Discover more from People vs Algorithms
Taylor Swift and The New Distribution
New ways of connecting with customers beg for new thinking about a businesses most valuable asset.
Welcome to People vs Algorithms #48.
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.
Taylor Swift released her new album, a collection of 13 songs called “Midnights” at, duh, midnight, last night. Then at 3am she released a bunch of more songs because the album is about sleepless nights and she loves a good narrative.
How do I know all this? Because Swift introduced the album last night with a personal announcement on Amazon’s Thursday Night Football and I was procrastinating about writing this here newsletter (Amazon is going to show the world that they can do a superior football production or die trying). BTW, you can turn the Midnights’ albums into a clock if you buy all four. Clever. Thankfully you can also get it on cassette. You can also get cool new thematic merch like these helpful amethyst incense holders:
The build up was teased with 13 videos on TikTok and all kinds of Easter eggs. Serve the fan.
Here’s the trailer for the forthcoming video project featuring a bunch of people like the Haim sisters, Laith Ashley, Mike Birbiglia, Laura Dern, Mary Elizabeth Ellis, Pat McGrath, Dita Von Teese.
Music isn’t just music anymore. It’s video. It’s theatre. It’s world building. Maybe it always was, right Sgt. Pepper.
Anyhow, I had no idea what to write this week. Thank you for the inspiration, Taylor.
So it’s gonna be a bit of a grab bag. Don’t worry, there’s a prize below.
Let’s start with the podcast, which is out today, fingers crossed. We will get the timing down soon. To be clear… it’s not the one entitled “Zuck’s Metaverse….” That was last week. Check later today.
Some of the stuff Brian, Alex and I discussed:
More on AI: I suspect we will spend a lot of time here. Innovation pace is furious. This week, job titles of the future. Help wanted: Model Trainer.
The race for your face: Like it or not, hardware is coming for your face. There will be a metaverse OS. Meta’s brand is tainted and they are better at knockoffs than original product thinking, but they are out front in race that’s just getting started. Apple will accelerate it soon. Android vs iOS.
Hello Semafor: Media businesses take shape over months and years. This one is off to a respectable start, IMO. Perhaps I am too generous. As you would expect, not everyone agrees. Much conversation about the heavy-handed attempt to present a balanced take inside of a structured article format (the “Semaform”). I love me a format and every business needs a mission. It’s international focus is welcome, the assembly of talent, undeniable, but does spoon feeding a news-saturated elite solve the problem? The differentiator will not be format, I don’t think. It will be better execution to compete with FT, Bloomberg and Axios. A couple of links If you want to go deeper:
Semaform and Function (Columbia Journalism Review)
Semafor Is The Problem (The Defector)
An important question raised by this work is whether the sentiment and emotionality embedded in news media headlines reflect a wider societal mood or if instead they just reflect the sentiment and emotionality prevalent or pushed by those creating news content. Financial incentives to maximize click-through ratios could be at play in increasing the sentiment polarity and emotional charge of headlines over time. Conceivably, the temptation of shaping the sentiment and emotional undertones of news headlines to advance political agendas could also be playing a role.
Perhaps this is obvious but it always sticks in my mind when I talk to folks about how their business is changing.
This time it was the executive team of a large grocery chain. We were discussing the disruptive role of retail media networks, basically advertising found in digital retail settings (and beyond) that leverages the retailer’s valuable data set. Retail media knows a lot about what you like to buy, an important signal in targeting advertising, obviously. It also shows up in digital places where you make purchase decisions. Amazon has a ripping retail media business that is quickly becoming the principal source of profit next to AWS.
Retail media tells us everything we need to know about modern retail and New Distribution — the profit is not in the selling of the thing, it’s in the relationship with the customer.
So, New Distribution is the modern discipline of managing a relationship with a customer, independent of physical location. Our preoccupation with ecommerce penetration as a percentage of total retail sends us down the wrong path in my mind. Almost all relationships have digital touchpoints. The store is just a place to pick up the goods. What really matters is how the connection to the customer is established and preserved. New Distribution strategy demands that we rethink the fundamental distribution asset inside of a company, as well as the talent and competencies that bring it to life.
(NOTE: this idea is closely related to a post I wrote a couple of weeks ago called “Flow Theory". To be honest, I liked the Flow idea but didn’t know if it would make sense to folks. TBH, I did a barely serviceable job of telling the story. But feedback suggests that the idea resonated. In my mind, Flow is the path of the consumer, digital and otherwise. New distribution is the business strategy to intercept the Flow.)
I have spoken about distribution repeatedly in a media context. Media is but an intimate dialectic between content and distribution. The equation works when they tango. Distribution in media is the mechanics of how you get content to the audience. It is also the vessel that carries the content. A newspaper is a way of delivering content to the home. It is also a format for the presentation of news. A front page, sections, one way communication, etc.
It's a bit different in retail. Naturally, distribution is the path to the consumer. It's a location, an environment to present your wares, people that help orient you. But the product is the product.
As physical space becomes less important to the equation, how should you think about distribution? As I said above, the answer is the digitally mediated relationship. Sustaining that connection in an endless sea of digital distractions is the hard part. This is why we are going to see many new types of relationship structures between retailers and consumers, driven by the idea of membership. Membership is a structure for sustained connection. It trades benefits like content, service and discounts for loyalty. It is also a vital source of profit when competitive dynamics suck all of the profit out of the retail trade, just like the example of retail media networks above. Amazon Prime is the canonical example, and perhaps, the greatest product innovation of the century. It also looks a lot like Costco, a company that requires you to have a membership to shop. Almost all of Costco’s profits come from memberships, very little from retail margin.
In short, membership is distribution.
But I think there’s another important idea underneath the concept of New Distribution: it’s data architecture. A company’s data architecture is the foundation building block of the New Distribution challenge. Data strategy connects 1) product metadata (everything about the product and the vendor), 2) customer metadata (who you are, purchase history, preferences, even community connection) and 3) content metadata (helpful content that connects products to your world and helps you get the most out of them).
In a simple grocery example it might be 1) data about, say, a pasta product including pricing, discounts, ingredients, calories etc., 2) a history of your consumption of the product, 3) how it connects to other products, recipes, health information, etc.
Vitally, making New Distribution work means creating mechanisms to capture consumer data everywhere. Your phone is the connector, online and off.
The quality of this data enables a host of downstream advantages in how you present products physically and digitally, the ability of AI to personalize its presentation and broadly how you turn the service of selling a SKU into something that has the potential to create value in the customer’s life. Perhaps the contrast between old and new looks something like this:
Distribution is the foundation of all business. The better our ability to reframe the idea in the context of a digital connection and a data asset, the better off we will be.
Cool AI things of the week
It’s coming fast.
AI in music…check out Muburt.
Fresh off a huge acquisition of Figma, Adobe is scrambling to keep up:
Don’t count them out yet. Meta AI does speech translation:
Thank you Sequoia for starting to map it all out.
And… a delightful analog thing of the week.
Send me feedback: firstname.lastname@example.org
Kate, this is dedicated to you.