend to have is a network accumulated over many years that is tremendous leverage, assuming you didn’t use people for your personal needs over the years. People are very helpful.
Personality is leverage. Institutional brands drain individuality out of most writers. I have done this draining, trust me. In a world of AI-generated content, human personality – not the weirdo simulacrum produced by a robot – is a differentiator. But I view it as mostly thin leverage unless married to a point of view. People tend to gravitate to brands that echo either their way of seeing the world (or a sliver of it) or represent what they aspire to become. Personality combined with a coherent point of view is leverage in a world of synthetic media, SEO filler and clickbait.
Finally, persistence is the ultimate form of leverage. If you’re willing to stick it out, you will likely outlast the tourists who invariably flock to mini-boomlets. It’s one thing to start a newsletter, it’s another to do it week after week, year after year. Apple lists over 2 million podcast, but half have three or fewer episodes. We’ll see similar dynamics in the mini-newsletter boom. Excitement gives way to grim incremental progress.
Leverage shifts in a downturn. Financial leverage is everything in good times. Cheap credit fuels growth. The money injected into economies after the onset of the pandemic created unreal conditions. One publishing CEO earlier this week told me publishers could simply exist and grow 15% during 2020 and 2021. Those days have ended. The leverage many companies had then and used to expand will now shift, in many cases, to become a millstone of expensive debt and unwieldy and bloated infrastructures. Being lean and efficient by default – hard to get more efficient than doing just about everything yourself – becomes leverage over lumbering legacy players mired in layoffs creating grumpy and distracted workforces.
Those employees are experiencing a hard lesson in leverage. The leverage employees enjoyed during the boom will dissipate as the professional managerial class that acts as emissaries to capital reassert themselves in the catbird seat. The brutal method of layoffs is something of a message: It’s called capitalism not workerism for a reason; capital always wins over labor. The recent spate of layoffs, notably coming after multiple years of dispersed workforces, expose the complete depersonalization of business, even if there’s a crying selfie video from the boss swinging the ax. Aiyyo Shraddha hit it on the head with this clever video on tech layoffs: “Who started this confusion between hiring and adoption? You didn’t adopt me, you hired me.” I’d argue companies started that confusion as a racket.
In an upcoming episode of the People vs Algorithms podcast, we discussed optimism. I took the somewhat contrarian view of being pro-optimism but anti-optimist. That’s because self-identified optimists are like self-identified entrepreneurs: They’re creating an identity of a trait. In truth we are a jumble of things. Counseling “optimism” as an answer to those dismayed by being laid off or seeing their friends laid off, or even living in regular fear of layoffs, isn’t going to help much. It’s better to understand leverage, how to get it and how to use it.
Are we heading into a recession? While hard to predict, you need to be prepared for advertisers to move 2023 budget from upper-funnel branding programs to performance-based commerce content. Get started right now with five ways you can squeeze more revenue out of your commerce content.
Bustle is the latest publisher to trim its workforce, including putting a bullet in Gawker (again). As I told Mark Stenberg at Adweek that cuts inevitably end up deeper in areas more difficult to monetize through ads, commerce or events.
The spreadsheet people never understand the moral injury that journalists take seriously. The most important trait in a leader is principles. And the test of whether a leader is principled is if they will take a decision that works against immediate financial interests. Without principles, you're gonna take every shortcut on offer. How CNET is being run by Red Ventures is a case in point.
Tech companies are reporting earnings this week. Snap’s were a disaster as it sees ad growth going in reverse. The company has been whacked by Apple’s limitations on ad targeting (and attribution). I thought back to seeing Snap CEO Evan Spiegel welcome privacy restrictions in a talk he gave on a yacht in Cannes last summer. Believe the answer would be different now.
The picture is different at Facebook, which saw its stock explode up 20% on better-than-expected results. Zuckerberg has time and again proven himself overall adept at weathering turbulence.
Expect lots more AI angst from the laptop classes. Automation for manual labor is one thing, but when the robots start to type out words, let’s shut this down and figure out what’s going on. At Every, Nathan Baschez has a more nuanced view, having builtAI-assisted word processor Lex, seeing AI mostly as a tool to expand personal leverage – allowing writers to become far more efficient and productive.
The Webby Awards has categories for the best newsletter in business, news and technology; best newsletter by an independent publisher; and more. Last year’s winners included Scott Galloway for No Mercy/No Malice and Garbage Day by Ryan Broderick. Enter by the extended entry deadline on Friday, Feb 10. (Sponsored)
Newsletter I like: Inside the Creator Economy. Jim Louderback, former CEO of Vidcon and Revision3, has been immersed in the creator economy before anyone called it the creator economy. Every week he serves as my guide through a part of the world I know far less about. Check out Inside the Creator Economy.
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Wise words Brian. I’ve also noticed that people and businesses in this industry (and probably others) mistake money as leverage. If there’s one thing I’ve learned, most of my problems couldn’t be solved by money. When I had access to money and used it liberally, it often caused more problems in the long run.
Leverages is such an important topic and rarely really really talked about well. As a rather old school blogger, I have to ask how am I going to compete with a creator that takes YouTube and TikTok somewhat seriously?
I've noticed a few newsletter creators who have managed to get grants and practically have amplified VC support. This enables them to grow maybe 10 times faster than others who do not have these resources. This access to brand accelerators I think will become more common.