This week, I have a conversation with Informed’s Axel Bard Bringéus about building a bundled app of paywalled news articles, some more thoughts on AI, and the year of efficiency grinds on. Quick request: Please share The Rebooting with others. Appreciate it.
The world has changed substantially over the last couple years. Publishers cannot rely on the tried and true methods they used in building their subscription businesses. That means having a framework in place for experimentation tied to business results, not experimentation for experimentations’s sake. The path to being a customer-centric company is to take a test-and-learn approach to prove out hypotheses. House of Kaizen has over two decades of experience working with customers to unlock new value in their audiences to deliver sustainable revenue growth through research-based performance optimizations. House of Kaizen collaborates with leading publishers and brands to optimize the entire subscriber journey, from marketing to product experiences, for net growth and sustained recurring revenue.
The new subscription bundle
The rise of the commercial internet has been entwined with the rise of digital advertising. Ads weren’t a business model choice; they were the default. That’s changed significantly, as publishers came to the realization that digital advertising needs to be complemented with subscriptions. Most news publishers now have some aspect of paid subscriptions and memberships.
Subscriptions are changing from an all-or-nothing proposition to a more dynamic model, with changing pricing and a new emphasis on bundling. The essential challenge of subscriptions is that for all their benefits – recurring revenue, stability not afforded by the boom-and-bust ad market – success still means 90% of your audience will fail to convert.
The shift to subscriptions has meant a hodgepodge of paywalls to navigate. That’s led many to wonder if, just maybe, this is finally the time for micropayments or more likely new forms of bundling. But we’ll inevitably see new efforts to bundle content in ways that do not risk publishers’ core subscription businesses. This week, on The Rebooting Show, I spoke to Axel Bard Bringéus, co-founder of Informed, a Berlin-based company with $5.3 million in backing that’s building a service for subscribers to pay about $60 for access to paywalled content from top tier publishers like Bloomberg, The Economist, The Financial Times and more.
What’s interesting about Informed approach is how it has focused on a specific segment: People in non-English speaking countries who graze on English-language news content yet not enough to consider a subscription. This is a smart approach. Publishers always struggle to make money from international audiences. Most advertisers do not sell globally. And international visitors, in my experience, are far less likely to convert to paid. (There is also added price sensitivity in non-US markets, I found. If only the world could all be like the Swedes.)
Bundles are having a moment. The New York Times is having success with its bundle, and the Wall Street Journal is also bundling. Instagram’s founders are working on bundled news app, Artifact, I’ve been testing. (More on that later.) I expect as the weight of digital media shifts more to subscriptions, we’ll see more smart bundling options pop up.
Hashtag Labs is a full-service digital ad operations company, offering software and services that help publishers achieve their advertising-related revenue goals. I asked Hashtag Labs CEO John Shankman how ad ops become a strategic advantage for a publisher.
“This is an interesting question. At a certain level, all ad ops, ad tech and ad delivery is a commodity. It’s a technical discipline with clear definition about how things work — HTTP calls and returns ads — but because it’s the internet and things get insanely complex very quickly due to the sheer scale of things there is a strategic advantage to having operations leaders, partners and products who explain how things work very clearly to stakeholders both internally and to customers. We’re all people trying to make a living, and there seems to be a natural curiosity about the way the world (and internet in particular) works. Those ad ops people and companies who can elucidate how ad ops, tech and delivery work will win.”
AI’s silly season
We are in the silly season as people try to define AI’s impact without having much of a clue. There are the crypto people who have seamlessly become AI people, much like how the amateur Twitter epidemiologists suddenly morphed into military experts. I just want AI to help me navigate Excel before looking to construct an AI god to worship, but we all have different priorities. There’s a burgeoning market to playing the role of Toto, yanking back the curtain to reveal that the “Wizard of Oz” wasn’t all he was cracked up to be.
There’s money to be made by slapping the term “AI” on everything. This is inevitable. It’s the American way. I remember when “big data” was the moniker used by every assorted ad platform. After BuzzFeed saw its stock jump based on a passing reference to using AI to gin up lightweight quiz content, its lead has been followed by other publishers, who murmur about “looking at” using the tools or dabbling in using them.
This is a strange period for these tools. Like any new tech development, they are likely both overrated and underrated. The focus on hallucinations and misstatements obscures that these are research or beta versions. I’ve spoken to people who have seen demos of GPT-4, and the advances in this area appear to be coming quite fast. Who would expect the experience of ChatGPT now will be anything like using an AI chatbot in three years? I wouldn’t take that bet. And the shift in expectations for conversational interfaces will have lasting effects.
AI tools point the way to leveling the playing field between big publishers and small. Consider Semafor’s Gina Chua’s tinkering to use AI for copy editing and news editing. Are these tools there now to replace humans? No, but it’s obvious AI will make it possible for smaller publishers to more effectively compete with big publishers. Efficiency without scale. Of course, at big publishers, old habits die hard, so some executives see an opportunity to shake down AI for payments because publisher news content is being used to “train” these large language models. Get ready to litigate the scraping wars. Publishers will end up facing the difficult choice of whether to close off their content from these models, at the risk of disappearing from search engines.
The good news is humans continue to prove themselves adaptable. We can even sometimes beat the machines at their own games. The early hiccups will likely be forgotten. Let’s face it, the internet was dull for a long time, and a little chaos could reset the board and make it more interesting. Too much of the doomering willfully gives the impression these glorified auto-complete tools are sentient. They’re not. Instead, their uncanny ability to simulate human conversation will serve as a reminder of how important the real thing is, as Very Fine Day’s Brad Esposito put it: “The evolution of artificial intelligence is not a reason to be sad or angry or anxious — at least not for very long — because it is through this evolution that we will allow ourselves to truly focus on what matters.”
The Ankler is an interesting new entrant to B2B publishing, growing from a solo Substack newsletter to a four-person micro-media company. Janice Min, the former CEO of Hollywood Reporter who joined in late 2021, joined the MediaVoices podcast to discuss the expansion plans for The Ankler. Her plans include expanding into events. An important takeaway from the discussion is how important a lean infrastructure is in these businesses.
“The dumb money era is over.” Rock bottom interest rates led to all kinds of oddities. An over-enthusiasm for the podcast market could be one. Podcasting is a strange medium. It has tremendous depth because the human voice is inherently personal and develops a connection most writing does not. But growing podcasts is very difficult. That makes podcasting a weird fit for ad models, not to mention the difficulty in targeting and measurement. There are hits in the industry, but podcasting will likely never support as vibrant of a “creator” ecosystem like YouTube does for video.
Given enough time, everything becomes an ad network. Shopify is finally making moves to lay the groundwork for an ad network after outsourcing distribution to Meta. Moves by Apple to restrict targeting has hit e-commerce companies hard.
The year of efficiency grinds on, as Meta is handing out lots of poor performance reviews ahead of a likely additional round of layoffs following a recent layoff of 11,000. The sudden uptick in poor reviews is a good reminder how “performance” is qualitative and easy for companies (and even managers) to use as a tool for other purposes. Hard to believe these people suddenly became bad at their jobs.
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