Small boats, big ocean

Today’s conversation: TPM’s Josh Marshall on the virtues of staying small.

I’ve always felt uncomfortable with the term “entrepreneur,” which has become shorthand for anyone running a business. But raising lots of money to blitzscale a software business is a far different proposition to what most are doing in the decentralized Information Space. I was relieved that Talking Points Memo founder Josh Marshall identifies as a “small business owner.” More further down on our conversation on TPM’s 25th anniversary, which is a remarkable achievement in a digital media environment that’s produced a parade of disposable brands. 

A couple things to know:

Josh Marshall is one of the last survivors of the blog era. The 2000s were a warmup to today’s creator economy as individuals build blogs with large followings. Most faded away, or imploded after a VC-fueled traffic binge.

More than two decades later, TPM is celebrating its 25th anniversary, and most others of that era have either faded away altogether or become something unrecognizable as they’ve entered the harvesting phase of their lifecycles. TPM’s mere existence as a profitable, stable business deserves some examination as to why it outlasted others.

Small boats

Josh credits the choice to forgo dreams of being the next media mogul and a critical decision at the height of the traffic era to get off that treadmill and go down what at the time was an uncommon path. His story is a study in the discipline of smallness.

“You are a small boat on a big ocean,” he told me. “When you’re really big, you can fool yourself for a long time and with a lot of money to burn into thinking you are going to buck the trends. But when you’re small, you know you are not going to buck the trends.”

My takeaway: Media is downstream of tech, always. The advantage goes to those who build for resilience, not speed — to those who adapt to new realities rather than try to outrun them.

The original sin of digital media

Josh watched his peers chase scale — raising venture capital and hiring like tech companies — and identified what he calls the original sin of digital media: confusing the growth patterns of journalism with how technology scales. Most of those companies foundered.

“People thought digital media was part of the tech industry,” he said. “It was not. There are no network effects in news.”

My takeaway: The end of mass media is often confused with extinction. People will continue to create media and consume it, from humans no less. The businesses built will use tech, like any business, but they won’t grow like it because the dynamics are completely different.

The pivot to sovereignty

In late 2012, in the run-up to that year’s presidential election, Josh made a bold choice: he would shift TPM to an audience-focused membership business. It would still sell advertising, but the weight of its efforts would go into building recurring revenue, turning its audience into customers rather than the product.

“When the [ad] crisis really hit, we already had 20,000 subscribers,” Josh said. “We were in a position to survive that. It wasn’t easy, but it saved us.”

Today, TPM gets roughly 90% of its revenue from subscriptions. It’s not the most scalable model, but it’s far more reliable and, more importantly, gives the publisher ownership of its audience, its economics, and its decisions. “I think of myself as a small-business owner, not an entrepreneur,” he told me.

My takeaway: Clawing back sovereignty is critical to building resilience. Audience revenue is the biggest lever for those that can pull it off; otherwise, these businesses will always be precarious, one interface shift or algorithm change away from collapse.

The return of pragmatism

This era would seem over, of course. Yet I’ve had multiple conversations with successful newsletters that contemplate raising money. The calculation is different now. Paying for content is normalized, and that gives a new media brand leverage. There’s also a cultural shift. Bragging about employee count has been replaced by finding ways to do more with less.

TBPN is having a moment now as a new-style trade publisher for Silicon Valley. (That they do this from LA tells you a lot about what a monoculture San Francisco and its suburbs are.) They keep repeating they aren’t interested in raising money or even building a massive business. They’ve seen this movie before — the rise and fall of VC-backed media — and are choosing sustainability over growth theater.

My takeaway: Everyone loves hockey-stick growth charts, like how we celebrate prodigies. The reality for most media brands is they require persistence to build over time. TBPN outlasted so many others with grandiose plans for reinventing their categories.

Follow the incentives

The lesson from TPM and others like it is simple but easy to forget: the system rewards those who know what game they’re playing. Josh’s advantage was not mystical foresight but a clear-eyed understanding of how the incentives y of digital media actually worked.

“We started making a lot of money again in third-party advertising,” he said, “but it was also clear that it was dying even as we were increasing the money we were making from it.”

My takeaway: Giving away their ad rights is a candidate for an original sin of the media business. The internet incentivizes and rewards middlemen, which is why ad-tech and data companies have the Cannes yachts, not publishers.

On this week’s The Rebooting Show, Talking Points Memo founder Josh Marshall on: the survivors of the blog era, the days of Henry Copeland’s BlogAds and Nick Denton’s sandbagging blogs as a business, TPM’s launch during the Bush years, how early blogging thrived in the pre-social web, Josh’s hands-on days slicing remnant inventory and mastering DoubleClick, the rise of Google Ad Manager and the long march to monopoly, harvesting VC ad-tech dollars while they lasted, subscriptions pre-Stripe, the 2017 ad crash, programmatic as the dirt-cheap-Uber-rides-to-the-airport phase of media, the illusion of scale that took down the VC-backed publishers, no network effects in news, the original sin of mistaking journalism for tech, D.C. public-affairs budgets as lobbying-adjacent ad markets, Facebook turning off the traffic hose, programmatic consolidation as slow asphyxiation, the stress of zero-visibility ad sales versus subscription annuities, being a small-business owner not an entrepreneur, subscriptions as ballast and sovereignty, the end of mass media but not of human media, newsletters as blogging’s spiritual descendant, reluctant entrepreneurs and the flipped risk profile of going indie, and why the only people left standing in media are the ones who learned to navigate the ocean rather than try to calm it.

Listen to the full conversation with Josh on The Rebooting Show

The Audience Revenue Lab is a collaboration between The Rebooting and House of Kaizen. The Audience Revenue Lab will work directly with publishers as an extension of their teams to assist them in implementing to audience-focused strategies. 

House of Kaizen has spent two decades optimizing subscription growth across industries. Their Subscription Growth Diagnostic identifies both quick wins and deeper obstacles. Their approach centers on experimentation: mapping subscriber journeys, testing hypotheses, and scaling what works.

We’re combining that with The Rebooting’s insights into where audience behaviors are shifting and what best practices have emerged from industry leaders. Together, the Audience Revenue Lab will work as an extension of publisher executive teams.

Learn more about the TRB-HoK Audience Revenue Lab.

For sponsorship information, see how we work with partners like Beehiiv and House of Kaizenv and get in touch.