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Publishers are used to distribution shocks. The social traffic era’s end produced a painful comedown, for example, and publishers regularly dealt with Google algorithm changes. The nature of the AI distribution disruption has been different. It’s been structural, not cyclical.

But a larger shock is coming to production. News publishers in particular are mostly adamant that they will relegate AI’s use to crunching data, making transcripts and workflow efficiencies. That will not insulate them from information markets being flooded with cheap supply: near zero-cost content. This is already overwhelming platforms and will further distort attention-based ad markets.

“The internet and cable were distribution innovations,” Paul Bascobert, president of Reuters News told me on The Rebooting Show. “They dramatically lowered the cost of distribution and they dramatically increased the function of distribution, which is audience reach. AI is a production disruption, which is going to have a different effect on the industry.”

Like Covid, we don’t tend to have a good grasp on exponential growth. The improvement of AI systems, even in the face of gathering signs of a financial bubble, is unlikely to stop. It seems like not long ago AI video was struggling to produce Will Smith eating spaghetti. Now, AI has cut the production costs of a Christmas movie by an estimated 90%. AI-generated long form video is proving successful in attracting views.

The term of the moment is K-shaped. The net effect of the AI production shock is to widen divergent information markets, like most markets are diverging as economic power concentrates at the top of the wealth distribution. As Jay Rosen told me, the rich will always be well served.

For publishers, I see a barbell of strategies. On one far end is the seal balancing a ball on its nose. This is representative of the models that will turn to events and activations and on the other extreme are those with unique data sets. AI runs on data – and it needs access to information that isn’t public. That’s why publishers have rushed to lock down content from crawlers.

“I expect that over the next few years we’re going to see some real innovation around content protection,” he said. “Because if you can protect it, you retain its value.”

CNN’s AI-licensing deal with Google is a sign that some will emerge as valuable suppliers to AI companies, which in Paul’s view have shed the earlier dodge of being platforms rather than publishers. They control the interface layer and will turn publishers into data suppliers. News leaders might bristle at journalism being treated as a data set, but capitalism is rooted in commodification.

“There’s going to be a lot of pressure on both wholesale and retail to produce something that is unique,” he said. “Because if it really doesn’t have some unique journalistic contribution to the system, it doesn’t have any particular unique value.”

Paul sees Reuters as well positioned as one of a handful of journalism wholesalers that have the breadth and depth of unique information with 2,600 journalists. It has disclosed deals with Meta and Microsoft. The Reuters business model is rooted in wholesaling information services dating back to the development of the telegraph. AI will add a fourth distribution “window,” Paul said, joining licensing to media companies, financial institutions and its owned distribution. “We think of it as build it once and sell it four times,” he said.

Much of journalism as an information product is not well positioned. The algorithmic era created an oversupply of low-value regurgitation. The Game of Thrones recap designed to cadge some Google traffic won’t cut it.

The biggest concern for publishers is they move too slowly. Publishers remind me of the guy who has always ridden out hurricanes before the Big One arrives. You can develop a complacency in the face of threats. “If there’s something that does give me some cold sweat, it is a fear that the industry isn’t gonna move fast enough,” Paul said.

“I do think it’s going to be a golden age of journalism. It may not be a golden age of massive media companies to support those and, you know, lots of guys like me running them. But I think it could be a great time to be a journalist and your capacity to produce great work.”

One of my truisms of the reign of tech is media always goes first. The same disruption and compression felt by media companies that lost control of their distribution and direct relationship with the customer is being felt in new markets.

The software market is facing a similar reckoning, as AI tools improve to the point that the entire Adobe suite can be rebuilt from scratch and open sourced. Software business models are some of the best created. The package at the heart of it – the endless features added over many years, most of which are used by a minority of users – is being ripped apart as AI allows individuals and companies to create custom software tools to accomplish tasks.

I don’t think this is the end of software. It will put pressure on lots of software categories that don’t operate as infrastructure. Big companies aren’t going to rip out Salesforce because someone vibecoded a CRM. It’s the system of record. Similarly, I don’t see most companies vibe coding their own email service provider because of deliverability and security.

But there will be pressure exerted on many tools that mostly perform simple tasks and wrap them in a blizzard of features most don’t need. This is what I call The PandaDoc problem. I want a tool for signing PDF contracts. I don’t need a “360-degree agreement management solution” for $1,300 a year.

Listen to the latest episode of PvA for more on the SaaSpocalypse, mathematicians facing existential dread, my attempt to create an AI client delivery agent, Silicon Valley’s regular return to its fever dream of killing advertising, and Alexandr Wang’s emergence as Zuckerberg’s Gen Z Tonto.

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