WORKWEEK

In the world of media, it’s easy to hear about all the things operators should be doing to build a great business. 

Thing is, it’s really hard to do all of those things — and it can be really overwhelming. So, instead of piling on to what you should do, I’ve created a list that’s a bit more actionable… 

The list of stuff you shouldn’t do if you want to improve your media business. I’m calling it “The Seven Deadly Sins of Digital Media”.

Before we start, one important note: These deadly sins shouldn’t be interpreted as things that will kill your business tomorrow. Instead, the below are simply things you need to pay attention to and solve for if you want to build a sustainable business.

I got so into writing this piece that it ended up being like 2,500 words (about 3X what I normally write), so the tiny group of people who copy edit this for (shout out to my wife, Jess, and co-founder, Becca) told me I should break up into two pieces. So that’s what we’re doing.

This week is Part 1 of The 7 Deadly Sins of Digital Media. Next week, you’ll get Part 2. 

#1 Dependence on feeds & algos 

Platforms like TikTok, Facebook, and Google have made discoverability so much easier in the last 10 years. It’s so satisfying to watch your follower counts go up and your brand expand through virality. 

Yesterday, I was talking to a media operator who told me, “If you post 5 somewhat good TikToks a day, you’re bound to go viral at least once a week. After a couple of months, you have a great channel for commerce.” 

They’re not wrong — but that TikTok algo will change, and when it does, your channel will go with it.

This lesson has been learned in the past, but it’s easily forgotten. This story about Joe Speiser and Little Things death by Facebook algorithm changes has always stuck with me — I know a similar fate will fall upon others who get greedy with the feeds. 

If you fall into this trap, you will wake up one day with an entirely different business than you did the day before. 

#2 No self-organization

Self-organization is the leading indicator of whether a media company has a community or not. 

Self-organizing is your audience acting on behalf of your brand, without your brand’s involvement. It might mean your audience talks on Reddit about how great the brand is, gives themselves a nickname like “Stoolies”, throws a local city watch party, or designs merch to embrace the brand.

Audience self-organization is a signal that you’re accomplishing two of the hardest things in media: establishing a brand and building the foundation of a community.

Do I think a media company will die if they don’t have a community? Not yet. But if a media company’s audience isn’t self-organizing, it’s a telltale sign that the business, at best, won’t continue to grow — or, at worst, won’t sustain. 

Without it, you’re just going through the motions and there’s no underlying moat. 

#3, Part 1: Misaligned talent incentives

Optionality is a beautiful thing for moving the world forward. Whether it’s the drama between taxis and Ubers or linear television and streaming, when new options are presented industries are bound to evolve.

In media, talent is experiencing optionality for the first time in a long time. Professionals in every arena — from fiction writers and TV personalities to athletes and B2B subject matter experts, creators everywhere are experiencing optionality for their talent. 

Substack, Amazon’s self-publish, Workweek, Mirror, and many others are all aiming to disrupt the talent pool by creating new options.

What are these new options replacing? Media companies that arbitrage their talent. 

If you’re the CEO of a digital media company, reading the above may give you heart palpitations. But it’s true. 

We’ve all treated talent as “next man up” and “they don’t deserve that because we own the distribution.” Thus, we’ve offered them not-so-great salaries, crappy benefits, and have expected them to use their gift to help us build great businesses.

In the past, I’ve been as guilty of this as anyone. I used to pitch that the beauty of newsletter businesses was the fact that you could have 10K subscribers or 1.5M subscribers and the cost of goods to make those newsletters doesn’t really change — you can pay a writer the same to do both. In short, writers’ pay historically hasn’t increased linearly with a newsletter’s success, which creates beautiful margins. 

But now things are different. Talent knows their worth. They have options. 

Media companies that are not laser-focused on aligning incentives of their talent, no matter how much distribution they currently control, will end up dying a slow death. 

#3, Part 2: Misaligned audience incentives

Related to the sin above, there’s a new path being forged for incentives in media through web3. 

I’d be lying if I actually believed your media business will die if you don’t move to web3 — I haven’t totally swallowed that pill. But the reason I’m taking this so seriously is because of incentives. 

As much as talent is starting to know their worth, so are customers. 

Is free content enough to reward audiences for their participation? Considering that it’s a limitless commodity, probably not. “Oh no, my team makes the best content. That’s good enough.” Sure. Says everyone. 

As I said in the deadly sign about self-organization, community is a cornerstone of media companies going forward. 

So, what’s the cornerstone of a community? Ownership.

There will be media companies that align incentives with their audience where their audience gains ownership in exchange for their participation. The companies that nail this new structure will have the strongest organic marketing in the industry — and the digital media company with the best organic growth wins. 

If you’re not learning about this new path forward, you will one day look up and be left in the dust. 

P.S. you’re seeing this part because you referred one or more readers to Perpetual. Thank you for sharing. 

#4 Failing to recognize your uncomfortable truths

The echo chamber of Twitter loves to say that “every company is a media company”. The intent of this line is that every company needs to use content to capture its audience’s attention and affinity.

But I interpret the line differently… 

If every company is a media company, then “media companies” can monetize in endless ways. The models they pursue could be NFTs, SaaS, subscription, advertising, merch commerce, events, CPG products, or any other business model on planet earth. 

But every model has its consequences — it’s “uncomfortable truths.”

In media, your business model dictates your relationship with your audience, the products you offer, and the value you drive. A “media company” may be able to monetize in endless ways, but you need to recognize — and account for — the uncomfortable truths of the model you choose. For example… 

If you choose advertising as a business model, the uncomfortable truth is that you will more than likely not create a business that is able to scale past $500M in annual revenue. Because there’s not real scale opportunity, advertising businesses will struggle to attract investors. 

If you choose SaaS, the uncomfortable truth is that your audience will perceive your content more as a marketing channel than as an information source. 

If you choose a traditional newsletter model, the uncomfortable truth is that you can’t pay your writers an equitable amount to the value they created unless you sacrifice your margin or expand your products. 

Uncomfortable truths can be overcome, but it takes self-awareness and countermeasures. 

Take Bloomberg for example:

In 1990, Bloomberg News was launched with the goal to help expand the services sold through their terminals. By 1995, they pivoted to say they wanted to create a separate and profitable media organization trying to tell the most timely business news. 

If Bloomberg was still only trying to push services, would they have turned into the biggest newsroom in the country? Never. 

But sometimes,  it’s too late to fix. Like a newsletter business raising $28.4M from venture capital. 

If you’ve made it this far, thanks so much for reading. Keep your eyes peeled for the rest of The 7 Deadly Sins of Digital Media next week.