The internet is about to be reshuffled
PLUS: How Spotify outmaneuvered every other music streamer
Welcome! I'm Simon Owens and this is my media industry newsletter. If you've received it, then you either subscribed or someone forwarded it to you.
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The internet is about to be reshuffled
I don’t think we’re truly prepared for how much the internet is going to change the day TikTok shuts down. An estimated 120 million Americans spend an average of 58 minutes a day on TikTok — a collective 116 million hours —and suddenly that time will need to be spent doing other things. Some of that free time will flow to Instagram and YouTube, sure, but not all of it. I wouldn’t be surprised if nearly all publishers and non-TikTok creators see a sudden burst of engagement in the weeks following the app’s shutdown. It’ll be a major reshuffling of the board, with many internet consumers up for grabs.
In other words, if you’re a professional content creator, you probably shouldn’t take the week off when the ban goes into effect.
Legacy media outlets don’t know how to assign value to their own employees
A gaming journalist got laid off from Axios and is now generating north of $100,000 on Substack only a year later:
When I was told in August of 2023 that I’d be losing the job that paid me to do the work I love, I was scared. As I surveyed the job market, I worried that landing a gig similar to the ones I’d held at Axios or Kotaku across the prior 14 years could result in another rug-pull that once again had nothing directly to do with my work.
Going independent was a daunting option, but it had the potential to make my chosen career sustainable for the long term. My income would be directly tied to my work, and I’d be able to take my subscriber base—and Game File’s name and content—to any platform of my choosing.
This really speaks to the mismatch between a media company’s assessment of an employee's value and their actual value. Obviously, if he was able to generate this much revenue without any institutional support, then that probably means he was producing even more value while employed at Axios — which has a full sales and marketing team focused on content monetization.
This is why I think every laid off journalist — if they're able — should launch some sort of paid subscription product, even if it's just something they're running while actively looking for another full-time role. The worst case scenario is it produces some extra income while you're unemployed; the best case is you discover that there actually was a vibrant market for you work and your employer simply failed to properly capitalize on it.
Does the success of Beast Games really tell us anything?
The numbers are in, and Beast Games, the gameshow developed by MrBeast, is one of the most successful shows in Amazon Prime’s history:
The Amazon-owned streamer says some 50 million viewers worldwide have watched Beast Games … in its first 25 days of release (which includes the first half of a 10-episode season). Prime Video says the show is its second largest new series debut of 2024, behind Fallout — which hit 65 million viewers over its first 16 days, according to the streamer.
The success or failure of Beast Games has been regarded by many in Hollywood as a sort of bellwether for whether creators can produce shows that will succeed on traditional TV networks.
But I'm not so sure that his game show success tells us much of anything. MrBeast has 344 million subscribers on just his main YouTube channel; when you add up all the others, then his total following is somewhere north of 500 million. There's just no other creator who has anything close to that level of scale.
Take Dude Perfect as an example. They're widely regarded as one of the most successful home-grown YouTube channels, but they "only" have 60 million subscribers —which, granted, is an enormous following, but it's such a steep drop off from MrBeast.
So, if you're a creator with, say, 5 million subscribers, can you produce a TV show that will succeed on Netflix? Maybe! But a creator of that size is so many orders of magnitude smaller than MrBeast that there are virtually no transferable comps that would allow a producer to predict your chances of success.
So here's my prediction: Hollywood is going to start throwing a lot more money at creators, and then many of their shows are going to end up being total flops, and that will trigger a new round of trend pieces claiming that creator skills don't transfer over to Hollywood. You can set your watch to it.
How the Washington Post can attract blue collar audiences
Jeff Bezos has joined a long line of media company owners who decided that what really ails the industry is its lack of content catering to Republicans:
Mr. Bezos has expressed hopes that The Post would be read by more blue-collar Americans who live outside coastal cities, mentioning people like firefighters in Cleveland. He has also said that he is interested in expanding The Post’s audience among conservatives, the people said.
The Post has already begun to consider ways to sharply increase the amount of opinion commentary published on its website, according to two people with knowledge of the talks. An adviser to The Post, Lippe Oosterhof, has conducted brainstorming sessions about a new initiative that would make it easier to receive and publish opinion writing from outside contributors.
I think it's incredibly naive to believe that the Washington Post could tweak its coverage to appeal more to conservatives. Republicans have spent the last 15 years building out an entire right wing media ecosystem that's been training its audience not to trust anything reported by the "mainstream" media. To the average Trump voter, the Washington Post is poisoned soil, and they'd never consider giving money to it, no matter how many Trump apologist op-eds it publishes.
That's not to say that there aren't non-MAGA, center right people who could be swayed, but that's a relatively small sliver of the American public, and I feel like the best way to reach them is to simply publish a lot more non-political content across business, sports, tech, etc... In fact, if the Post wants to attract more blue-collar, suburban readers, it probably should just hire a bunch of reporters whose job it is to report on the regions where blue collar workers are highly concentrated. It probably could generate a lot more traction with those audiences by simply launching a vertical dedicated to, say, Ohio sports than it would by shifting its political coverage to the right.
The media industry continues to devalue its own advertising products
Hardly a month goes by where we don’t learn about another way that scammers are siphoning billions of ad dollars away from publishers. This time it’s through the creation of fraudulent, AI-generated news websites:
DoubleVerify, a software platform tracking online ads and media analytics, recently conducted an analysis of a collection of over 200 websites filled with a mixture of seemingly AI-generated content and snippets of news articles cribbed from actual media outlets. According to the analysis, these sites often chose their domain names and designed their websites to mimic those operated by established media brands, including ESPN, NBC, Fox, CBS, and the BBC. Many of these ersatz sites look like legitimate sports news offerings.
The embrace of open programmatic advertising continues to be the biggest mistake the publishing industry made in the 21st century. Media outlets grant these ad networks legitimacy, and then the networks are easily manipulated to divert tens of billions of dollars away from premium publishers and toward fraudulent websites. Not only that, but that fraud drives down the marketing ROI of display ads, which then further pushes brands into spending more money on Meta, Google, Amazon, etc...
So why do publishers allow for this tech to appear on their websites? They view it as free money; they can just embed an ad widget on their pages, and then without any extra effort those pages are monetized every time they're loaded. Publishers are basically trading in their long term financial health in exchange for short term financial gain. It's insane.
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How Spotify outmaneuvered every other music streamer
It's only been a year since Spotify incorporated audiobooks into its subscription offering, and the platform has not only cut into Audible's market share, but it's also expanded the audiobook market:
The official statistics for 2024 won’t be released until the spring, but it’s already clear that “2024 has been another record year for audiobooks, with more people listening across all genres”, says Jon Watt, chair of the PA’s Audio Publishers Group.
Chiefly, the boost has come from Spotify, which “has brought new listeners to the market”, Watt says. The streaming platform launched its audiobooks service in the UK in October 2023, including up to 15 hours of audiobook content each month in its usual £11.99 music and podcasts subscription. Spotify says it offers more than 350,000 audiobook titles to its 252 million global subscribers – a vast potential audience for authors.
I think Spotify's expansion beyond music into all audio formats will eventually be considered one of the smartest business pivots in the early 21st century, on par with Netflix's decision to produce original content and Disney's acquisition of Marvel.
Prior to this move, Spotify had the same music library as virtually every other music streamer, which limited its ability to differentiate its services. Even worse, it was at an extreme disadvantage to Apple Music, which isn't subjected to the App Store's steep fees.
By expanding into podcasts and then audiobooks, Spotify strengthened its value proposition among music listeners, giving them extra incentive to buy a Spotify subscription over the competing music streamers. And by exempting podcasts from the ad-free experience offered to premium subscribers, it gained an additional revenue stream that would reduce its reliance on the music labels, which until then were taking 70 cents of every dollar it generated. It's not a coincidence that Spotify finally reached profitability this year, and I think it's probably operating a true flywheel at this point, which means its profit will only grow.
A surprising Substack stat
This is a pretty comprehensive data overview of the 75,000 newsletters on Substack. The most surprising stat for me is that the average subscription price is $10 a month; I'd assumed it was lower. Given that Substack has publicly said it has 4 million paid subscriptions, that means it's probably facilitating upwards of $400 million in subscription revenue for creators, while Substack itself is generating $40 million.
A Trump bump probably isn’t coming
A "Trump bump" still hasn't emerged for news publishers, at least compared to the huge surge in traffic they saw in 2017:
Web traffic to major news websites saw a pronounced decline in December, according to data from Similarweb. Publishers, including CNN and the Washington Post, saw double-digit percentage declines in December compared to October.
Polling helps to explain why readers changed the channel post-election: Two-thirds of Americans said they felt the need to dial down political news consumption, according to a December AP-NORC survey.
A big part of this has to do with political news fatigue. But I think another part of it has to do with the size and diversity of the content ecosystem now compared to 2017. The Creator Economy was tiny then compared to now, and legacy media outlets today are competing with an enormous range of podcasts, newsletters, YouTube channels, and shortform video accounts. All of this dilutes the audience for political news even further. Publishers are going to have to invest in coverage outside of Washington, DC if they want to grow their businesses.
We learned the wrong lesson from the “pivot to video”
Former Business Insider EIC Nicholas Carlson makes a good point here about why the "pivot to video" was so disastrous for so many publishers. It wasn't that video was overrated as a content medium — if anything, online consumption and revenue for video has only increased over the last decade — instead, it was that publishers with no competency in video started burning piles of VC cash to produce video that had no revenue stream or long term value.
There are plenty of creators and publishers that have incredibly healthy video businesses because they were able to develop evergreen formats that spurred audiences to return with each new episode. The show Hot Ones is the perfect example: it uses a repeatable format, a recurring host, and evergreen celebrity questions, which ensures that new fans of the show have a huge library of episodes they can binge after they've finished watching the newest video. Most publishers that failed in their pivot to video focused on trying to create one-off viral videos that lost most of their value within 24 hours of posting. A deep, evergreen archive is the key to any successful video business.