Hope everyone’s week has gone well. In NYC, this week feels like the time we have finally turned the corner on winter. This was my first Northeast winter since 2020, and it was bleaker than I remembered.
Some publishers are stuck in the bleakness, not just with their immediate challenges (not much new there) but with the specter of AI. We’ll see a split between those that play defense and those without legacy assets and business lines to protect that see opportunity in volatility.
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Time to build, or time to sue?
Earlier this week, I made it all the way to the Meatpacking District to attend the first Semafor Media Summit. One of my first conversations upon arrival was with a veteran media exec deciding their next move and mulling openings provided by the coming onslaught of AI tools. “You can be sure nobody between 40th and 60th is going to figure it out,” they noted, using NYC shorthand for established media companies.
As if to prove the point, Barry Diller was one of the first speakers at the event, took on AI squarely and with a typical Barry Diller flourish. He was interviewed by Ben Smith, who admirably went wire to wire by doing eight interviews, including ESPN’s Stephen A. Smith (surprisingly thoughtful when out of persona), The Messenger’s Jimmy Finkelstein (still not buying it) and Kara Swisher (insulted the hors d'oeuvres). Diller’s message: Time to push back on the tech crowd.
Now, Diller has a particular place in media, owner of Dotdash Meredith, a collection of properties that mostly specialize in lifestyle content. He’s also friends with Sam Altman, the creator of OpenAI. Dotdash Meredith CEO Neil Vogel had expressed to me months ago in a conversation at an Adexchanger event his doubts about AI as a gamechanger and vowed the company will “never” use AI to write the kind of content it produces that tends to rank high in search results.
Diller, who I believe Logan Roy would say qualifies as a Serious People, didn’t hold back. He recounted how publishers made a fatal mistake in the early Web of going along with the notion that content should be free and rely on advertising. That ended up working out very well – for tech platforms, not for publishers. This time, Diller suggested publishers play defense by blocking their content being accessed to build large language models that are being mined to create search-like chatbots and band together to fight back. Any veteran of Hollywood is going to have an instinct for when it’s time to lawyer up.
This is likely how AI will play out in the publishing industry, which isn’t a monolith but filled with companies that operate different business models in different sectors. If you’re looking to start something new, AI is a godsend. In volatility lies opportunity. If you have a collection of assets that are doing quite well siphoning search traffic and making money via affiliate and target ads, you have a darker view, seeing yet another “existential threat.” As an email from one publishing exec put it this morning, “We recognize our industry is about to change forever.” The only question is what path to take. It’s Block and Sue or Build, or some combination as publishers look to extend the game, like a losing basketball team.
We’ll see this bifurcation as publishers pick a lane. As you would expect, the old guard are banging the war drums. News Corp has come out and said it expects to be compensated for news content used to train models. Publishers are perhaps emboldened to take this path after the success of shaking down tech platforms for payments in markets like Australia. As NFL analyst Andrew Brandt likes to say, “There will be lawyers.” Of course, the issue of publisher payments will be small in the big fights ahead as governments inevitably seek to regulate AI like they do pharmaceuticals, financial services and energy.
The reasonable fear is that chatbot-generated information will be deemed “good enough” for many people to skip publisher sites altogether. The argument that content used to produce the “answers” in chatbots will get links is sorta besides the point. The magic of using ChatGPT is you don’t need to Unspoken is how publishers have long used brand arbitrage to use their authority with search engines to rank highly for commercial searches that are often far from their domain expertise. I mean, what exactly gives Rolling Stone authority to rank highly for where to watch the USA vs Cuba World Baseball Classic game ? It’s a cash grab and like much of publishing these days a form of brand arbitrage.
On the other hand, publishers with unique data sets will see an opportunity to create their own chatbots. Bloomberg is already out with BloombergGPT, admittedly a luxury few publishers enjoy. A niche publisher I had coffee with recently said they planned to roll out a chatbot soon to query their specialized research and insights. LLMs and chatbots aren’t monoliths. They too will spawn vertical versions.
But perhaps the biggest opportunity will be in leveling the playing field between small and large publishers. While many understandably worry about AI replacing swathes of jobs – Swisher recounted a conversation with ex-Uber CEO Travis Kalanick where he mused wistfully of eventually replacing drivers – the reality of most publishing enterprises is they lack the capital to employ enough people. AI tools offer the hope – unrealized weirdly by the internet – of being a true productivity boon. I’m interested in how Local News Now is using AI to build new newsletter products that otherwise would have required human resources a scrappy local news publisher simply doesn’t have. AI offers some hope in filling the funding gap that’s estimated by Boston Consulting Group at $1.5 billion per year.
Those with strong brands and direct connections to an audience – more important in a world of synthetic content – but lacking in the heft of legacy competitors should be able to compete better by utilizing tools that are advancing on a near-daily basis.
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Early thoughts on Substack Notes
Substack has a new Twitter-like service that rolled out on Tuesday. I’ve been using it to see if this can be a Twitter alternative, particularly for more substantive content. I long viewed Twitter as mostly a place for a grab bag of random thoughts as opposed to a distribution channel. Substack Notes has potential, although how it will evolve (and whether people who don’t write Substack newsletters will use it) remains an open question. Some early thoughts:
Notes holds promise as a new growth driver. Any platform needs to solve for distribution. If Substack is just a basic content management system and email service provider with a Stripe integration, it will not retain publishers who achieve the newsletter version of scale. Substack Recommendations has been probably the best Substack feature released, making a meaningful difference in growth. Two days is a small sample size, but Notes could have a similar impact. Over Tuesday and Wednesday, The Rebooting added roughly twice as many new subscribers compared to the same days a week earlier. Others are seeing the same spikes.
Notes will likely remain niche. I know the narrative is naturally that Notes is a “Twitter killer.” It’s likely not. Twitter is not about to die, although it is in “structure decline,” as Nathan Baschez puts it. Right now, it feels mostly like Substack writers talking to Substack writers. That’s natural at launch. But as one person put it to me, “Is my brother who just consumes sports highlights going there? 0% chance, and that’s like 90% of Twitter.” That’s fair, although I can see “social media” atomizing into smaller, more focused spaces versus the bizarre free-for-all mass social platforms became. Notes could find a niche as a place for a calmer conversation corner, rather than Twitter’s raucous town square.
Notes has a shot at being a calmer forum. It’s early, and Notes right now is a lot of writers promoting their newsletters. I’ve found the self-promotion necessity of the solo path soul sucking. It’s just not a natural impulse.. The advent of threads soured Twitter for me. Notes could become something of product-led marketing as writers give others a sampling of their thinking to draw in new subscribers. My hope is Notes becomes a less volatile and shouty place. Early Twitter had a nice community. Substack in general has a supportive vibe with its platform, so I have hope that Notes will have less of the flaming, well-actually guys and bad faith arguments – in fact, fewer arguments altogether would be nice. I’ve found the discussions I’ve had over the last few days to be far more substantive than any I can remember on Twitter recently.
If you’re interested, check out Notes on the Substack app or on the Substack site. I’m going to use it for more “professional” content vs Twitter for the random random observations and Eagles-related content.
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As I mentioned in my podcast with Substack CEO Chris Best, I don’t think ads have to detract from newsletters and can be additive. I was happy to see in Notes that Matt Shaw of Dear Americans agrees: “Like what you’ve done with your issue sponsors. The execution makes me slow down and take a closer look.” I agree. Get in touch if you want to discuss partnership options to reach over 15,000 publishing professionals. My email is email@example.com.
Not sure if you got the email I sent but I'll post this here too. My thoughts on Substack Notes: