So small

This week: 

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The true test of a “real New Yorker” is if they know what upstreaming is. In the media business, tech has gotten upstream of media companies by controlling the interface and distribution of information and programming. But now, there’s further pressure as a combination of curators in the form of podcasters and newsletter and a new class of aggregators like Google’s AI Overviews, Artifact, Apple News, Particle and Perplexity leach value downstream. This is most perilous for those in the business of text, which is the easiest to reconfigure. The result: More personalities, interactive experiences and multimedia content as information delivery becomes more automated and commoditized. More on last week’s episode of People vs Algorithms. Listin on Apple | Spotify | Other podcast platforms

The Rebooting’s upcoming Online Forum focused on why publishers can’t afford to kick the can down the road on getting a better handle on their first-party data. On Oct 31 at 1:00pmET, I’ll be joined by BlueConic director of core sales Patrick Crane and Actable cofounder Craig Schinn to discuss:

Note: Those who register will be sent a replay to the hourlong session.

The New York magazine package on media leaders mostly lamenting the state of their business, while taking the occasional catty potshot at rivals, offered only a few hopeful silver linings for models that are growing. 

The Substack box was ticked, with acknowledgment that for the doom and gloom that invariably envelopes packaged media, there are a mounting number of success cases of individuals building their own platforms. That usually came with caveats that these businesses are uninspiring. 

It was captured by the anonymous swipe of what is surely a “seasoned” executive who likely never built anything from scratch: 

“I’m surprised that people are OK with the subscription model, where they don’t have that many listeners or viewers but are making money, so they’re just good with it,” says one of them. “The Substack writers, people with Patreon podcasts. My generation was wired completely differently. We wanted to be read or listened to by as many people as possible. And now this new generation is like, I’m totally cool with having 9,000 die-hard fans.”

This is insane.

I’m not sure the generation this person is from, but the point of businesses is to make money. A successful model like Punchbowl, which generates $1 million per employee, is solid and yet still to 17-year New York Times veteran Carolyn Ryan so niche as to be almost unambitious.

“It’s so small and it’s so particular, and yet it seems like it has impact. I don’t even know how many reporters they have — it feels like just a handful — but they really seem to have a sense of mission and what value they bring.” 

The emerging post-scale media business playbook: Keep costs down, focus on providing value for specific audiences, generate reliable profits, and skip all the errors of the previous generation of bragging about headcount, worthless Facebook video views and ComScore numbers ginned up with “what time does the Super Bowl start” hacks.  

The reality of the evolving Information Space is power will continue to leak from packaged news media. The trash talking of small ball does not come with many alternatives. You know people are out of ideas for models when they return to the New York Times – and give the advice that you need to create things worth paying for.

The reality of that advice is that will inevitably lead most of the action to niche models. The publishing industry has been in a long shift to focus more on direct reader revenue. The standout success cases alongside the Times are established. They are either business publications (Bloomberg, The Financial Times, The Wall Street Journal, The Information) or high-end DTC cultural brands (The New Yorker, The Atlantic). Subscriptions are not going to save the massive middle of the market.

Which leaves the other end of the barbell: the so-small niche publications, often an individual or small group. Peter Kafka detailed how former Vox columnist Matt Yglesias has built a mostly profit $1.4 million business with pretty much no overhead. Eric Newcomer left Bloomberg and in four years has built a $2 million in revenue business with 50% margins. Sitting between startups and venture capital, Newcomer has plenty of expansion opportunities, especially during an AI gold rush. 

There are hundreds of these businesses that will be created. The media business isn’t dying, it’s just atomizing as mass media breaks apart. I regularly talk to people with growing small scale niche media businesses that are solidly profitable and growing.

Some of these breakout successes will build out, unencumbered by the legacy infrastructures built out for a different era and different environment. Eric has hiring and expansion plans to double revenue and profits next year. The Ankler is growing to look a lot more like a typical Hollywood trade publication. Isaac Saul’s Tangle has found a lane in a centrist approach to politics. Both Defector and tech publication 404 Media were born from the failures of scale models. 

I’m intrigued by 2way, which is mixing video programming with audience participation. I joined a Zoom webinar this morning with 221 others to hear Mark Helperin, Dan Turentine and Tricia McLaughlin discuss the home stretch of the race. It would be fitting if webinars end up as a reliable media business model.

The Free Press is going big with a big funding round and aggressive expansion plans. Puck and Semafor, in their own ways, are attempting to build larger businesses of niches. They’re both hardly rocket ships or massive businesses but are steadily expanding. Slow growth is still growth.

But many others will remain small – and sustainable. My conversation with Defector’s Jasper Wang was an honest and realistic take on the state of the media business today. It has seen growth stall, but it is still a $4 million business that its workers own. I don’t know what the ceiling for that kind of business will look like. I know that attracting 42,500 paying readers in four years is an impressive accomplishment for a small operation. 

Anybody who has been half paying attention knew The Messenger was the wrong idea at the wrong time. It was from a time capsule. The so-small models are made for the moment.

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