I’m glad no one asked me in November 2019 to share predictions for the media industry in 2020. It would have been one of those pieces that makes you cringe in retrospect considering everything the world has been through this year.
Yet here I am writing a prediction piece for an equally unpredictable year underscored by my 3-year-old watching YouTube behind me because her school in New Jersey was abruptly canceled due to COVID-19 exposure (she does not understand what ads are, so every three minutes I have to skip them, an irony that is not lost on me).
If 2020 accelerated underlying trends in our industry, then I believe 2021 will be the year the dust begins to settle and we start taking a sober look at how we move forward in more sustainable ways. At the highest level, I think that means we see two trends emerge — revenue diversification and social platform independence.
2021, hopefully, will be the year we start betting on ourselves.
Media companies will diversify their revenue streams because they have to. Downward pricing pressure on ubiquitous display advertising coupled with fewer targeting options as cookies are phased out means ads alone are simply not enough to financially sustain a media organization. I should be clear that I do think advertising will continue to play a major role in the portfolio of most media companies, but the focus has to shift from second- and third-party-based targeting to sustainable, contextual targeting bolstered by compelling machine learning akin to what The Washington Post is doing with Zeus. The shift towards empowering media companies to own their data is very encouraging to see.
In looking at the revenue mix of most media organizations, the other area that is ripe for innovation is the subscription model. Historically, paywalls, dynamic meters, etc., have generated revenue on the brand level by creating friction. Meaning, I’m made aware of an article I want to read but I cannot do that until I become a paying subscriber. The media brand brokers this exchange and in turn collects subscription revenue by gatekeeping the relationship between the writer (or subject matter) and consumer.
The gatekeeper model has served a lot of media companies well and will probably continue to do so, but writers like Casey Newton (formerly of The Verge) Glenn Greenwald (formerly of The Intercept) and Matthew Yglesias (formerly of Vox) have all very publicly stepped around this model to strike out on their own and build value for themselves versus the media companies that employed them.
Not every writer has the personal brand to be able to facilitate this but it highlights a really interesting trend of what I would call atomic monetization. If the basic value exchange for most media companies is an individual audience member consuming/interacting with a writer’s knowledge, then why is the only way to monetize that value exchange on the brand level? Put simply, innovative media organizations are looking at their roster of editorial talent and ascribing significant value to the relationships that talent is cultivating with their audience. When executed well, this means media companies can generate incremental revenue, reduce subscriber churn, and improve engagement by giving their readers unique access to the topics and personalities they care about free from the vitriolic white noise of the social platforms and the din of email newsletters.
If the model sounds familiar it should — it’s the Patreon, OnlyFans, Subtext (Disclosure: I am a co-founder and the current CEO of Subtext), Cameo, Substack model applied to media on the enterprise level. No matter which creator platform is facilitating this more personal interaction, they are empowering the individual and their brand to own their audience versus renting it from social media platforms. In this regard, the growth strategy many innovative media companies will begin to pursue will look more like collecting star talent and allowing them to grow their individual subscriber base in a way that is mutually beneficial to that individual, the media brand and their fans, which we’re seeing play out in real time at The New York Times with recent high profile hires like Ezra Klein, Ben Smith and Kara Swisher.
We’ve already seen the shift from mass audience quantity (social) to generic audience quality (paid subscribers) — now I think we’ll see a shift from generic quality to community, with editorial talent serving as the leaders of those communities. In other words, rather than generating money via friction, we can delight readers with a direct and humanizing way of interacting with the individual writer, the brand and the subject matter. Engagement has always been viewed as an editorial metric. I would argue that when placed against the backdrop of a sound strategy with the right monetization platforms in place it’s just as valid a business performance indicator. More directly, people subscribe to content created by individuals, they unsubscribe to organizations.
The core concepts for this atomic monetization strategy are audience ownership, consumer access, operational ease, and collective value exchange. If you can truly own the relationship with your audience by giving them unique access via a familiar medium, you create a defensible value and a personalized experience that cannot be replicated elsewhere.
The coming year will likely also represent another year of diminishing returns on investment on social media platforms, which I expect will lead to a reallocation of resources and a measured pull back from the platforms as a whole. For years we spent untold amounts of time, money and human capital chasing vanity metrics on social platforms only to realize that algorithm shifts, toxicity and unhealthy data practices were actually alienating the people that we wanted to connect with the most — our core fans.
The truth is, we built our strategies (and in some instances our businesses) on someone else’s land that happens to have a major fault line running through it.
Instead of investing the time and effort to build value in someone else’s platform, I anticipate we’ll see more media companies investing in themselves, their talent, their platforms and their audience relationships as a means of building enduring value in 2021. Betting on ourselves in this instance takes courage and conviction but leaving your future in someone else’s hands is far riskier.