And related notes on the future.
Welcome to People vs Algorithms #44.
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.
Brian Morrissey and I are making a podcast. Listen here.
A friend and old boss reached out after last week’s note. After gentle criticism for meandering (warranted) and length (apologies, hear often, working on it) we had an interesting back and forth about the crazy state of change in the media world. Mark Kingdon is a shrewd investor and talented trend spotter. He is an early investor (Twitter, TheRealReal, Homelight, dozens of others), former CEO of Organic, Inc and Second Life.
Mark encouraged me to map the consequences of change five or more years out. I took the bait, sat down yesterday and attempted to articulate the vectors of change and the broader consequences. It’s hard to do but a good exercise to get you thinking. Consider it a work in progress.
Our back and forth inspired this note. Read further down for a summary of Mark’s comments.
Major forces changing media
1 / Platforms power people and level the playing field. Now a well understood phenomenon but worth emphasis. Platforms provide infrastructure for talent to go direct — they unbundle media at a human level. In the platform ecosystem, fame is accessible to all, with the viral potential to grow very quickly. This is the fundamental ingredient and foundation of media moving forward.
2 / Tools change everything. Video was always better than a blog post, at least for most people. It was just too hard before. Accessible video creation made TikTok happen. As our pal Alex Schleifer says, "Own the tools. Own culture."
Innovation now happens at the level of the creator. New tools are accessible, collaborative and increasingly AI driven. Figma sale for an astounding $20B give a sense of their importance.
Technologies like GPT-3, Dalle-2 and Midjourney are about to blow up creative access and possibility. Have a look at Runway to get a sense of how AI will evolve video creation.
The hype around blockchain is not for nothing. Outside of financial innovation, the technology will provide the foundation for the next generation tools that connect people. CRM and social media are being reinventing around blockchain. The line between content, identity, ownership and transactions continues to shorten.
3 / Related…video makes stars. The media market is steadily migrating video. Video has alway been about talent, but talent used to be wrapped tightly in media brands. Video creates personal media brands. People will still read and listen, but video will continue to take a larger share of attention and value pie.
4 / Everything gets more niche. Communities of shared interest are easier to assemble and serve. People self-select by interests, passions, socio-economics and point-of-view.
5 / Advertising creates either meaningful experiences or transactions. The latter is pretty obvious and the consequence of a a steady chipping away at sales attribution and interconnected media / transaction path. The meaning part is harder. Brands become increasingly values and mission led, but superficial nods to these are getting tired. Brand advertising is shifting to community connection via content, partnerships and collaborations.
Increasingly, if you can afford it, you don’t consume old fashioned advertising. Reaching wealthy consumers becomes more difficult.
6 / Everything is on-demand. On-demand moves beyond computing and media, making, selling and delivering products is easier and more accessible, opening up unusual new offerings and business models that we’ve not seen before — like a YouTube star selling hamburgers. Value shifts to connection and experience, away from product.
7 / Digital reality eclipses physical. More of our lives are played out in digital environments. Old physical-world status signifiers become less important. It's harder to decipher positional cultural signals from where you live, what you drive etc. Understanding status creation in virtual worlds important to brand success.
These are a few. I am sure you can think of others. Now the hard part, what are the consequences? Let’s outline a few of the big ones.
A global star-fed ecosystem
Everything is in place for a system that funnels talent from the edges of the internet to the mainstream. As Mark points out below, the internet is where culture is born. Even more than before, young women are ground zero.
Media brands are increasingly challenged by platform enabled personal brands. But these are more fleeting — they rise and fall with fortunes of talent and programming. Few transcend stardom.
Personal brands become a nexus for a wider range of services. Content, defined broadly, is becoming the front end, and connective tissue for everything.
Media brands are now the middlemen, an increasingly tough place to be. Those created in the print era will slowly die or become hollow front ends for affiliate or licensing businesses. Some will extend life as vertical ad studios or production companies. A few super premium, sub-driven players will carry on. Video thinking and adeptness in growing and managing talent are key to the future.
Now, media brands follow talent not the other way around.
Participatory media brands, particularly those underpinned by fandom will do much better. IP persists, especially when the stories are carried and evolved by fans. Think Marvel not CondéNast.
Sports, and the athlete-stars that front-end them are power brokers, more than before. The last vestige of “live” outside of news, they become urgent ingredients in the emergent streaming oligopoly. The economics of going direct can't match the value creation inside the bundle. Niche stuff and ancillary programming goes direct but the mass leagues find outsized economics in driving a larger bundle of content. Some things change, others remain the same.
The world divides into platforms and creators
Platforms make creation possible with tools for creation, connection, manufacturing and fulfillment. They are the coral reefs on which the star ecosystem feeds. Creators live and die by niche creation and fan connection. Pick your lane.
Think beyond the tech platforms. A CPG company like P&G is a platform company that funnels the next creator-led brand to wide distribution mainstream. Tesla is a transportation platform.
Platform dominance is preserved by a potent mix of hardware, software and logistical complexity. Apple is the canonical modern example; the company defines the new integrated conglomerate — chips, hardware, software, financial services, entertainment, advertising, retail. Connecting the pieces is extremely hard. Premium programming becomes veneer for its elite brand. It’s the next HBO. Its long-term leverage is its distribution power.
Amazon persists as platform because they are the best process / workflow company, crushing complicated logistical problems. They own the last mile and have fortified it with Prime. Next up, health care. Remarkably, they too have found a way to bridge it to entertainment.
Google trucks along because they are the platform of the open web. Search is virtually impossible to dislodge and the world’s greatest ATM. YouTube is a network effect driven monster. Strong revenue streams provide coverage for many years. They keep innovating to provide home and business with inexpensive, useful utilities, mostly ad supported.
Microsoft keeps winning because they still own the office platform, now connected to cloud and its superior economics. It is extremely good at thwarting competition, by destroying a competitor’s position through strategic bundle pricing, most recently undermining Slack with Teams and pushing the company to SalesForce.
But Meta stumbles into irrelevance. Facebook becomes the new phone book / yellow pages. Insta can't mode shift to be a TikTok competitor. The Metaverse is a failed play for device control. Consumer sentiment, financial and regulatory pressure slowly overwhelm the company.
TikTok is the new social entertainment platform. Someone with tons of cash has to buy it because Chinese ownership of a dominant social network / entertainment platform can’t last.
Let’s stop with these companies for now and speculate on how concepts above coalesce into something more expansive. How do these ideas change how we live, relate and connect to one another?
The “stars”, and their stories are inputs to, and frameworks for, community connection. Look for the organic formation of these worlds around their bright light. Digital media is not just media, it’s a starting point for interpersonal connection and ultimately, consumption. The defining characteristic of modern media brand power is… fandom.
Related… branding becomes world building and experience programming. Tools allow everybody to tell more expansive and more participatory stories. Increasingly these are built on moral, spiritual or political foundations. The blockchain will play a role as connective infrastructure and the open data source of record.
Fashion brands play an increasingly important role in defining the vocabulary of modern cultural connection. Luxury brands continue to find ways to offer status online and off.
While not a direct consequence of media, manifestation of wealth and privilege increasingly happen in private bubbles outside of public view. Exclusive groups built on money, status, consumption and experience form in the real world just like they do online.
In a dense and long-winded essay on this topic called “Life after Lifestyle” Toby Shorin attempts to define the contours of the post Direct to Consumer world, where a new wave of brands fronted supply chains with aspirational promises connecting consumer friendly value proposition with superficial moral and community brand values. The next wave, he argues, will attempt to find deeper and more meaningful spiritual connectivity. It’s a tough read but worth it for the committed.
In short, the next world is not divided neatly into media, products, services and experiences. They are all connected inside of the community bubbles that we live inside of. To me it’s a new way to think about social / economic constructs — stars create energy, platforms bring the infrastructure, communities provide connection and meaning. Or something like that. Let’s leave it here for today.
A summary of our back and forth:
[Me]dia (era of people-driven media) is pretty obvious. Even though it’s changing because Tiktok killed the Instagram Star. In this case @Charlidamelio is killing the Kardashians at 147M followers three years in. And there’s MrBeast. And Markiplier. On YouTube. Markiplier’s 20B views on youtube blows my mind. And OnlyFans paying out $5B annually. Moving up the food chain there’s Substack and one of my portcos, tryletterhead.com connecting writers and audiences through the inbox. Jason Calacanis called email the new black. This is not TV. This is not Cable. This is not the Box office. This is not even FB, I mean Meta, anymore. The writing has been on the wall for awhile.
Troy, you said streaming is going to suck the unnatural profits out of the system and you’re right. And [Me]dia is another form of unbundling because it connects talent directly with the audience. Now the audience controls what they see when they want to see it and that’s the future 5 years out. This is destroying the media landscape we’ve known up until today. I don’t even know how to turn on my TV anymore. I need help with the remote. No joke. If you asked me to find a linear TV program on the cable lineup I wouldn’t know where it was.
In the short term we’re seeing lots of companies trying to get streaming subscriptions. Soon consumers will tire of so many choices, it will consolidate to a few winners. Maybe 3-4. Next, the [Me]dia winners will be the ones with the best rev share models with talent and the best rapid distribution so talent can monetize through sponsorships. Virality is monstrously essential here. You won’t have 2 “Onlyfans” you’ll have one. You won’t have 2 “YouTubes” you’ll have one.
But there is something else. Beyond broadcasting. And [Me]dia is broadcasting. That thing is belonging. Facebook scaled “belonging” on FB and then on Insta. TikTok isn’t belonging, it’s passive media consumption. Addictive, passive media consumption. And Troy you pointed out that brands in the ‘10s were about belonging. Blue Bottle Coffee. Patagonia. And the list goes on. But I think we’re all getting fatigued with that. Consumers are figuring out they’re being played.
After brands, came the next wave and here I think we have the beginning of that “something” that I do think will morph into something bigger in the next 5-10 years in terms of belonging and community. Don’t laugh. Don’t roll your eyes. When NFTs were hot for a moment, Apes took off. People went crazy. A rabid community grew. Offline events, merchandise. A whole ecosystem grew organically. Same happened with other NFTs and Discord was one of the go-to places where people gathered to connect. Discord. The UX on that thing crossed my eyes. It made Reddit in the early days look nice. But it worked and it works. And the power of the community was and is so exciting, way beyond anything I’ve seen in a long time.
Those “movements” are products, media and communities rolled into one. And that’s where we should be looking 5, 10 years out to understand what the future will be like. We shouldn’t be looking back at traditional media companies and traditional consumer product companies with their glossy designs, and pretty influencers. We should be looking at the edge of internet because that is where change happens.
And then, there are those who have sped up the hierarchy of needs, moving beyond porn, and apes into self actualization to micro-dosing ketamine and psilocybin. And because we are the ultimate capitalist society, we have startups serving their needs.
The Brit’s understand.
Gregory Isaacs had the finest voice in reggae. Sadly, he was lost to cancer in 2010. Here, for your weekly enjoyment, a classic.