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[upbeat music] Welcome to the Rebooting show. I'm Brian Morrissey. This episode is brought to you by Beehiiv.

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When you are running a media business, email is usually the backbone, or at least increasingly is, and getting it right is unfortunately usually harder than it should be. That's where Beehiiv comes in.

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This is a platform that was built by people who scaled Morning Brew to millions of readers, and they created the platform that they wish they had when they were in your shoes.

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So it is no surprise that companies like TechCrunch, Time, and The Texas Tribune are already running their newsletters on Beehiiv.

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It is designed for serious media operators, not marketers bolting on a newsletter as an afterthought. If you are running a publication with more than a hundred thousand subscribers, Beehiiv is built for you.

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Their team has scaled newsletters at places like The Information, Puck, and as I said, Morning Brew, so they understand the challenges that big publishers face, from seamless migration to enterprise-grade deliverability and monetization.

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Beehiiv makes it easy to grow, retain, and engage audiences at serious scale. So if you wanna see what the next stage of growth for you could look like, go to beehiiv.com/trb.

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That is spelled B-E-E-H-I-I-V.com/trb, and you can meet with Beehiiv's team of growth and newsletter experts today. I wanna thank Beehiiv for their partnership.

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They've been great partners, and we're gonna continue this through next year, so you'll be hearing more about Beehiiv. I recently switched over to Beehiiv, so I do encourage you to check it out.

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I found the tools that they provide more powerful than the ones that I had previously used.

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And last week, we actually partnered on a breakfast where we gathered together a group of product and revenue leaders from leading publishers, and I think the biggest thing that stood out to me is how much these businesses are in a time of change as they look to rebuild the direct connections to their audience.

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Now, the wrinkle to this is that I found that many of these businesses still have to operate the old traffic-based model while they build the new audience-focused model, and that is a difficult burden to, to bear, and that's why I think many cases, you know, newer, newer models have a leg up in that, but I think that there are obviously still strengths with more legacy models that are adapting.

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And it also echoed my conversation that I'd had with Josh Marshall, the founder of Talking Points Memo. Yeah, Josh is one of the, and Talking Points Memo, are one of the last survivors of the blog era.

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I mean, I remember that moment, you know, when sites like Talking Points Memo, Daily Kos, or The Daily Dish, even Gawker, you know, were forerunners really of this shift from institutions to individuals that were seen and has been branded as the creator economy.

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More than two decades later, TPM is celebrating its twenty-fifth anniversary, and, you know, most of its peers from that era have either faded away altogether or become something unrecognizable as they've entered what Troy calls the harvesting phase of their life cycles.

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TPM's mere existence as a profitable, stable business deserves some examination as to why, and Josh was nice enough to walk me through it.

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You know, he credits the choice to forego any dreams of being the next media mogul and a critical decision at the height of the traffic era to get off that treadmill and go down what at the time was an uncommon path.

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He watched his peers chase scale, you know, raising venture capital and hiring giant newsrooms, and he saw what he calls the original sin of digital media, and that is confusing the growth patterns of journalism with how technology scales.

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So TPM made a bold choice in late twenty thirteen. It would shift to an audience-focused membership business.

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It would still sell advertising, but the weight of its efforts would go to building recurring revenue, turning its audience into customers rather than the product.

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That alignment gave the company critical ballast compared to more f- volatile ad businesses that depended on the fickle traffic patterns from tech platforms.

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And today, TPM gets roughly n- ninety percent of its revenue from subscriptions.

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It probably isn't the most scalable model, but it's far more reliable, and most importantly, I think it gives TPM and, and publishers that get on this path a, a degree of sovereignty that you simply do not have when you depend on traffic from tech platforms that you're gonna then monetize through an ad system that you mostly don't control.

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So Josh looks at this as a pure practicality, which I really appreciate [chuckles] personally, 'cause he describes himself as, like, a small business owner, not as an entrepreneur, and it's a distinction I greatly appreciate because the media businesses of today and tomorrow will increasingly look this way.

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Also, I mostly have read Josh over the years for his political writing, but what always struck me was how precisely he could write about programmatic advertising, something we discuss in this, because he treated it the way he treats politics.

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You follow the incentives, and y- you'll understand the system. And what he saw, and this was what led to that decision in late twenty thirteen, was that the system was designed really to fail publishers.

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And so in this episode, we talk about what it takes to survive twenty-five years in digital media, what TPM got right about membership, and what everyone else has missed about monetization in the attention economy.

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I hope you enjoyed this conversation. I know I did. If you do, please share it with someone and also leave a rating and review wherever you get your podcasts. Always like to hear your feedback.

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My email is Brian@therebooting.com. Now, here's my conversation with Josh. [upbeat music] Josh, welcome to the podcast. Congrats on twenty-five years. Thank you.

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Thank you, and, and thanks for having me. Yeah.

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I was joking before we got on that, like, a-anyone in this business who has been running a digital media operation for twenty-five years is, like, the...The World War II veterans that are like- Yeah... produced.

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[laughs] Yep. Yep. Yep. Once a year. So you've had, like, you've gone through a bunch of different of these eras, and you started in the blogging era, right? So- Yep. Yep.

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I was, like, reminded, you know, with Curtis Sliwa now being talked about a lot, and then, like, people don't remember a lot of, a lot of things that came before. Yeah, yeah. And the blogging era was the forerunner.

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It was a different time. I mean, you started obviously in two thousand, and, you know, blogs were a thing. And- Yeah. Yeah, yeah. No, they were.

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And, and, you know, one thing that as I look back on it now, one of the key things about the blogging era is that it was the pre-social media era. Yeah.

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And that was, that was so critical to it because, because, you know, there were some aspects of blogging existed before two thousand and two thousand and one, but the political blogosphere as, as- Yeah...

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something that was like a, you know, a, a number of different sites and kind of had a, had a whole valence to it, that was, a lot of that was tied up with the Bush administration, you know, and, and, and people wanting alternative sources of news and stuff like that.

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But a lot of it is people-- I think people today have a hard time, even people who were around then and operated in that context, it's hard, it is hard to remember to put ourselves back in the framework of just how hard it was to find information.

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Yeah. And that is one aspect of, of what blogging was about. You know, alternative media, a more, a more informal kind of reader engaged kind of media.

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But also pre s- pre-social media, a lot of it was, you know, finding out about news that the big, you know, the big outlets weren't focused on.

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And that's not just a matter of wanting to hear from people who had a different viewpoint.

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Often it was, oh, you know, this story, this new story is happening in San Diego, or it's happening in Des Moines, and how do you find out about that?

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Well, blogs, because there was a lot of, you know, reader engagement and stuff like that, often things like that would bubble up in, in the blog world. So it was a very...

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It was kind of a, you know, a, a crazy time and, and it was just a very, very different environment than anything we have today in so many, you know, in so many different ways, even though it was in the internet era- Right...

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so to speak. Yeah. And there's kind of, I mean, we'll get to it, but there, there is like sort of a revival of that, I guess, ar- and the energy around, like, Sub Stack and independent- Yep... voices.

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And I think some of that, everything comes back in fashion, right? Yeah. Yeah. And a lot of the, a lot of the sort of things is being closer to, to the audience- Mm-hmm... being more informal.

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Like, a lot of the things like- Yep... echo, right? Yep. But the incentives are obviously very different in, in- Yeah... in this, in this environment.

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And that's something that you've been part of for twenty-five years, which is responding maybe against your will to the incentives of the systems in which [laughs] media exists.

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Well, that, you know, that's one thing, and I, I've told people this at, i-inside TPM at various stages of, of the company's history, that there is, you know, there are a lot of downsides to being a very small company and a small organization, but there are also some plus sides to it.

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And one of them is that you are never under the illusion that you can buck the trends- Yeah... that are surrounding you. You are a small boat on a big ocean, and you have to navigate that ocean.

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And when you're really big, you can, you can fool yourself for a long time and with a lot of money to burn to thinking you are gonna buck the trends. But when you're small, you know you are not going to buck the trends.

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You ne- you have to... The ocean is the reality that you live in, and you need to adapt to that and navigate within it.

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And so that can, if you are-- I think if people running media companies are, have their ears open for that, that can give you a certain advantage.

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I mean, maybe this is a way of, you know, repackaging deep disadvantages as advantages, but, you know, you have to take your advantages where you, where you find them. And that can allow you to be more reactive.

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You know, I think about, you know, some of the things that happened to even the big operations like, like the Times and the Post, say in the first decade of this century, or that happened with a lot of the big VC-backed startup publications in the second decade of, of this century.

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And a lot of those problems were based on or, or exacerbated by thinking like, "Well, this is a challenge, but we're gonna outsmart that challenge." Well, no, you're not, right?

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You're, you're not going to outsmart that challenge. You're gonna need to react to it. So yeah, that has been something very basic to us for forever.

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You know, that is, th-there's, I would say there's a number of decisions that, that we made over the course of twenty-five years that were very early, and we saw things early, and we started doing things very early because, again, you're small.

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Yeah. You're not gonna, you're not gonna buck the trend.

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And so for, just one thing that really jumps to mind to me, because it has really just shaped the arc of the last dozen years of our history, is that we started a membership program at the end of twenty twelve.

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That was way before anybody else was doing it. And actually, there were things that I was looking at in twenty eleven and twenty twelve that made me think, like, "This is not gonna work."

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And not, not just like it's not gonna work for us, but the whole thing isn't working, the whole scale, um- The traffic era you're talking about.

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The traffic era basically and, and the business underpinning of the traffic area with, with a certain kind of ad- Yeah... monetization and so forth. Um- Often programmatic, which is indirect. Yes.

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Pr-both pr- yeah, programmatic. Well, the growth of, it's a series of things.

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One is the concentration in what was, you know, we used to call direct advertising, the increasing, the ways that programmatic wasBeing cut into by the social platforms and, and not just cut into, being like you know bored by the [chuckles] by the, by the social platforms and I remember I was-- we actually, the actual launch of our membership program was, was very shambling because I,

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I, I got this idea in like the middle of twenty twelve, and I was like, "We gotta-- I, I have to launch this before the election." Because if you're in the political news business- Yeah...

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the el- an election is when you have a, you know, a lot of audience.

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And so I sort of did everything I possibly could, and a lot of things I wasn't able to do to get the thing launched before, before the election in twenty twelve.

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In any case, you know, it took us, it took us another year or two before we had things lined up in a way that we could really start building that, you know, building that subscription business like around early twenty fourteen and so forth.

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But when, when the crisis really hit, which I would say was sort of twenty seventeen, twenty eighteen, we already had like twenty thousand subscribers. So we were in a position to...

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Now, not that it was easy, it was still, it was still desperate- Yeah... but we were in a position to nav-- to, to survive that.

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And that's one of the, you know, that's one of the, you know, kind of key moves that allow us to be here today. Yeah. I mean, 'cause th-that was when, you know, the Facebook traffic hose got turned off and- Yeah...

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I think it became very clear then that relying entirely on advertising is gonna be a very difficult proposition. Yeah. Yeah. Not, not workable at all.

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And, and you know, it's funny that one of the, one of the things that I think has always been an advantage to...

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And just, just for kind of clarity, my-- for the first twenty years of the organization's history, I ran every aspect of, of the business side of the organization.

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Obviously, I had people who, who work for me, but I mean, I was, you know- You're hands-on... the per- ve-very hands-on- Yeah... running each aspect of it, and it's been a little different over the last five years or so.

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Well, the more than a little different. We n- we now have a publisher who had, who had worked with me for a number of years. I made him p- you know, gave him the publisher job.

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So basically, I, I'm, I'm less hands-on today and for the last four or five years than I, than I was previous to that.

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But I think a big advantage that we had is that if you are deep in the nitty-gritty of things like, you know, twenty fourteen, twenty eighteen era programmatic advertising or for that, for that matter, t-two thousand and five era programmatic advertising, you see things that you're not necessarily gonna see.

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You're certainly not gonna see if you're- Yeah...

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the vast majority of journalists, but you're also not gonna see if you're like, if you're most media executives, because you're, you know, third party or programmatic, you know, that's, that's not where the, that's not where the stars are, right?

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That's, that's not where the- Right... where the big money is. You're not looking really close. So being hands-on the business side and really in the trenches also gives you some advantages. What were you seeing then?

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'Cause I mean, you...

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I, I don't wanna say you like turned against programmatic advertising or something, but like, I mean, you, you, you sort of, you know, you made the choices that you made, and you saw that, you, you saw that advertising was not the path to go down, and advertising was, at the time, the sort of, I guess that was the consensus, sort of like the Washington consensus.

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Like I mean, that was- Yeah... the consensus at the time. Yeah. Well, and as you say, the consensus also, you know, based on scale. They all, they all go together.

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I think that, you know, a few of those things were the way the... For direct advertising, we were always in the DC advertising space, which is a very unique- Yeah... environment. You mean like public affairs?

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Yes, which is in some ways, it's a part of the advertising world that is i-i- It's different... in effect, kind of... Yeah, it's part of the lobbying budgets of- Yeah...

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corporate America, basically, so it's, so it's unique. Basically, uh, there were a number of ways where that was starting to get very stratified, say in the first Obama administration, not because I'm just kind of...

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It had nothing to do with the Obama administration- Yeah...

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just kind of lining it up with eras, became very stratified, and at first, we actually made a heavy pivot back to programmatic advertising because I had, I had in the, let's say in the two thousand and five, six, seven era, the whole, the whole thing in digital media was direct advertising, and what you didn't sell through direct advertising, you did through third-party advertising.

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You know, kind of, uh- Ad networks... cash, you know. Yeah. E-exactly. Just, just the leftovers. They called it remnant. Yeah. You know, it's a good, a good sort of capturing of that.

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And since we were a fairly undercapitalized business, I really f- and didn't have, you know, a kind of a big ad staff, I spent a long time focusing on how can you, how can you slice and dice the, the, the inventory so that you can get as high and effective ad rate as possible through, through third party or programmatic advertising- Mm-hmm...

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when it was definitely a secondary thing. And you know, it's sort of like the way that, you know, homesteaders, right? You kill the animal, and you, you harvest every bit of it kind of thing. [chuckles] Absolutely.

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So in that era, I had really kinda gotten that down to a science, getting, getting a, an effective ad rate that wouldn't mean much to corporate publications, but at our, at our, you know, low cost level was, was, was really good.

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Go forward, you know, half a dozen years. So as we got into direct advertising, we kind of devalued third-party advertising, but I still knew a lot about how to do it.

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So as part of that pivot, we actually pivoted heavily, again, in that same period- Mm-hmm... when we were starting our subscription business.

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We actually piv- pivoted heavily towards, towards third party because I knew there was, there was a lot of money we could, we could recapture there.And we did, you know, using a lot of the same ideas and stuff but in the same way-- but as I did that and we dramatically increased our revenue from third party advertising, so those were...

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You know, it was, it was very successful but you could see also the same trends are-- that were hitting in direct advertising were hitting in third party advertising.

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And a lot of that is just concentration, you know, really basic things. Mm-hmm.

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Concentration of the companies that, that operated in that, in that space, the, the related, you know, takeover of the social networks basically, and Google being sort of a hybrid, being a sort of a hybrid part of that.

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So, you know, there was a, I would say in, you know, twenty twelve, twenty thirteen, we had started making a lot of money again in third party advertising, but it was also clear

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that it was dying even as we were increasing the money that we were making from it. Explain that. What did you s- why, why, why is that? Well, you could see that again, reduction of players in the space- Yeah...

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the increasing dominance of the platforms and as, you know, in the same way that, that when it, when it, when it basically bubbled down to everything going through Google, the effect of prices were gonna go down.

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We know about this. This is- Yeah... basic monopolies and so forth.

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But I remember, I remember a conversation with my colleague Joe Ragazzo, who, who is the publisher of TPM now, but at the time, who I basically hired in large part to manage third party in the way that I'm, way that I'm describing, probably in sometime in twenty thirteen or twenty fourteen or something like that.

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What I said is, "Look, here's the way to think about this. There are still third party programmatic networks coming into this space with lots of VC money. They are gonna lose that money.

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Maybe a few of them, you know, standard hockey stick- Yeah...

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maybe, maybe one or two of those will succeed, but all of that money is going to be burned in what is basically a dying media space because Google's gonna take all this over and our job is to, is to harvest indirectly as much of that VC money- Yeah...

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as we can because you, you would, you would- It's like cheap Uber rides to the airport. Yeah. Get, get, get them while they're [chuckles] while, while you have them. Ex-exactly.

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And frankly, you could see it because, you know, you, you have, say, your effective rate is, you know, a, a dollar fifty per ad slot, right? Yeah.

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And each few months you get some new entrant with a bunch of VC money come in and they're offering two 'cause they need to buy up space. They need, you know, they need market share. Great. Yeah. Bring it on, right?

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And, and- Trust me, I spent those years at Digiday. Yeah. I mean, like- Yeah...

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we-- I would stand up on that stage and be like, "And thank you to our partners," and then it would be like one slide of logos and then another slide of logos and then another slide of logos. Yeah.

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I was like, I kept joking, I was like the Matthew McConaughey, like, I keep getting older, but the logos just keep changing [chuckles] you know, like, you know, like- Yeah. Yeah. And, and, and again, I...

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You know, we were in, in a lot of ways what we were, what we were doing in that period was again harvesting the VC money trying to buy market share in a, in an industry space that was being devoured by the big social networks and Google.

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And, and look, I, I don't wanna... Ob-obviously it's not that I had perfect visibility into this- Yeah...

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at the time, but we had basic visibility into it and, and again, that, that was, that was why I was so desperate to grow the subscription business because I, I mean, I, I didn't...

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There was a, you know, I, I don't know in the, you know, once you get to around the pandemic and just after, I mean, the fact that it, it, it bottomed out quite as much as it did, I didn't expect it to, you know- Yeah...

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I didn't expect quite that. But I could see it was, I could see it was dying because again, if you, if you... We were one of the, we were one of the beta/launch partners of what was, you-you'll know, GAM. Yeah.

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Google Ad Manager, right? The, the, the- Successor to DoubleClick. Yeah. Yeah. The... Well, this was-- Well, that was before. Google Ad Manager's before they bought DoubleClick. Oh, was it? And then Google-- Yeah.

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So GAM, Google, Google Ad Manager was- You really were hands-on, huh? [chuckles] Yeah. Was the, was the... Yeah, exa-exactly. Well, when you, when you, when you need to, when you need to cover payroll- Yeah...

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you gotta be hands-on, right? So yeah, so, so GAM was first, and then in pretty short order, they bought DoubleClick, and that's where, you know, DoubleClick- Yeah... you know, became the in-house version of it.

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But if you had, if you had been there from the beginning of it and watched how it evolved and how their role in it evolved and a-a-as the dominant role that you s- you see it happening, right? Yeah.

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And I, I remember I, I, I wrote occasionally I, I've-- obviously most of what I write about is politics, but occasionally I've written about the business of media. And- I like those.

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I'm like, I like the politics stuff- Yeah... but I'm like, "Okay, this guy is in the details too." I've been reading [chuckles] You know, it's funny. I, I in a lot of ways,

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I in some way I've, I've always- The poor people who come to TPM looking for [chuckles] politics- Yeah... and all of a sudden they're in GAM.

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Well, you know, it's funny that, that I, I have always-- in a lot of ways I've enjoyed that stuff more because in the politics space, you know, I think about, well, there's a million people who know what I'm saying about po- You know, there's just a g- but, but there, there are along the way, there were certain things about the, the digital media infrastructure that I certainly wasn't the only one who knew about, but often I was in this, in this somewhat unique, sorry grammarians, somewhat unique space in that I really did know the details, and I could write about it.

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Right. Right? Because so- That's the difference. Like, there's a lot of people who know the details, but they're like, "Eh, this guy's-" Exactly. Exactly. "... this guy."

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There's a lot of people in the, in that space who- They almost know too many of the details 'cause they're not able to, like, sort of see the forest for the trees a lot of times.

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You know, they spend- You know, and it's a plumbers convention arguing- Yeah... about PVC piping and whatnot, and it's like- Yeah...

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wait a second.You know, it's funny, I actually had-- There was one time, I don't know, it was probably two or three years before the pandemic, something like that, and a couple of the guys who were

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you know, very, very high up people in the Google programmatic advertising DoubleClick hive, right? Yeah. Who worked out of the, worked out of their New York space and were actually both TPM subscribers.

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So these were, you know, these were kind of TPM people, and I had written a few pieces basically explaining Google's monop-monopoly power over the advertising space. Yeah. We can say that now.

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And- It's a judge's- Yeah, yeah. Now it's, now it's, it's a formal legal- I used to always say dominant, like [chuckles] all these sort of things. Exactly. But it's monopoly. It's a formal, formal legal finding now.

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And again, you know, as monopolists go, there's, you know, some monopolists get in by just some kind of nasty acquisitions. Yeah. Google did it to a great extent by a lot of forward thinking and, and, and- Yeah...

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really pretty effective products and all that kind of stuff. Anyway, so I- They had a lot of advantages with the greatest, like, economic engine ever created. Of course. In search. But yes, yes.

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But so anyway, so I, I had written a couple pieces saying, you know, "Here's, here's how it works. Here's how- Yeah... here's the big sort of picture of this."

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And these two guys, very nice guys, you know, subscribers to the site, readers of the site, basically invited me to come in 'cause, like, you know, "We're not, we're not monopolists.

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You know, it's, it's not, it's not what you think." And so, so I went over to meet with them, and it's funny, I actually had this...

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You know how they do, you go into a place like Google, you have to basically sign an NDA to sign into the building. Oh, yeah, you have to say you're not from North Korea and Cuba and stuff.

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Yeah, all just, you know, and I will never divulge anything- Yeah... I see in this building and stuff like that. I'm like, I would always do that as a report. I'm like, "You gotta be kidding me."

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I was like, "I'll sign this thing. I'm not gonna be some, you know, guy who lights himself on fire in the lobby, but I'm not, I'm, I'm not gonna do that." Well, I was one of those guys, right?

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Because, but not in the s- but the reason was is that, you know, I think most people are going to Google because there's a business deal on the line. Yeah, I know. And they need to.

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And I remember I saw the thing, and I was like, "I'm not signing this," and she's, "Well, you have to." I, I said, "I'm happy to meet." It's always so annoying. "You guys invited me here." Like, whatever.

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Anyway, I got in. So but the, but the reason I bring this up is we had a great conversation. They kind of, you know, whatever. We talked about seeing the forest for the trees.

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I don't think they thought they were a monopoly. These were people who were admirers of the website. Yeah. Wow. You know, knew me through reading about politics. I don't think they were trying to spin me.

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Like, why do they care? They don't care. You know, they don't even- But it effectively doesn't really matter also. Like, you know, it doesn't- Yeah.

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It's like I think about this a lot of times in the political world of the sort of people who used to be more traditional, I guess, conservatives who are now, like, deconstructing the Cabala or whatever. Yeah.

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I'm like, it doesn't really matter if they truly believe it or not, like- Yeah. You- Or if they're just responding to market incentives. The end result is the same. No, totally. Totally.

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But I, but I-- but to your point that a lot of the big trends, and this applies to all of us, it's hard for, it's hard for any of us to see the big trends that we are- Yeah... governed by and, and, and part of, right?

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So yeah, so all of those things were, all of those things were coming together and we were in a period sort of in the last, you know, three or four years before the pandemic when we were, you know, trying to build the membership business as quickly as possible to manage the, the, you know- Yeah...

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catastrophic decline of the advertising business. And, and it was, uh, you know, I don't need to tell anybody in, in, in the space at the time, it was very difficult, but we did have this advantage.

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We'd al- we had gotten a four or five-year jump on the subscription thing, and that's what saved us. Okay, so now tell me about where subscriptions/memberships are.

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I mean, they're the overwhelming majority of the revenue, right? Yeah. I mean, they're, they're- Ninety. Oh, yeah. In the nine-- in the ninety, in the ninety percent range.

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So basically, it's an entirely a subscription business. We, you know, we still do programmatic advertising, but it's, it's, you know, it's a minor part of the, minor part of the revenue picture.

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In practice, it is a completely subscription-driven business. And that gives you more- Even though we have some token other revenue sources. Right. That gives you more stability, right?

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I mean, you, you know, I know as someone [chuckles] who relies on indirect for the most part, like it's really not great. You go into the year starting from zero. I mean, you have partners that will renew. Yeah.

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I'm like rubbing my neck right now 'cause I'm in like sort of renewal season. But it's, it's definitely- It's night and- There's a lot of advantages that- It's, it's night and day.

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It is just on the, just on the quality of life front, frankly. I, I mean, we,

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you know, say back in any time between like, you know, two thousand and ten and two thousand and fifteen, you know, go into the, go into the year with a, with a, with a budget, you know, having to bring in upwards of three million dollars, right?

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Mm-hmm. And that would, that was basically all advertising. Now, programmatic is somewhat predictable, right? You have a general sense since it's a commodity business.

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But basically, you go into the year not knowing where, you know, with the payroll there, it's a payroll business, right? It's overwhelmingly payroll and- Yeah... and rent.

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And, and not knowing wh-where the money is coming from. And the difference is there is that if you are a bigger publication, you maybe don't have guarantees, but you have advertisers.

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They may advertise more or less, but you have advertisers.

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A small publication without an endemic advertising space, which we are, we're not tech where you've got ga- you know, gadget advertising and stuff like that-You have no advertisers. You don't have advertisers.

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You may have people who advertise more than o-- in more than one year, but you don't have advertisers so you're basically having to, to build an advertising book from scratch each year and that was so damn stressful.

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I ca- [chuckles] I can't- Yeah. I ca- I can't, I can't even describe because again, I wasn't, I wasn't an ad seller per se, but I was the one running our strategy and, and all the stuff.

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And, and the thing with subscriptions is, and this is, you know, look, this is-- we know this is why the, you know, everybody wants you to put down for a recurring monthly payment.

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It's like having an annuity or something like that, right?

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I mean, you go into-- when you're a subscription-based business, you go into the year basically having almost total certainty of nine-- where ninety percent of the revenue's coming from.

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And that's, believe me, that is so different from zero percent- [laughs] Yeah. [laughs] The revenue. Yeah. At the same time, right, like, I mean, there's, there's a lower ceiling. Yes, absolutely.

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Absolut- there is a lower ceiling. Um- Like, I think all of these, these shifts are, are very good. If you think about like just the, the blogging era, you know- Yeah...

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it was going to be, it was in the, you know, content must be free time- Yep. Yep... and very few people were behind paywall. Even doing a paywall was extraordinarily difficult [chuckles] technically. Like- Yeah.

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Yeah, exactly. Anyways, people were not used to paying- Yep... online even, but much- Yep... less for paying for content.

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Substack- Well then also bey-beyond pay, beyond the, the mechanics of a paywall, even the mechanics of how you would harvest subscription payments was- Yeah. There was no stripe... didn't r- yeah, there was no stripe.

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And, and the, you know, the other part that's, that's, that is worth kind of making clear for people who, who weren't, you know, kind of in the mix at this time, is that for most of what people consider like the blogging era, there was no, there was no business model at all.

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Right. There were people asking for tips. At a certain point, blog ads, which was a specific- Oh, yeah... company which really kinda pioneered um- Henry Copeland... the kind of-- Oh, yeah. Oh, yeah. Yeah.

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You know, that was a big part of the early period for us. But I, I guess it's, it, it, it's important to realize that, again, the sort of what people remember as the, as the height of the- Yeah...

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blogging era, there existed- There was no business model. People didn't think about it- There was no business... it was a hobbyist. It was CB radio- Right... in many ways. Exactly. And then- Exactly...

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you know, Nick Denton was sandbagging it all the time saying, "This is no business, this is no business," while he was building a business [chuckles] which is fine. Yeah.

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He-- You know, Nick always used to, I remember used to, he always used to have this line about anything, you know,

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i-i- in anything we do that, that, you know, might be called journalism, you tell me and I'll get rid of it. You know, Nick is a, is a- Yeah... is a provocative and transgressive guy.

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But yes, it was all, it was all without a business model and, and you know, Henry Cop- Copelan had a big role in kind of making it, opening up one, you know, one real revenue stream, which was a, which was a big deal.

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So compare it to today where the, you know, the energy, I think during the pandemic particularly shifted to like Substack, and I think Substack is a, you know, it's an important company, right?

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Like it-- far beyond its like revenue and business itself- Yep... in that it has created an entirely different digital economy for content that- Yep... is primarily direct payments from- Yep... its audience. Now- Yep...

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d- doesn't only, there's Beehiiv, there's, which is sponsoring this podcast. There's other places that you can do these, these things now.

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But, you know, I think when I think of TPM, if it was going to start twenty years later, it would probably start- Yeah... as a Substack, right? Y- yeah, no. It, uh, absolutely.

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I mean, there's a lot of things like, you know, since we started doing a lot of things before there were good industry solutions for them, we built a lot of things ourselves. Right.

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And so there are certain things that if you were starting now and you say, "Okay, you know, we got a twenty percent off the top for, you know, for the provider and all, you know, all, all these kind of things."

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You know, we can't do that because we already, we already own that money.

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And so, [chuckles] you know, when you're talk- when you're talking about, you know, X millions of dollars of, of revenue, you can't really do that. But yes, that would be, that would totally be the way that we'd do it.

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We even have a couple of our newsletters, uh, semi on Substack.

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They're still completely within the TPM ecosystem, but we also do versions of them on Substack to take some of their, you know, their finding algorithms and stuff is a, a place to be.

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So we even dabble with it, even though we don't, we don't, you know, all of our, you know, kind of business fulfillment stuff is based on our own software, you know, often built- Yeah... on public libraries and stuff.

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But not, we don't, we don't deal with any of the, any of the companies that will basically, you know, provide a subscripti- you know, the s-s-sort of the, the, the back office of a subs-subscription service as a, as, as a, as ser-service to you.

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But yeah, we absolutely would.

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And, and you know, the other part that's important to say is that the, you know, the arrival of Substack is partly because they have this great finding algorithm that allows people to, you know, to find you and stuff like that, and they've really gotten the business fulfillment side- Yeah...

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down really well at a relatively, you know, a relatively easy percentage.

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But the other flip side of it is everything we were just talking about, about the collapse of digital journalism between like twenty fifteen and twenty twenty. Right.

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That you've got lots of journalists who've decided that it, it is the preferable thing to, to, you know, put out their own shingle and be like busking, or not quite busking.

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You know, there's everything from people who are just doing it kind of individually to what, you know, the free press and, and some of the tech Substacks do. But, you know, it's, it-- not everybody wants to do that.

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So some of it is of necess- I mean, a lot of it is of necessity, right? Yeah. There's, there's, um- A lot of reluctant entrepreneurs out there. Yeah, yeah.

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And, and that is-- You know, it's funny, I remember there's a, a New Yorker journalist I, II remember just a lunch we had, I don't know, a decade ago or something like that, and this is a very successful journalist, right?

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Would be, you know, uh, very prominent and saying like, "I don't know how you do it. I just want a paycheck. I don't wanna worry about all that stuff." Yeah. Right?

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And, you know, people are characterologically different, but the, but the, the crisis in the industry, you know, forced a lot of characterologically different people to say like, "Uh, I...

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This is what I'm gonna- Well, also the, the, the- "... is what I'm gonna do." The risk profile flipped almost, right? Like, I mean, like- Yeah... it used to be it's higher risk to be, like, independent.

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It absolutely, like, is in some ways, but then like- Yep... do you wanna be sitting at CBS News right now? I mean, that's pretty high risk. Yeah. They got, they got- Yeah... 2,000 scalps they're gonna, like, take. Yep.

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Totally. So- Totally... you know, this industry has compressed quite a bit.

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But, like, tell me about, like, the sort of substackification, if you will, of politics, like, in particular in your, in your space because there are tons now of independent voices, journalists, non-journalists- Yep...

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comedians. I, you know, I get most of my Middle East news from comedians, it seems like- Right... these days. [laughs] You know, Comic Book- Yeah, it-... Smith tells me what's going on.

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[laughs] You know, there, there's, there's always been this, this, this pattern that we have existed in with, with other players becoming more like us.

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And I think that this was a lot of our-- This was a big thing that we dealt with, say, between,

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you know, the, the 2006, '7, '8 period to, you know, to a decade later, that there was a certain point when the big news organizations were still, and in some cases still at once-a-day publication, or still operating totally in the, you know, kind of high school journalism class idea of what a newspaper article is, and we could just kind of run circles around those people.

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And now we were still, like, a tiny little organization, but in the sense of for people who wanted, for news, for political news junkies who wanted to know what was happening now, we had these formats that we worked in that we not-- we obviously weren't, you know, doing kind of one publication a day, but able to customize our mode of publication to the content.

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Sometimes two sentences is the news, and can you front two sentences, that you're not locked into an article? Yeah.

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This is, uh, look, an easy way of explaining this is the way the i- is that it is totally natural to us now to know that the Times and The Post and all the other similar organizations will have live blogs of all sorts of, of moving stories.

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That didn't use to be the case, and that's certainly not just a matter of, of copying us, literally copying us, but a little.

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You know, we started a, you know, we're, we're in the group of publications that started those things. So you have to, you have to get used to like, oh [laughs] we're not the only ones doing that anymore.

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There's no moats. There are no moats. Yeah, exactly. Format is absolutely not a moat. Like it's like- Exactly.... "Oh, that looks good. I'm gonna do that." Exactly. Exactly.

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So you have things like that, and, and so now we are, we are in a space where a lot of, a lot of people who used to work for the big publications are setting up shop, you know, places like, you know, The Bulwark is a little different since their founding people were mainly people out of politics as opposed to journalism, but I- they've obviously hired up a lot of journalism now, all sorts of places like this.

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So, so there are a lot of, you know, we are not that unique as a, as an organization of around 20 people, you know, doing this stuff, and that's, you know, that's how media works and that's great as far as I'm concerned because we have, we have an audience that likes what we do.

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And I can honestly say that, that, that our business is more robust and stable than it's ever been, not just, you know, so not just surviving. As you say, it's not, we're not gonna have hockey stick growth, right? Right.

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This is the size of the business. But a lot of the people who had hockey stick growth didn't realize that they weren't actually having hockey stick growth. Right. Yeah.

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It was kind of an illusion, and there were very specific reasons why, why we did not get in on that very aggressive VC-backed period.

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It was, it was a decision I made, not, and not one 'cause like, oh, you know, journalism needs to remain pure. I th- there was, there was, you know, TPM was a hot thing- Yeah...

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at the time when that money was flooding in. And at a certain point, I was-- It wasn't even a matter of I had to be persuaded.

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I was so, I was so busy running things that I actually had a number of sort of prominent Silicon Valley VCs trying to get in touch with me. Yeah. And that other people, that I just,

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uh, I can't even explain to myself now, like, why didn't I respond to these people? And it wasn't- Well, you could just say that you were wise. You know, well, I got wise a little later. Retrospect is great for that.

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Yeah. At that, at, at that point, I wasn't wise, though. I was just, I was just so, I was just so full on doing it day after day.

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In any case, what happened was eventually I got persuaded, like, "All right, you should do this. Takes min- investment money," whatever.

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And one of the things I've always been very happy about is that I, as I was, as I was walking through how these deals would work and stuff,

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I realized very quickly all the ways that you can lose control of a company while still being the majority owner of a company. And for reasons that are just characterological, I could never accept that. Yeah.

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I couldn't handle the idea that someone could, could take the company away from me. Yeah. And it's, it's, it's- Yeah...

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kind of, like, hard to, like, looking back, but, I mean, that was the sort of default for a lot of people who reached, like, you know, the, y-you, you, you, like you said, you were, like, a hot property, whereas I feel like now it's normalizedYou know, bootstrapping is the assumption in media.

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Like- Yeah... I don't think nobody's like out there like raising money for the most part for like- Yeah. Why would you?... publishing sites. It's like get to- Yeah...

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you know, particularly you, you can do and you look at like, I think particularly in the political landscape, like- Yeah... there's some really profitable, like small, and particularly around personalities.

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Now, they- Yep... don't have a ton of, of enterprise value, right? Yeah. But like amazing business.

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It's good for your in the-- if you're, if you're running it, it's, it's-- I-- look, I've been, I've been, you know, in, in-incredibly fortunate with, with, with TPM. It's great. It's, it's, it's doing well.

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You know, I did a-- we, we have this-- we're publishing this twenty-fifth anniversary series where we basically went to twenty-five people in every kind of part of the digital media history and present and just say, "What's, what's an essay about the his- about the last twenty-five years of digital media that you're sort of itching to write?"

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And we commissioned all those. Sure.

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And I wrote an introduction for it, and the sort of the after sort of thanking everybody and all that kind of stuff, I said the, the, the, the original sin of digital media was that- There are many sins.

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I read it, but there's many Well, okay. Yeah. Well, there's, this is the, the, the, the core one in mind. Yeah. Yeah, you're absolutely right.

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There is, there is one, is that people thought digital media was part of the tech industry. Right. Yeah That it was, that it was tech, and it was not.

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And when you talk about moats, you know, this is, this is, this is very basic for anybody who, who knows Silicon Valley or VCs or tech world.

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You know, you, you, you, you intentionally blow a lot of money fast because you're trying to build scale and network effects and lock-in.

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And, you know, let alone losing nine out of ten, you can lose nineteen out of twenty and you get lock-in, you're gonna make- Right... all your money back. That's the whole game. And there was this

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weird inability to see that there's, there are no network effects in news. Right. There's certain, certain little parts of news distribution that have network effects, but publications have no network effects.

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You're not gonna be the Stripe of news and suddenly like, "Wow, I, you know, it's so big now, you can't not get your news from Stripe." That makes no sense.

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And a huge, huge amount of, of, of everything that happened and the whole collapse was, was that playing out.

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And you had, you know, added to the fact that the whole, the whole, the whole business model was sort of destroyed by the, by the, you know, concentration of, of the, of the tech mon-- you know, platform monopolies.

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But that's another thing that again, sort of allowed us some visibility, is that if you were running a media business and, and had a really hands-on sense of how the money worked, you could see that all of these hotshot publications of a decade ago were not making money.

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Right. You just, you, you know the space.

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You look at, you look at the numbers and you say like you're obviously, you, you're, you're telling, you know, you're not gonna fool Morrissey, but you're gonna fool half the other people in the media press that you're ma- that you're making money.

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You're not making money. Yeah. You know, you may have some sort of Wall Street creative, creative accounting and stuff. [chuckles] But, you know, it- Can we adjust the EBITDA? Yeah.

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All these ki- you know, it's funny, I was telling somebody recently, they talk about, you know, the, the fact that you're in a space where there's a difference between are you solvent and are you cash flow positive?

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[laughs] You're not, you know, I-- for those listeners, I know, I know accounting. Right.

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I know the difference, but in practice, in this business where there is no inventory, where there is, there is very little intellectual property that you, that, that can, can be done anything with, if you are not cash flow positive, you're, there's someone who's fooling you about your job security.

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So let me, let me ask you this then. A, a final topic, but it's a little bit like broad, but I have this theory about like we're operating in the information space, right?

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And it's, there's the media industry is, is a small part of a larger space in which everyone's jostling for attention, for influence. Mm-hmm. Mm-hmm. Mm-hmm And people have different business models. Yep.

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Talking Point, Talking Points USA w- to me are Talking Points, what am I saying? Turning Point USA was, was a media organization just with a different like purpose matter. Yep.

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And we have that all across this information space. Yep. A lot of the energy seems to be in personalities, in creators. Like, and there's no moat really in media. I think we've gone through this at this point. Yeah.

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And so I think you end up defaulting to personality because, you know, you have different, different personalities and you can develop a parasocial bond, and we've seen that within the, the, the contours of the information space that that is rewarded.

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Is this, do you-- first of all, how do you ev-ev-evaluate that? And then is, is that like a permanent condition as we move beyond mass media? It's a good question. I, I, you know, you're, you're, you're,

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you're catching me before I say I, I knew everything in retrospect. [laughs] Because I, I don't have a, I don't have a clear sense of that. You know, I, I think if we look at, if we... Well, let's look.

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There is, we have a lot of things that have happened just in the last six months that point to a, a lot of media concentration that is, that is, you know, kind of tied to the government and stuff like that. Mm-hmm.

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So there may be forms of lock-in there that we're, that we're already seeing. I think that I, I could see us being in this space, the sort of the influencer personal connection space, for a long time.

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I think if we look at the broad scope of history, that you, you, society and economies work their way into somewhat stable, institutionally stable moments. But we're certainly not, we're not there yet.

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It could also be, you know, it-It could be something that our society is still-- you know, it could be something about the internet, the sort of the parasocial intimacy that is, that is-- seems to go naturally with the internet that maybe- Yeah...

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you are going to have some-- I will, I will say this, that, you know, we're all talking about how AI will affect media, will, you know, will, will, will disintermediate journalists and stuff like that.

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And I do think that there's, there's a pretty big contradiction here because the entire coin of the realm about influencers and parasocial relationships is about a person, is about a person.

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That is, I do-- y-you can fool someone. You know, you could, you could, you could have a, an influencer- Yeah... using AI to, to produce their stuff.

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But this is something that I have-- I've given a lot of thought to, partly because I'm in this business. I doubt just generationally whether, whether it'll affect me a lot personally. But like, you know, will,

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will serious news coverage, and let me amend that a little bit, very straightforward wire stuff I could see being done by AI. Mm-hmm. And, and that's very important stuff. It just-- it's different.

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It's very kind of specific and factual. But people doing opinion journalism- What it means, connecting the dots. Exactly. Yeah.

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I think th-there was a lot about the era of major metropolitan newspapers that we did not understand until the internet destroyed it. Mm.

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And I think there is something similar about the rela- potential relationship between AI and journalism.

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And I think the key is that even though we haven't had to think about it, if you read opinion pieces, it is only relevant or compelling to you because the idea that a-another person, an entity li- fundamentally like you, a human being- Right...

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came up with these ideas and wrestled with them. If it is by a machine, I don't think the vast majority of people will be interested to read it.

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That's not to say that AI couldn't fool a lot of people, or fool some people into thinking a person did it. But the idea, I think people only want to read that kind of journalism if it originates with a human being.

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So-- and I, I-- there's a lot of reasons I think- Yeah, and that, I would argue that this would ac-ac-accelerate and would be something of a moat.

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Like that would be-- because like, the, the, just the humanity of it would then- Yeah... be the differentiator, and you can't give up your differentiator, and that's why I sort of...

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You know, I think, look, there's a lot of pressure on the news industry to get more efficient, and AI is a great efficiency tool, et cetera. Mm-hmm. Mm-hmm. Mm. At the same time- But yeah, um-...

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you can't give up like your, your strength, and maybe this is me sort of whistling by the graveyard, but- No, I, I, I think, I think that is true. I mean, I was thinking of moats in different ways.

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There's, there's, there's moats for the influencer era- Right... and I think there is a moat there.

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The, the, the, the, the moat for individual companies, that's different because obviously individual influencers come and go. But no, I, I, I do think, I do think that is the case.

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We-- I think people want to hear what another person thinks, and the more creative that person is, the more whatever, the more kind of attractive they are as someone, as someone to read.

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But I think even for listeners, think about it yourself.

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Think about if you, if wherever you read your opinion journalism, if it's, you know, the Times op-ed page or, or your favorite site, if, if you read something knowing that it was something produced by an algorithm, you know, produced by AI, would you be interested in what it had to say?

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And I don't think most people would. So I do think that is, that is a, a moat. Yeah, I think the big, the big unknown is, and we could go on this forever, we could do one of those four-hour podcasts.

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I think the big unknown is whether that generationally changes. Like we're too far into, like we- Yeah... grew up like analog. I mean, all, all the internet stuff is sort of against nature.

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My, my, my bet is that it doesn't, that it is something, that is something- Human. Yeah... actually fundamental to, to, to why we read, why we consume, why we consume things.

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But yeah, we, it's also- Well, that's assuming people are gonna be reading. Well, why you consume, why you, why you consume. Well, why you read, why you listen to podcasts. Yeah. You know, podcasts is another example.

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You could obviously, you could, you could certainly engineer a podcast with, with AI. Would you wanna hear it?

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But it's also true that w- it's very hard for us to, to-- for any humans to think beyond their generational, you know, beyond their generation, beyond their time. Okay. Awesome. Thank you so much, Josh.

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This was, uh, really great. Congrats. I really appreciate it. I had a great time. Congrats. Thank you. Thank you so much. [outro music]