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[upbeat music] When you optimize against a measure that's a marriage of the customer and the business goals, you're going to win. You're creating value on both sides of that equation.

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When that number goes up, you know that number is good for the business and it's good for the user, and that's the kind of optimization you wanna pursue for sustainability.

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There's a ton of optimization that occurs that is chasing the wrong path.

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[upbeat music] Welcome to the Rebooting show.

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This is Brian Morrissey. Quick reminder, sign up to become a member of the Rebooting. Gives you access to all of the Rebooting's content. Um, still experimenting with what to make member only and what to make free.

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And also you get access to member events that we're lining up for the spring and beyond. You can check out all the benefits at therebooting.com. Hope you will consider supporting the Rebooting and me.

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One of the reasons we're actually doing that membership program is really tied to this conversation I had with Matt Cronin, who is the founding partner at House of Kaizen, a consultancy that works with publishers and other companies on recurring revenue growth.

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Matt and House of Kaizen have been great partners with Rebooting over the last few years, and I've learned a lot from both my conversations with Matt and also his partner, Peter Figueredo, who I can remember interviewing back when I was a reporter at DM News, and I think it was like two thousand and seven.

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Maybe Peter can fact check it there. I like to joke that we both did not have any gray hair back then, and we have a little bit now.

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Anyway, I did a, uh, workshop with House of Kaizen last year around their growth diagnostic, and I found it really useful.

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I, I liked how they didn't just focus on the optimization tactics, which are incredibly important with subscriptions, but really on building those on top of a customer-centric approach to business.

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And now this is one of those things that is easier said than done, I found. You know, most every company, at least the ones I've been in, would claim to be, you know, customer first or in a publishing audience first.

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But it starts to get tricky when your customer is different from your audience, and that's where conflict happens. And I think that disconnect is behind a lot of what's being called the enshittification of the internet.

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I mean, you can see the competing priorities really in the user experience.

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And so to me it's no surprise that with these kind of misaligned incentives that businesses are in difficult positions because they gotta get those incentives aligned in order to move forward with a new growth agenda.

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So in this conversation, Matt and I discuss how publishers can become truly audience-centric, 'cause I think you need to make them customers, and we talk about that.

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What publishers can learn from what other consumer companies do to become more customer-centric, and lots of other topics. I hope you enjoy this episode and this conversation.

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Uh, big thanks to Matt and House of Kaizen for their support, and please send me your feedback. My email is bmorrissey@therebooting.com. [upbeat music] Matt, thank you so much for joining me today.

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Making room on a Friday. I just read something that I don't know how you feel about it in the Wall Street Journal. It was that Friday meetings are like, are toxic, like that you can't call a Friday meeting.

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Does that, does it work that way at House of Kaizen? Yeah. We tend to try and protect Fridays for the team as much as possible.

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I think a lot of people like to use it to get caught up on things and to prepare for the next week, so- Matt, they're telling you, give me a break. They're at the park or at the beach. [laughs] But you know what?

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That's fine as well. We're totally okay with that as well. I think at the end of the day, you know, it's a matter of valuing people for their outputs as opposed to their time in office, so to speak. Yeah.

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And if Friday's a day that you need for- Yeah... mental health or getting caught up, that's fine.

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So let's actually talk about measuring outputs because I think, you know, you and I are both, I think, broadly in agreement that the overall media industry and the publishing, uh, part of the media industry is in something of a transition between eras, and it's a very awkward transition, and I just...

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I see it in, and I hear it in a lot of my conversations with people that are trying to align incentives far better than the previous era. So if we just like take a step back, right?

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Walk me through, like from your point of view, sort of the misaligned incentives that have been embedded in a lot of publishing business models, particularly ones that are very advertising dependent. Yeah.

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I think from our perspective, the, the key difference that we notice immediately, kind of coming at this more from a consumer point of view, so in the case of a media business, the consumer being the reader or the one who actually consumes the content, it's always interesting how within an organization, a media organization, that customer is considered the advertiser in many cases, as you're saying.

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It's primarily kind of evolved from that point of view that the customer, the, who brings the money to the business, is the one who wants the eyeballs, and the consumer of the content is in a subordinate position to that.

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So, you know, it is a really fascinating point of view, I think, when we come into these conversations because there's always this effort to help people come around the idea that it's actually the consumers, it's the owner of the eyeballs that all of this infrastructure is dependent upon, right?

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It's that individual who ultimately represents the source of any stream of revenue, right? Whether they're paying for it directly or whether they're paying for it indirectly through the advertising money.

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So, you know, there's, I'm sure you're familiar with first principles thinking, but that's a lot of what we need to do, is kinda come into these environments that are frankly so complicated.

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They're so caught up in so many dependencies that have been built around this sort of traffic monetization infrastructure.And try to strip all that away and think very specifically about the, the fundamental truth is that you need to have an audience, and the experience has to be good for that audience in order for everything else to exist around it.

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Yeah. So you know, that, that sort of complexity, that sort of tension that you described there, I think that's the first thing that we see is that it's, it needs to be focused on the consumer. Right.

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So when you say first principles thinking, explain a little bit. I mean, I've read some LinkedIn posts about this- Right...

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and I listen to podcasts, and it's thrown around by some VCs, but, like, explain what exactly it is. Yeah. Anybody can get an internet MBA on fir- first principles. I'm sure there's plenty of content out there [laughs].

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I have one. Uh. I have multiple internet degrees actually, Matt. That's good. You gotta put them on the plaques in the, in the wall behind you then. My biology degree from 2020 to 2022. Exactly.

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You know, first principles is basically just the idea that you have to boil things down to their fundamental truth, to the point at which you can no longer distill the thinking or the scenario because at that point it breaks, right?

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So and there's the five whys approach as well, right? Right. Asking again, why, until you get to that point where you can no longer ask why. You can no longer distill anything further.

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And I think in the media and publishing space, you simply cannot distill it any further than the relationship between the audience or the end consumer and the content producer.

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And that's a really interesting scenario is to come at it from that perspective and recognize that there's two parties at the end of the day, and what connects those two parties is a combination of the content and the interface, the medium through which that content is delivered, and that is the foundation for everything above it.

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Now, you know, way back in the day when people were receiving- Yeah... their newspapers by hand, the newspaper was the device. Here comes, here comes the big but. Yeah. Well, I think, you know- Yeah...

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newspapers used to be the device. Newspapers were the platform for a long time, right?

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And as things have evolved over time and the internet has intermediated that relationship between the audience and the device, the platform of news or media, a lot of the complexities have developed as that relationship was ceded to other platforms.

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And so technologies had to move in order to better- Right...

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capitalize on that traffic monetization, and these commitments have become complexities that, as you said earlier, media companies really can't just strip themselves away from it.

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So that first principles thinking helps people kind of reorient themselves around what's true and how to then move forward in this era of transition that you're describing. Yeah.

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It, it reminds me of, like, putting up, like, the Christmas tree as a kid 'cause, like, the... I don't know. I th- I guess the technology of Christmas tree lights have gotten so much better.

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They seem to be less tangled, and it wasn't... Back then it was like if one light was out, like, none of them would work. [laughs] I don't exactly understand. Again, I didn't get an electrical engineering degree.

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But you'd spend an inordinate amount of time trying to untangle Christmas lights and identify the one that was causing all of them to either blink or not actually work at all.

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I feel like, you know, with publishers, and this is one of the reasons that I think that there's a tremendous opportunity for new entrants as a lot gets overturned within this industry, is that their business models became really...

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and, and that the business models dictate the organization, became like those Christmas tree lights that were completely tangled and it wasn't sure why they were blinking.

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And [laughs] it's really difficult to unwind that as someone who has sat on the floor of a living room before Washington, Pennsylvania trying to untangle those Christmas tree lights. Really difficult.

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It's something that comes up a lot of times in conversations that I have.

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I had a dinner this week, and it was top of mind for a lot of publishers that, yes, they wanna shift, and they realize that they need to shift their models to be more audience first, if you will, and totally agreed.

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At the same time, you know, they have to make numbers, and they're trying to really operate a... You know, they've got a burning platform, and they're trying to build a new platform.

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Is, is this something you see with any clients, and what sort of advice do you give to try to untangle those Christmas lights? Unlike tree trunks. Yeah. No, I like it. It's a good one. It makes a lot of sense.

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We definitely do see this. I think there are publishers that we work with that have successful publications that are working well based upon the, sort of the status quo models.

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But they recognize that model is not necessarily going to be what exists in the next era.

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And so the challenge, and part of the reason why they're engaging with us, is to ask the questions, how do we kill our current growth playbooks? How do we kill our current models ourselves before the market does, right?

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Mm. And I think that those are the forward-looking publications that are having those conversations with us.

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There are other publications that we talk to where they kinda look at it from this sort of it could be worse perspective, right? And the it could be worse perspective is like, "Oh, we have everything.

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It's kind of working. We're gonna ride this out for as long as we can. We're gonna try to endure-" Yeah... whatever the status quo scenario is.

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And for those folks it's tough because the truth is it's going to get worse, right?

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[laughs] And simply trying to ride it out thinking you're in a relatively good position- But I, I, I'm getting all these accusations that I'm a negative dude, and, like, you're telling me it's gonna get worse.

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I was like, "It's Friday. Let's talk about, like, you know, all the growth and stuff."

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Um, yeah, but- Yeah, no, I, I think it is going to get worse for those publications who try to ride out the, you know, the traffic monetization model.

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And it can get better for those publications who recognize that the closer they get to their audience and the better they build those experiences and, and rebuild those relationships right now, it could get better.

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You know, and, and diversion- Yeah... diversify their revenue streams with an understanding that the core of every single revenue stream is an audience member or an audience segment, right? They're not...

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It's not just two different P&Ls or three or four different P&Ls. It's actually an individual audience member that represents each of those P&Ls, represents revenue across the board.

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So if you can galvanize that relationship, I think you will actually succeed into the next phase. But this moment in time is critically important- Yeah...

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to make those moves.And it's almost like I kinda think that it's-- maybe it's not an output, but a lot of times people think let's just take subscriptions or memberships.

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I mean, they think that is the change they need to make, but really that comes after reorienting your thinking to be customer-focused, audience-focused.

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And then when you stop to think about the audience as really the product, that the ones that can endure the autoplay from the top, from the bottom, and then sometimes also from the sides. I've seen it. Yeah.

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I've seen it out there. They sneak up in the bottom right corner now, too. They're coming at, they're coming at you. It's like a trash compactor.

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And yeah, obviously those are not, that's not like a, an audience-focused approach, right? And, you know, what I see out there is a lot of incoherence in these models, and I understand why there's incoherence.

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But to put a stake in the ground a-and to shift to an audience-focused approach means, you know, sometimes when you're in a meeting room and someone with the spreadsheet energy comes in and is saying, "But we, you know, we turn this knob this way, we can, you know, we've modeled it out and th-this will be pretty good."

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We've all been in those meetings. Sometimes you gotta just say, "Well, no, that doesn't align with this," call it a North Star, call it, you know, first principles thinking of we're gonna be customer-centric. Yeah.

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I think, you know, that this is another one of those inherent tensions in this industry, which is really interesting because you're right, you can look at the data, and the data can show you that something appears to be working.

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But it can also, at the same time, be in direct conflict with that consumer, that audience member's experience.

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To your point about the ad overload and the pop-ups, I've literally been on publisher sites in the last few weeks where I've received pop-ups on top of pop-ups- Oh, yeah... attempting to get me to- I love that...

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subscribe. Right. In, you know, in conversations behind the scenes- I call it a tangible manifestation of internal dysfunction 'cause you can see the different competing groups.

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'Cause some group is like, "I gotta meet my subs goal." Some group is like audience development, it's like, "We gotta get these notifications in there."

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And then maybe it's a different group that's like, "We gotta get the email subs." And then like revenue's like, "Quarter, we're going into March. Let's get those autoplays in there." Yeah, exactly.

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And, you know, everybody looks at their spreadsheets- And events teams like, "Hey, by the way, we've got fourteen events coming up." Yeah. Yeah, let's get the registration going.

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Well, you look at the spreadsheets, and everybody's showing growth, and so they're happy with it.

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But again, all of these things centralize the point of the audience member, the consumer of that content or that experience, and for them, it's horrible, right?

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So though the spreadsheets may be showing incremental growth, the truth is the potential is not being achieved. So again, that goes back to this idea of like a could be worse mentality.

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The problem with the could be, it could be worse mentality is that it blinds everybody to the potential, right?

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If you come at this from the perspective of the end user and how to improve their experience overall, you can begin to see the potential growth of all of these things by delivering a much more cohesive and respectful experience that people are going to want, and that they're going to wanna pay for, right?

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This idea that we build something that people want to pay for is a really important part of this conversation because at the end of the day, that's where the value is created.

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The goal here should be about creating value so that people stick around and come back again. Yeah.

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You know, something that I heard from a publisher today, or actually two days ago, was that, look, for all the talk of first-party data and getting closer to the consumer, this was in-- He was talking about like a sports publication.

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He's like, "Look, the reality is, if I put e-even a reg wall in front of people, forget about a paywall, they'll bounce immediately."

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A-and this is for like the top columnist that we have, and it's not even, it's not even a tenable. So i-is this...

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Look, if you're Bloomberg, if you're The Wall Street Journal, I have a lot of these dinners and like, you know, the, the business of finance publishers, uh, it-it's like they're in a different world- Totally...

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to some degree. Yep. We start to talk about ads on pages, and they're like, I'm like, "I don't know about the future of ads on pages." And they're like, and they say, "Well, we're sold out."

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Like, everyone else around the table is like, "Oh [chuckles]." So, uh, there's different areas, obviously, of the publishing industry we often, and I fall prey to this, talk about it as a monolith.

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How practical is that for... Because I think part of getting out of this is being totally realistic, right? Right.

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And the reality to me seems that there are a ton of publishers out there that really don't even have a path to taking these kind of strategies. Tell me how I'm wrong. Yeah, sure.

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So, so the reality is it's a yes and perspective, right? You know, again, going back to those inherent tensions that exist.

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We don't have to think about this as either the solution being advertising or the solution being, uh, subscription with a reg wall as a step to a subscription, right? The truth is, it could be all of those things.

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If, again, we come at this from this consumer-centric or this audience first point of view, you know, we would want to be able to make money off of audience members in any way in which they're willing to demonstrate that they value the product, right?

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And even if that's just purely advertising, though they have options for other things like commerce or events or whatever it might be, it's just a matter of meeting them where they are.

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So when we think about media business in terms of the product or the organization first, we think about, we need to get people to buy this thing, or they need to buy that thing.

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But the truth is, it's just not the way people operate, especially with content like this. Mm. They could be consuming it in a variety of ways.

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So the more diverse your potential revenue streams are with an audience member, the healthier you ultimately are going to be over time. In that example of putting up a reg wall, that may be true.

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You know, you may have relatively low conversion rates for registration and subsequent subscription.

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That may be true, but that's not necessarily a problem because you're, what you're doing in that case is you're segmenting your audience by the value relationshipAnd it gives you different ways to make money off of those various segments.

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If somebody chooses not to register, it doesn't mean you can't give them content, and it doesn't mean you can't monetize them off of that content.

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You just have to come at it from a different perspective rather than thinking of them as a lost cause. So I think that the story of digital publishing has been one of intermediation, right?

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Because I think it's embedded in really the development of the commercial internet because it did away with artificial scarcity, which a lot of publishing and media models were built on.

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Um, and that's proven to be really terrible for that business. It's been, I think, great for people really. I mean, because you have access to all kinds of content that you never did before.

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I know there's a lot of people in this industry that pine for the good old days where there was only, you know, one paper in town, and you had it, you know.

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[chuckles] But it's, you know, taking the perspective that that's great for them. But like take-- [chuckles] monopolies are great. You know, people...

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I notice that people love competition, but not when it applies to them. But, you know, the reality is that this has led to prob-way more upside than downside.

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Just the downside has been met by this industry, and that's because when you throw off the constraints, you come up with a matching problem that there's too much stuff out there, and you need aggregators, and the power accrues to those who can aggregate, and they then act as intermediaries.

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And so with publishing, it's clear that technology companies became those aggregators, and, and aggregators then get to take tolls. And then on the advertising side, the same thing happened.

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Their, you know, advertising technology, archipelago, rose up to intermediate the relationship between the buy and the sell side. Again, this was driven not by some evil forces.

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Advertisers wanted to be more efficient, and they-- this is how they want to transact in a large way, and so they're going to transact that way and, and that's just how the economy works.

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So what I wonder is, when you look at all the changes that are happening right now with AI, et cetera, it seems to me that miracle of miracles, the power of the aggregators will go even higher, and that publishers will most likely be even more disintermediated.

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Is it a lost cause to, for most publishers to claw back some of that power that has been ceded to those who are, you know, aggregated versus aggregators versus the aggregated?

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So no, I don't think it's a lost cause, and I think the reason for that exists in this really unique space that we're in at this very moment in time, which is that traffic has already fallen, right? We've lost.

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The collapse of traffic has occurred from search and social. So these old models are not necessarily working in this very moment while we have the looming AI intermediation on the way.

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And I see this as a really unique opportunity to invest in rebuilding these relationships with consumers because the future version of this intermediation through AI is going to be oriented, I, I believe it's going to be oriented with preferences that begin to dictate what we are served, right?

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So the whole pivot from search to being served, but at the end of the day, your AI is an agent for you, and your preferences can be built into that agency.

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And so if media companies today, recognizing that they are no longer competing on the former models of traffic from search and social, if they're investing in those relationships and really galvanizing those relationships with their core audiences, those relationships and those preferences will be built into the AI interfaces that people have in the future.

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Mm-hmm. That's my perspective. Now, not everybody's gonna do that.

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[gentle music] Yeah.

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Every publisher wants to have these relationships with their audience. I wonder if it's requited necessarily on most...

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'cause you know, there's the Dunbar principle that you can only have two hundred and fifty, you know, social connections that social media has proven [chuckles] is probably accurate because you can't really have depth of relationships to, with like thousands and thousands of people.

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But I wonder about, you know...

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I've, I covered the advertising side initially in my career, and, you know, I would hear, you know, the agency people constantly talking about like, "We must engage consumers, and they need to be obsessed with us.

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They love Mark," and all this stuff with Kevin Roberts and Saatchi, and I was like, "It's toilet paper." Like, I mean- Right. "People got, got stuff to do. They don't want a relationship with their laundry detergent.

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Like, they wanna get their clothes cleaned." So sometimes I worry that the relationship talk and stuff is a little wooly and frankly unrealistic because people want to get things done a lot of times.

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They wanna get some piece of information. They want a problem to be solved. They wanna be informed as quickly as possible in many cases, and I think that will increase.

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And on the other end, it's like, [chuckles] "Let's have a relationship." And it's like, "No. How about you just give me what I want?"

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[chuckles] Well, I think people need to be realistic from the sell side, you know, the company side wanting to establish relationships with these consumers.

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You have to be really realistic about what that means because you're a hundred percent right. The consumer, the user has a job to be done. They need something to complete, and you help them solve that problem.

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And so what a relationship really means to that consumer is not like they have a ton of warm and fuzzies necessarily with that organization.But they believe that organization to be reliable to them in solving their problem.

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So when that problem arises, they're not thinking, "I have to pick between these four or five different places in which I can solve that problem."

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They've already determined, based upon that relationship, that there's a reliable resource in place already that will solve that problem for them.

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That's the relationship that we're competing for, because that actually makes it easier for the consumer to not have the kind of relationship that you're describing, right? It's not like a true relationship.

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It's a relationship that doesn't require additional thought in order to solve the problem the person is looking to solve. We've established that relationship.

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We've established the position of being the problem solver, so therefore we're the go-to. And that's the relationship that media can achieve, absolutely.

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You know, we know that people generally are subscribed to one or maybe two media publications.

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Now, obviously, there's lots of other subscriptions that they could be consuming in terms of forms of content of different kinds.

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But when it comes to things like news, it's usually one to two, and usually one local and one national, right? So there's different roles that they're serving.

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So the reality is that those people have a relationship that is, like this is their source for this thing, and they don't need to think about which of my local newspapers do I wanna read this story in?

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They've got our source. Yeah, it's interesting. I do think that's totally right on with like having... The mindset shift is incredibly important. I spoke to a J School class earlier this week in this industry.

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I mean, the kids were all really smart and, you know, scared, but like eager [chuckles] because they're entering a field that everything they read says is collapsing. Yeah. I don't necessarily believe that.

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But I think what was interesting to me with that and other conversations is, you know, the need, particularly on the content side even, 'cause I think that there's a lack of like introspection of the fact that too much of the product that it's putting out is not actually solving the needs of the audience.

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Because the audience needs are not actually, you know, even taken into consideration. A lot of it is on, you know, what the person wants to create, and you see that divide.

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And I look at it, you know, you talk about local news, the product has roundly been rejected by consumers, and it's really arrogant.

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And you work across different industries, so tell me if this i- is common in others, to then blame the people for not wanting the product that you're making. Right. I mean, I... It's just simply not how markets work.

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And if you wanna go in a different approach than markets, the United States is probably not the place for you [chuckles] because that's just how we organize things.

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And so to me, it starts with listening to your audience.

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Like, I did a podcast with Moze Oyefusi, who he had a long career in broadcast news, and he started this Instagram news service, Mo News, and it has four hundred thousand subscribers.

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And he's in the DMs with his audience, right? Yep. And he told me, he said, "I had-- I was doing like CBS Evening News. Seven million people were watching it every night." He's like, "I never talked with our audience.

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They were just numbers in some Nielsen rating that we would get." Yeah. And he said, "This is totally different because I am..." You know, you can talk about it not scaling.

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He's like, "I'm in the DMs with, you know, this audience."

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And in talking with him, he said it's just given him a totally different perspective of the kind of product he i- is going to make because it's being made around the needs that he's not divining off us, but by like listening to the audience and talking to them all the time.

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Yeah, a hundred percent. No other industry would look at a product that hasn't changed for decades and assume that it's the audience that is the problem, right? Yeah.

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The reality is that markets and the people who make up the markets, the consumers, their preferences are constantly changing. They're constantly evolving. Yeah, and they send you signals. They send you signals.

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All these signals. And very clear signals. They either buy it, they don't buy it. [chuckles] Exactly. They want it, they don't want it. Yep, that's exactly right.

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And this constant evolution, well, we need to consider a couple things, right? So who is affecting the expectations of our consumers, right?

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You know, our focus is entirely on repeat customer experience that has a lot to do with subscription and loyalty and membership businesses.

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And in those spaces, we recognize that the person who wants to have a repeat or recurring revenue relationship with a product, their expectations of what they're gonna get from their local news perhaps is shaped by their Amazon Prime account and their Netflix account and their, you know, their Peloton account.

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These innovative companies are setting the expectations for this kind of a relationship, these kind of experiences.

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So when you have a product that has not evolved to keep up with those expectations, yes, of course, it's going to disconnect.

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What I worry about is the sort of into the void thing that like publishers will go deeper, not like claw their way out, and that you can always try to load more ads on the pages and more and more and more.

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I think that game is going to end, and particularly with consumer expectations.

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I think one of the first stories I covered in this industry many years ago was Google's then CEO, Eric Schmidt, telling a room full of advertisers to stop scaring their users.

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'Cause at the time it was just like flash ad after flash ad. Remember the Fatboys and all the... The names themselves were not very customer-centric, I gotta say. It was something that was done to you.

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And, you know, I think that has been a problem pretty much since that day to now. And, you know, people put up with a lot of stuff, and then they stop putting up with stuff.

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And usually it's because the expectations have changed. Amazon set the expectations for customer service and for delivery.

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Now, if you go and you buy something for someone and they're like, "Oh yeah, it'll arrive in like, you know, seven to 10 business days." It's like, "What are you talking about?" Exactly. Where it was very common before.

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And what I think is gonna happen is-As AI tools become more widely deployed, I think the biggest impact is gonna be on expectations. Mm-hmm.

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It's gonna become very strange to have these very, to be kind about it, friction-filled experiences [laughs]. Yeah, I totally agree.

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I think that's already happening with, you know, the search results or AI-based search, like Perplexity as an example, where there's no expectation. Yeah.

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I have no desire to click on a bunch of links to try and find what I wanna find. I would much rather have one search that reveals exactly for me what it is that I need to know, and I'm done. That's it.

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That expectation that Perplexity has now set for me is something that I bring into all my other consumer relationships [laughs]. Yeah.

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And it happens fast, which is precisely why, you know, this sort of experimentation needs to be taking place within these organizations to understand those expectations, how they're being set with their users or their audience members, and how to begin to adapt the delivery of their interfaces to match those needs.

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'Cause again, this is the time. If that expectation, that understanding, that empathy, and the adaptability isn't taking place right now, the ship is gonna sail very soon. And people use different terms for it, right?

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Intentional or controllable audiences. I mean, basically it's, it's saying, look, a generation of digital media companies were built on drive-by traffic. Call it what you want, indirect traffic.

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There's all sorts of different terms you can use for it. Yeah. But basically they were borrowing audiences that weren't theirs- Yeah...

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and they were passing them off to gullible journalists like me, or trying to, as their own audiences when they were Facebook's audiences, or they were just catching the Google algorithm.

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And that, that's been the story of publishing. Now shifting that to a focus on these intentional or controllable audiences is not a simple thing.

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It's in some ways to me like turning a, a bit of a cruise ship because you've built up processes, you've built up organizations, you've built up skill sets a- and playbooks, and most, most importantly, personnel that are geared towards that.

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I mean, it's... You know, I'm a big football fan. It's like if, if you switch, if you completely switch defensive philosophies, well guess what? You've got... You're gonna have the wrong players.

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Like, and I think that is a major issue with a lot of publishers.

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I mean, you can send out the memo that now our North Star is people coming to the site two times plus a week, but when you've spent the last 15 years focused on how do we get the biggest number of, the biggest amount of traffic, well, I don't care if they bounce after, like...

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You know, hopefully they'll click an ad. Yeah, that's gonna be hard. It's gonna be hard. But, so how do you define sort of intentional audience? Yeah.

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So we love the phrase intentional audiences because it really is not about that drive-by traffic as you describe it, it's about the people who really value the content that you're producing and the way in which you're delivering it to them.

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And understanding those folks as the core of the business and the ways in which you can better build value between y- your business and those audience members is really what's gonna create the sustainability for a business, right?

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Because it's within that relationship that you have the most control. The intention is really meant to reflect control.

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When we think about what are the things we can control versus the things we can't control, to your point, this traffic monetization economy that we're coming out of right now is really dependent upon most things that can't be controlled by the folks who are delivering the content in the space of media and publishing.

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But if we've centered down on the things that we can control and we look to make that as strong and as healthy as we possibly can with intent, right, and own that, that's what's... where sustainability's gonna come from.

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And I agree with you, it's gonna require a totally different mindset and maybe a totally different skill set within these organizations to value that versus the drive-by traffic. Yeah.

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That's gonna be a painful transition, for sure. I mean, it's like, it's a kind of an obvious one, but I mean, I saw it. You know, I...

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At some point in my last job I decided, weirdly, to like do a magazine, and it was a little contrarian move, but it was really difficult to do in large part because we had our entire process, our people were not geared to do that.

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And it was, it was a fine idea while running in Brooklyn, but like the execution [laughs] of it was really difficult- Yeah... because we didn't have those... We didn't have all of that system up and running.

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And so sometimes we were asking, you know, people who we brought in because they were good at, at doing what the meat and potatoes of what we were doing was, you know, producing a, a daily news product that was a digital product, to all of a sudden doing magazine.

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And magazine is a different writing form. The, the art direction is different. Everything is different. And it... The transition is pretty difficult, at least in my experience. Yeah. I agree.

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I think that the talent pool has to be augmented with people from other industries and other perspectives. You know, this idea that- Mm...

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more folks coming into this space, the media and publishing space, with a bit more of a product point of view, and the experience of building products with audience first or customer first mindsets, with a culture of experimentation, those kinds of philosophies are really needed in this space, for sure.

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Because the truth is that the media and publishing industry is looking for a leader.

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It's looking for somebody to demonstrate how to make these moves we've been talking about, and how to set the stage for a sustainable future through this era of transition that we're talking about.

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The industry is very insular from my perspective. Yeah. As somebody who kind of looks at it from the outside in, I see folks that we work with kind of talking- Mm...

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and trading one a- with one another tactics that have worked for themAnd historically, those have generally worked okay. But in this era of transition, those tactics no longer work. They will no longer work.

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So looking for the solutions to these current problems amongst the folks that are managing solutions to the last era, you just- Yeah. There's a need for some external inspiration for sure. Yeah. I...

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That's why I like in my, my other podcast that, that I do, People Vs.

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Algorithms, Alex Schleifer proudly tells us he knows nothing about the media industry 'cause he's been [chuckles] in better industries 'cause he was at Airbnb, and now he's very immersed in the video game industry, and that's, like, a great example.

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You know, for instance, like, anytime something like micropayments comes up, I'm like anyone who's been, I'm like, "Never works."

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And Alex is like, "Yeah, but it's, like, a massive industry in, like, gaming and all these other things," but, you know, my reaction is probably indicative of the reaction I would get of anyone else who's been in this industry for a long time because you're just like, "Pfft.

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Never gonna work." And I can go into all the reasons, but they're kinda boring.

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And, you know, I think that's understandable, but at the same time you sort of need to fight against that, and I think it's really good when people come in from different industries 'cause they can bring in...

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They don't have that, I guess it's baggage to some degree. Yeah. No, I love that example because it is so interesting. You look at micropayments through the lens of a media business, and it seems like a silly idea.

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You look at it through the lens of a gaming business, and it's a fortune. And that's not to s- it's not because it's two totally different groups of people, right? Again, it's, it is the same people.

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There's a big overlap in that Venn diagram. The difference is the way those businesses choose to deploy and, and adapt their interfaces. That's the difference.

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So it's a matter of really kind of taking what has worked from other industries, again, recognizing that these are recurring revenue businesses with recurring relationships. We want repeat customers.

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Let's understand the repeat customers ex- expectations based upon their experiences elsewhere, and let's capitalize on those best practices in these other industries to help media build and grow rather than trying to adapt what exists in the status quo 'cause that's not gonna work any longer.

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The, the, you know, the rug's being pulled out, this traffic monetization strategy. We gotta look at it more from a product perspective, build something that people are willing to pay for in a variety of ways.

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That's gonna lead us into the next era.

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[gentle music] So one of the things that a great metaphor that came up at a dinner I did a couple days ago, and I told the executive that I would be stealing it from him and passing it off as my own.

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He talked about it... Yeah, 'cause we were... Inevitably you start talking about pockets of revenue. You go to events, you go to, like, video and stuff, and it... Everything becomes tactical, right?

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I, I feel like all of these conversations. And tactics are incredibly important, and you need to get into the details of it.

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But I think when it comes to these different business lines and, you know, different pockets of revenue, I mean, publishers have always been chasing after, like, the dream of some sort of pocket.

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Like, right now, the pocket of money is in commerce, and everyone is swarming all over- Mm-hmm... the commerce which when they say commerce they really mean affiliate, and when they say- Right...

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affiliate, they mean SEO. That's my joke. [chuckles] Which I think is fairly accurate in most cases. Yeah. And what he said was, like, it's kind of like a mechanical watch, you know, one of those...

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I'm not a watch guy, uh, but, like, it's one of those complicated watches I see sometimes guys wearing that have all those gears in it, and they're like overlapping gears.

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And he said you need to get all the gears sort of turning in some kind of flywheel that they work together.

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And I- the f- it's hard for me to see for most publishers, again, there are a lot of different, uh, in different, like, parts of the industry in which they're making money from fewer sources than now.

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Like, you're gonna have to, like, have a few different sources of revenue going. Nobody is coming out and saying, "Yeah, we're just gonna be about programmatic advertising," I don't think.

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At least I don't talk to those people. And the question ends up being is, how do you start to look at th- this as a whole?

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Because when you start to look at these things in isolation, you get the battle of the overlays on a webpage. Right. Yeah, exactly.

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This again comes back to this audience first perspective and recognizing that individual audience members or segments of audience members represent lots of different sources of revenue. They...

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Each person has kind of like their own little portfolio or pie chart of ways in which they represent value to the media business.

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So when you look at it from the perspective of, like, subscriptions or commerce in two different bar charts, you overlook the fact that there's a singular person who's contributing to both of those, right?

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But if we come back to that singular person point of view, we can see them in terms of their lifetime value, their ARPU and their lifetime value.

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And what's really important here to recognize when we talk about this perspective is that lifetime value doesn't mean what that person is worth to you as a business.

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What it means is what your product is worth to that person. And- Oh, that's interesting... the goal should be- No, I would, I would-... building more value... never thought of that. [chuckles] I gotta be honest with you.

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I, like, talk all about like, "Oh, you know, customer centricity." I'm like, "Ah, I always just think about it as how, what their ra- value [chuckles] is to me." There you go. Right?

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So, like, if we're really going to build a better focus on audience first, like truly be audience first, not just talk about it, it means thinking about things from that perspective.

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What is the value we represent to that person? And that is represented in the spreadsheets and in the documents, but it has to be aggregated at the level of the person or the segment.

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And then from there, we can use all the tools we have to build that value, to make the product more valuable to them.

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They're willing to pay more for itAnd I'll tell you, here's the funniest, most ironic thing about this tension and this struggle in the media industry about how do we, you know, deal with the fact that we have different revenue lines and different customers and those kinds of things.

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Well, coming at this from a product point of view, most other product businesses have one thing that they sell, one line of revenue, and only one way in which they can increase their customer lifetime value.

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They would love to be in the scenario that media businesses are in, where they can sell more things and provide more value to that one customer and actually expand their relationship and make it more long-term.

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So the media industry actually has more tools available to it to increase the value of their product to an end consumer than most other companies do.

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But they lack the perspective to truly capitalize on all of those things to make the value grow for that individual user, right? So this is exactly it.

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It's a point of view, recognizing that we're not just trying to throw stuff against the wall, more affiliate links, more events, more this, more that, in the hopes that those individual line items will grow.

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We need to be looking at them in terms of how can we better create value for these end consumers so that they demonstrate how much more they value us with their money. Yeah.

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And something else that came up that I thought was, you know, pretty smart is, and I'm thinking about writing about this, is you don't really have an audience. Like- No... the, the monolith of an audience.

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You have segments within the audience that have different needs, and, and you need to create products to, to fit those, those needs of the different segments. Like I, I...

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at least that's how I'm, like, thinking about it, and this is, this was brought up by an exec there.

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And because I think a lot of times, and I understand it, these businesses can get overly complicated just because you're trying to chase after all those pots of money.

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I see that with a lot of the subscription programs in that they're trying to cater to an audience when they really should be focused on segments.

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And I think if you sort of unpack The New York Times, 'cause everyone likes to go to The New York Times as the one sort of example, their bundle is doing the work of segmenting their audience, right?

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Like, I mean, they're serving different needs as they've moved from a news product into more of a news and lifestyle bundle of products that can be, "Hey, I've got time. I wanna play a game.

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Oh, I gotta make something for dinner. Oh, I wanna, like, immerse myself in what's [laughs] going on in Gaza." Like, "Oh, I'm gonna buy an air fryer, and so I need to understand which one to get."

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But I think that seems pretty important. Yeah, segmentation is a huge opportunity in this space. You're right. Most audiences are considered one homogenous group.

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And simply breaking that down into slightly smaller, slightly more groups gives a lot of more opportunity to meet those individuals' needs. There's lots of different ways in which you can segment.

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I think recognizing that there's different jobs to be done, they have different needs, and orienting groups around those needs is super, super important.

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It's a great first step for many media organizations to move from this sort of one-to-many scenario to one to a couple different segmentations. And the perspectives on it can vary, right?

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So jobs to be done is one way to take a perspective on it. I think ultimately what you wanna do is define segmentations based upon the ways in which you can create unique value for those groups, right?

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So if they have different jobs, those jobs have different value. But the value component is ultimately what's most important. So even segmenting by CLV is a great way to look at it, right?

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If you look at your entire audience, they should make up lots of different revenue streams, as we've talked about, but cumulatively different ARPU.

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And so calculating what's the cumulative ARPU of each individual segment of people is a great way to segment and look at how you can grow those individual groups to higher value.

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So coming at it from the value perspective- Yeah...

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or the jobs to be done perspective are two different ways to just simply break down one homogenous group into smaller, more manageable pieces that you can build more value with. For sure.

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I mean, I end up just thinking about it, like, myself. Because, like, I have a very niche audience, I mean, [laughs] I think. You know, there's only 22,000 subscribers to the newsletter.

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But there's a lot of different segments within that.

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And in making products and figuring out the business, like, the needs of someone who is, you know, Julia, who's a chief product officer at Bloomberg, and the needs of someone who is just starting out, like, a media business, they're very different.

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And also, their ARPU is very different too. Mm-hmm. Right?

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A lot of my partners have enterprise software that they're selling to executives at publishers who need that software in order to build these sustainable businesses.

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And so that's why it's very complementary to the model because it's serving a real need.

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At the same time, the reality of the LTV or ACV, whatever acronym we wanna, like, apply to it, it makes that other segment of people who are just starting out media businesses, they're not in the market for that.

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So you need to come up with a different product, at least the way I think about it. You gotta come up with, you know, different products that provide unique value to a segment like that.

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And then if you provide unique value to a segment, you can wet your beak. You can take a little bit of the value [laughs] back yourself, I hope. At least that's the way I'm thinking about it, Matt. Yeah.

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Yeah, no, I think it's really good that you have that perspective that your audience is made up of different, you know, needs. And the more you can...

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And this creates complexity for you, but the more you can create slightly different experiences based upon that understanding of segmentation, the more you'll be able to create more value with each of those groups, right?

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So your total audience sort of average value...

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will go up, but the reality is you're managing it on a segmented basis, and that actually would make it go up even higher because you're catering to those needs more specifically.

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You know, simple example of that would be advertising these SaaS products to the, you know, independent operators is a waste of everybody's time and money.

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If you're able to just simply segment the sponsorships based upon those two different cohorts, you would increase the value of that to everybody. Yeah.

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And I think, you know, that's one of the key things here is that, again, going back to this idea that it's ads versus subs or whatever, these line items one versus the other, the truth is when you do this sort of audience first point of view, it makes even advertising more value-- m-makes all of it more valuable to everyone.

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Yeah. So final thing is, and this might be one area where we come at things with slightly different perspective, which is around optimization, right? And I'm not against optimization. Not all-- #notalloptimization.

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At the same time, I think the way optimization has been done with overall writ large across the publishing industry has led to some of these problems that have existed.

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And by that I mean, when you lose control of your distribution, you're inevitably gonna be chasing an algorithm, and you're inevitably going to be working against this entire idea of being audience-centric.

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Trying to operate a business is hard, I think pretty much no matter what industry you're in, unless you, I don't know, have a search engine, then you can collect all kinds of fees and stuff like this, and it's great.

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But it's really difficult in publishing when you're serving so many different constituencies that often have-- they often have needs that are, are in opposition.

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And when you're talking about serving the needs of an-- of, of your audience and serving the needs of your customers 'cause they are different people, advertisers, and then on top of it, you need to serve the needs of your distributors, which are technology platforms.

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Really difficult. Optimization is incredibly important.

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At the same time, I-I've just seen over the years the way optimization has been done by a lot of publishers has led them-- They've optimized themselves into some pretty anti-user places, right?

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Like, so if- Yeah. I'll give you an example. Anyone who's run a subscription program has run into a meeting with how do we mitigate churn.

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And some smart whippersnapper will put up their hand a-and talk about adding friction to the unsubscribe process.

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And you can add friction through all kinds of, you know, they're, they're-- they've taken some sort of growth marketing course like on the internet, and you can add friction in all kinds of different ways with what some would call dark patterns.

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You can just not overthink it and just do, you know, you can call to cancel, and, you know, you have to do it between nine AM and, and nine forty-five AM.

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Give me the case for optimization that does not work in opposition to being audience first, customer centric. Yeah, absolutely.

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I think you're describing a scenario where optimization can be a whole effort that pursues the wrong goals, right? It pursues organization-oriented goals.

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And again, coming back to this concept of audience first and first principles, before we even begin to optimize something, we need to align goals within that relationship between publisher and audience.

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If we can look at how the publisher solves the needs of the audience and understand the audience's goals at every stage throughout their relationship, from the point of understanding what the publisher offers to the point of becoming a subscriber or a regular reader to an ongoing relationship, maybe somebody who purchases product later on, somebody who doesn't churn out because they renew their subscription.

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Throughout that entire journey, really first understanding what that audience member's goal is at each of those stages and how to marry that goal with what the business needs at each of those stages so that you can align those goals, to your point earlier, align those incentives around measures that are worth optimizing against, right?

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When you optimize against a measure that's a marriage of the customer and the business goals, you're going to win. You're creating value on both sides of that equation.

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When that number goes up, you know that number is good for the business, and it's good for the user, and that's the kind of optimization you wanna pursue for sustainability.

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There's a ton of optimization that occurs that is chasing the wrong path.

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Coming back to understanding how to maintain that relationship with the audience member, that's going to be the kind of optimization that's still critical.

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It's still evolving 'cause that audience member's needs and their expectations, as we described before, are evolving over time. The market around us is evolving over time.

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The product needs to adapt through experimentation and optimization to maintain that relationship.

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But the goals that we're measuring are again reinforcing and reminding us of, you know, we're there connecting the publisher to the audience. Okay, cool. Well, Matt, let's leave it there.

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But I really appreciate you taking the time, making an exception to the no meetings Friday rule. It's a podcast. A podcast isn't a meeting. But thanks so much. I really appreciate you sharing all of these thoughts.

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Likewise. Loved chatting with you, Brian. Thanks for having me. Thanks for listening. Thank you to Jay Sparks for producing the Rebooting show.

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If you have a podcast that you're considering making, you should check out Podhelpus and what Jay can do for you. Go to podhelp.us.

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