Small is beautiful

Couple things to know about:

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There’s been an interesting change in much of publishing: Big companies envy smaller companies.

Last night, at a private dinner we held with Omeda, two different executives from different large media companies expressed their wishes that their companies were smaller. The context was discussing how publishers simplify their businesses during great volatility. Operating businesses often means running the existing business while building the new business.

The Great Realignment in media is the shift to an audience model that prioritizes high engagement with intentional audiences. The most promising new models invariably are smaller, focused and built around direct ties to an audience, if not a community. The reality is most legacy publishers – and that encompassing digital publishers now – were built for a different era. 

For these publishers, it means you have to continue to do the Google dance, even as what was once the most reliable platform acts far more capriciously. It means trying to reverse engineer Google Discover and looking for other sources of traffic to fill any declines. Meanwhile, they need to build their future businesses, notably by shifting their orientation to center on the audience. Oh, and do it all with fewer resources. 

On Friday, I’m talking to BuzzFeed CEO Jonah Peretti, who has a new manifesto about the need to build a new social platform that rewards high quality content. The details are hazy. It’s hard to assess a theoretical product or even know what you’re talking about when it doesn’t exist. 

What interests me is this is a final admission that institutional publishers cannot build big businesses on these platforms. They can use them for marketing and to eke out distribution. (One big publisher told me proudly how their proportion of Google traffic was at its lowest point.) Instead, they need to get people to seek them out.

I have always found Jonah a smart and analytical thinker about media. Whether this do-over is possible in 2025 vs in 2012 is a stretch, although it’s impossible to say without seeing a product. Lots of stuff sounds good on paper until it meets the harsh reality of the market, especially one with distribution and revenue concentration like media. The motivations are sound around the garbage content on platforms that is weaponized by algorithms to slurp up incremental attention. The existence of “doomscrolling” as a common term is a tell that algorithmic content is often a lot of empty calories. Substack is building something of an alternative as it becomes more of a platform. Substack Notes is certainly a different vibe than the fighting pits of X.

Jonah noted to Peter Kafka that BuzzFeed is well positioned to pull this off because it is now smaller and by necessity scrappier after the bet on a SPAC-fueled consolidation fizzled. BuzzFeed’s shed 94% of its value since its IPO. If the market needed a digital media bellwether, it was to express its disdain for the business models of the sector.

It’s enough to dream of the pastoral Substack life. The Times envy is mostly gone. It’s the exception and has its own headaches. (As an aside, I am impressed with its vertical video game improving on the NYT app. They’re like smart-people TikToks with chart graphics.) Instead, it’s a model like The Information that gets namechecked, or newsletter brands. Kara Swisher said Stratechery’s Ben Thompson has the best job in media. The New York Times and Air Mail are looking to a solo operation like Emily Sundberg’s Feed Me Substack as the hot insidery publication. Simple models are very hot right now. 

In the Great Realignment, media companies are faced with choosing a path in the Information Space, where attention entrepreneurs are fighting guerilla warfare with far different business models. Elon Musk has shown that attention can be monetized in far different ways than ads and subs. Some publishers will become front businesses for agency services, brand activations and events, or data services. These approaches are indirect models; the economic value is realized downstream from what is ostensibly the product. Think how Time is constructed not around its magazine or even digital content but the ancillary businesses its brand powers.

The other broad path is to become audience-centric product businesses. In this model, the audience and its needs are central. It was compared more to how consumer-packaged products companies operate. This is hard to pull off, notable exceptions like the NYT and WSJ aside. 

Operating the old traffic model means organizational energy is sucked into trying to react to unpredictable algorithmic changes. That comes at the expense of building products the audience wants. Covering digital publishing in the 2010s was a strange dichotomy because all the issues consumer publishers struggled with around Facebook were completely foreign to the B2B publishing model that was always focused on things like email-led direct connections and revenue models that weren’t ad-driven. But B2B was seen as small and uninteresting. That’s changed. 

The desire to be smaller arises from the simplicity of these models. Most publishers know in their hearts they need to shift their models to be centered on the audience. That means not relying on traffic games to feed the programmatic beasts. It means opting out of the affiliate SEO arb hustle. It means not having the internal battles and incoherent strategies that ensue by having separate leaders for subscriptions revenue and ad revenue.

Instead, it would mean focusing on the value exchange with the audience. Media is often made out to be a far more complicated business than it is. The business is what you make, how you distribute it, and how you make money. The complication has come from the last two parts being often dictated by others. Most publishing executives I talk to are frustrated by Google for the same reason the crypto people didn’t like the last SEC: Just tell us the rules. 

The lack of control of distribution is compounded by outsourcing monetization. It’s hard for these publishers not to feel like programmatic has been a disaster when a Canadian DSP that’s not even one of the biggest is closing a $235 million funding round at a $2.5 billion valuation. The math on programmatic seems pretty clear where the value has gone, and it’s not to the media owner.

The future of publishers will be determined by the audience-product nexus. As Super Bowl champion Jalen Hurts says, you have to keep the Main Thing the Main Thing. The most successful publishers will be product-led companies. The sales-driven construct is not going to cut in when in competition with everything and everyone in the Information Space. You can be nostalgic for the era when the top magazine in the category could be guaranteed big chunks of spending, but those days aren’t coming back. 

We had a lot of discussion last night about whether the Chief Audience Officer is needed. On the plus side, the CAO would be a clear signal to the central importance of the audience (and it would provide a career path for audience development executives). The objection is that a CAO could be a replay of the vogue for chief digital officers, which often allowed old-school leaders to opt out of needed change when there was resistance to the shift from print to digital. Those were quaint times.

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