Content is hard. Shopify is easy. A case study.
Seeking daily habit. Buzzfeed dances in public. Mr Beast wants everybody to get a Lambo. Introducing the People vs Algorithms Shop.
Welcome to People vs Algorithms 9. I am traveling this week. Enjoy the early edition.
I look for patterns in media, business and culture. My POV is informed by 30 years of leadership in media and advertising businesses, most recently as global President of Hearst Magazines, one of the largest publishers in the world.
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Wait… there’s a PVA Holiday Shop?
In January 2013, shortly after becoming CEO of Yahoo, Marissa Meyer gave her first televised interview to Bloomberg. In it she reiterated what would be a key strategic theme of her short tenure at the company:
The nice thing at Yahoo is that we have all the content that people want on their phones. We have these daily habits. I think whenever you have a daily habit and providing a lot of value around it, there is opportunity to not only provide that value to the end user but to create a great business.
“Daily habit” was repeated 10 times in the interview, for good reason. Habit is what every media company craves. And it has never been harder to earn. Habit used to be your local news, sports and weather. But that was before communications apps sat along side content on a 2”x4” mobile screen. Social became the new center of gravity.
But Yahoo got close for years with strong positions in search and email, sports and finance. It was, and still is, a self contained ecosystem independent of the traffic spigots most media rely on today. Which made it incredibly resilient. Despite many missteps and diminished stature, 25 years later Yahoo maintains a position of power as a top five web site in most countries around the world.
Of course, everybody aspires to find consumer habit, which is why you are seeing so much interest in content. Digital is rewiring distribution and brands are scrambling to forge a new path to the consumer. From retail to banking to gambling to travel, how do we make our offering more useful, engaging and addictive? There’s content for that! If only it was that easy.
The world is being entertainment-fied, if that’s a word.
I pay a lot of attention to the finance and crypto space because the rise of the digital wallet is the next obvious frontier for habitual connection. There will be a flurry of deal making and partnerships as new and established players look for new ways to stay in front of the consumer.
You see it today across both B2B and B2C sides of the business — BlackRock hires an editor in chief, Goldman has a talk show, Square buys Tidal, Robinhood publishes MarketSnacks, Stripe starts a book publisher, A16 is a content machine, Coinbase is adding NFTs.
Few media companies, traditional or otherwise, have had luck finding habit, outside of a couple of dominant news and sports outlets like NYT and ESPN. That’s why mobile media apps have not worked for most — consumers have limited time and interest in a daily direct relationship. Everyone else competes for attention from the attention brokers in search and social.
Which brings us the Buzzfeed’s public debut.
Things have started out a little rocky. A flurry of SPAC redemptions and languishing stock price will incline many to cast aspersions on the company. I see it a bit differently. Buzzfeed's record of adapting to market trends is remarkable, from pioneering social distribution to branded content to mastering search, adding verticals, learning video, events, then commerce. Going public is the latest effort to find operational leverage. I applaud Jonah, Rich and team for hitting this milestone.
I swear Rebooting’s Brian Morrissey and I must be on the same cosmic plane this week. After writing this, his excellent email came in. We were clearly feeling the same vibes:
The bottom line is BuzzFeed has made it to the public markets, with a market capitalization of over $1 billion (not far from what Disney would have bought it for in 2014) and, most importantly, the chance at developing a new digital media holding company model that marries a shared tech, operational and business infrastructure with distinct brands that cater to specific audiences. As Jonah said to Peter Kafka, the deal might not leave them with as much cash on the balance sheet as once hoped but it will still give them the ammunition needed to do more acquisitions. The test will be if BuzzFeed has developed the systems, infrastructure and discipline to run those acquired companies better and more profitably. (BuzzFeed claims it is currently profitable although that’s on an adjusted basis. Under standard accounting rules, the company is still unprofitable.) “There’s a great path for profitability in this space,” Jonah promised on CNBC, citing “operational leverage” as the rationale for a publicly traded BuzzFeed rolling up other digital media firms.
Digital media has never much of a ownable distribution model, outside of email, social followers and search position. It's a perpetual dance. Every time the song changes you’ve got to change your boogie. Search needs one type of content, Youtube another. Snap needs something different. Maybe TV will save us. Product reviews make money, let's do that. Here’s TikTok. And so it goes.
The distribution food chain
Here's how I think about it. There are essentially three types of digital distribution — Infrastructure, Network and Participant — decreasing in power and resillence from left to right.
Infrastructure is slow to change and oligopolistic. It's wires and hardware and operating systems. I would probably include search in this category because of its structural characteristics. Increasingly the Infrastructure category runs all the way back to custom chips, the most complex and expensive capability across the spectrum.
Networks are platform enablers for large groups of people and are, therefore, hard to scale, tough to displace and extremely valuable. We see generational shifts here, like Facebook to Instagram to TikTok, but these applications are sticky.
Participants are the workers of the digital economy. They make content for the others but do not benefit from any structural distribution advantages. They would love to move upstream but it is extremely difficult. Platforms are much harder to make than websites and content. Digital publishers innovated relentlessly to get a leg up — building publishing systems, insight tools, growth teams, traffic arbitrage — to find any kind of advantage. Many, like Buzzfeed, have built meaningful businesses, but they certainly do not have the structural resilience of the last generation of media brands.
For Participants, daily habit is a state of equilbrium few achieve. Scale and diversified revenue lines help, but Jonah will have to stay zen leading a unpredictable business under the bright lights of the public market.
If that fails, there are legal and legislative options. This week, 200 frustrated newspapers took the legal path, suing Google for exercising too much power and decimating their ad business. Sympathetic governments like the one in Australia get Facebook and Google to pay up for content.
For many in the content business, commerce is an obvious diversification move to cope with the insecurity of digital. Not just for revenue diversification. Or because content plays a valuable role as pit-stop between search and shopping. But because it's another path to engagement and entertainment. Product is content.
And if you squint a bit you can see where this goes next. Youtube prankster extraordinaire, Mr. Beast (84M subscribers) has been selling $35 yellow Lambos like crazy over the past few weeks. The catch: you don’t know if you are going to get a toy or the real thing. Related, MSCHF’S $1M QR Code Puzzle — build, scan and win. You see similar entertainment meets gaming meets shopping mechanics in the NFT space. Expect a ton more of this.
Case study: Build a bear
With that in mind, I spent a day this weekend creating a shop of my own. I wanted to get a first hand understanding of the tools, the experience of creating a product, setting up a shop, merchandising, connecting payments, managing the fulfillment experience.
So here it is, the People vs Algorithms Holiday Pop Shop, where you will find jazz like this and much, much more.
A few observations. Shopify is great. It's easy for the uninitiated to create a professional product. Increasingly the wires are connected between suppliers and the Shopify ecosystem. I created most of my products with a custom merchandise vendor and could easily move SKUs to the Shopify store. It took a few minutes to set up payments including one-click from Amazon and PayPal. There are an endless number of plug-and-play third party applications for everything from gifting to SMS marketing.
Apropos to the discussion above, the challenge falls back to your brand narrative — how do you tell a product story that makes someone want to wear the bear. I think this is a natural step for content creators who invest the time and understand the merchant mind. Like content, the retail game is ruthlessly competitive, particularly now that it is unconstrained by the complexities of place and all the other stuff you used to have to do to source and sell.
Clearly I am not a real merchant and this is just fancy schwag, but it's an interesting case study how the friction is being removed.
In my case, Algo is the story. Algo is the bear you see around this newsletter. Algo is a symbol for the tension at the center of People vs Algorithms. Is technology emancipator or enslaver, or both…
You can contemplate while looking great in your official, limited edition PVA holiday attire.
If you feel the in compulsion to buy, do it now. All proceeds will go to charity. My family and I like to support food and shelter needs of New Yorkers. This is where the money will go.
Thanks for reading… and shopping. Have a great weekend…/ Troy
A year we are unlikely to forget…
The Year in Search from Google, 2021 Wrapped from Spotify.
Bad Bunny is the top global streamer. Nirvana Smells Like Teen Spirit, a top 5 “throwback” performer. Let’s go with that gem this week just for the drumming.
Huge thanks to my friends Guthrie and Alex who helped me sort out the PVA brand.