Interviewer: Peter Houston
Brian: I’ve been covering this probably since…I guess I’m going back to 2000 really, so a long time, in different forms for different publications. But about eight years ago, I left Adweek where I was digital editor, and came to Digiday, which was about two years old at the time, but was mostly an event. The idea – and linking up with Nick Friese who is the founder of Digiday – was how do you build a modern media business?
At the time it was using events as a foundation on which to build – a revenue foundation, because events are a good source of immediate revenue, you can spin up revenue pretty quickly if you do them well. But then also the community element, and what I felt with Digiday was that you could actually expand a community using the event.
Now everyone says events don’t scale – that may be true but it really depends on your definition of scale. Critically, I think events really provided the oxygen to figure things out as far as what the brand was about, because revenue is the oxygen for any business. Well, cash flow! I should say cash flow is the revenue that….
Peter: I think the events thing, that was a model that the Media Briefing followed initially, with great success to a point. But how has the business covering media changed, over well, I guess Digiday has been going almost 10 years, but for you almost 20 years, how has the business of covering media changed in that time?
I mean it’s obviously it’s changed quite a bit. I mean, I can remember earlier on in my career covering this, it was a lot of just…there is a legitimacy factor of just digital media, at the time, it was just internet media. And particularly coming out of the dot com era, a lot of people were dismissive of the changes that the Internet was having on media and marketing. You got to remember this is really before Google took off.
And so, once the dot com crash happened, and all the nonsense of dot.com businesses went away, I think a lot of people were dismissive of the entire sector. It was at a time when people were really just getting broadband connections. And so, I think one of the smartest things that was said to me about that time was that everyone’s looking at the wrong number, they were looking at the Nasdaq number, but they weren’t looking at the broadband penetration number.
So, I think at the time it was a fight for legitimacy. And it was it was exciting, I was at a publication called DM News to cover the direct marketing industry. And that’s where I remember actually at a previous job having a meeting with goto.com about this crazy idea that they had around paid search. Goto, which actually became Overture, they were really the people that pioneered the model of paid search.
It wasn’t Google, Google perfected the model. But covering that, and people really didn’t understand how big of a business Google had; I covered Google for years before its IPO, and it was only at the IPO that people realized how gigantic Google was, and that was because Google was aggregating a lot of smaller…at the time like people were, I guess they were amazed when Google said that it had two hundred thousand advertisers. Facebook now, they said yesterday they had 7 million.
But, I think that seeing these model grow, now we’re at a period where there’s not like a question about legitimacy, there’s a question about whether there’s too much power of the technology companies. So, I think in covering it and living it is always then for me the biggest focus, maybe the self-preservation sort of thing was: “How do you build sustainable media businesses in this area that’s completely changing, as delivery goes over to digital models, but also the economics go into digital models.”
The economics is the bit that we’re all struggling with right now.
Yeah obviously I mean…the last couple of weeks here in the US, well and also abroad, but with BuzzFeed layoffs, with Gannett having cutbacks. We just actually pushed a story about Vice having layoffs.
Is it 10 percent of their workforce?
Something like that yeah. So these are massive dislocations that are happening in the media business, and there’s an unbelievable amount of…there’s a lot of different causes of them. There’s a lot of just…bad businesses are still bad businesses. And I think a lot of these companies are getting their cost bases under control.
But yeah I think that’s what makes this such a compelling story to tell, but also to live, as an independent media company that that’s trying to grow and thrive.
And the best thing in the world for a business to business company like Digiday is for there to be loads of change in the business, because that’s when people will come to events, or they’ll read your stuff, or they’ll buy reports or whatever it is because they’re trying to get that edge.
I think so, and I think that that changes the role of a “trade publication”, and that was one of the original insights we had was that, I really sort of push back against the term trade publication because to me…it was always code for meaning “boring” and being cheerleaders.
It’s kind of pejorative.
Yeah. You know it’s a backwater for ‘not real’ journalism. It’s a lot of fluffery and stuff like this. And I think that’s actually true in a period, a static period. But I don’t think it’s true in a dynamic period of change. What our idea was here – and I think you’re seeing a lot of other areas, I can’t say that we’re completely original in it, but maybe we’re a little earlier than a lot of people to it – was that in a period of intense change, you cannot have a trade model that is like that. One, the idea that people separate the kinds of stuff they read because that’s their professional interest versus the kinds of things they read because that’s their personal interest, that’s gone. You compete with everyone for their time and attention, and focus.
And the other is, I think that instead of being cheerleaders, the biggest role you can play is being honest about all of the changes that are going on, and the winners and the losers. And so I think it makes trade journalism completely different and makes it akin to just normal journalism. I don’t really like the term ‘trade journalism’. It’s usually used by people who are in the generalist field. But I do think that the role has changed. But I think that the business model in some ways, B2B media companies are really fortunate because the business models are hard to execute, but they’re fairly straightforward.
Everyone wants to be a B2B publisher these days. Condé Nast and Hearst…
Well I think that’s because the business model are seemingly a lot more straightforward, when you’re not in the know. Look, there’s a lot of people who pontificate about the future of media and stuff like this. And the reality is, a B2B business model is different from the B2C business model. So you can be the smartest guy in the room about the B2B business model, but the fact of the matter is, very few people on B2B are reinventing it. That’s not bad, you still have to execute, and execution is everything.
The truth of the matter is, the dislocation that’s happening to companies like BuzzFeed and Vice is completely and utterly different than the sort of challenges that a company like Digiday media is facing. It’s just completely different.
On the execution side of it though, that’s where you guys are the same as a bunch of other people with The Drum, or even individuals like Ben Thompson. You’re trying to take revenue from that expertise, from that real deep analysis that you provide. From a revenue mix point of view for a company like Digiday, where you used to be so reliant on events say, how does that mix look these days?
Well I would say this, I think the business model is very straightforward. I think what we look at is, we want to put ourselves at the center of industries that are going through a bunch of different change, usually driven by technology, but also by culture too.
So we started with publishing, and then we expanded into marketing, and advertising within Digiday, and then we started another publication, Glossy, that was focused on fashion, and then we expanded that into beauty. So I think we’re looking at industries like this, and the model will change a little bit.
But at the heart of the model is, if you put yourself at the center, and you make yourself a resource to the people who are grappling with those changes, both from incumbent companies, but also from challenger companies, you have an opportunity to have a diverse amount of ways to make money.
So events which is like our sort of core “legacy business”, it’s still the majority of our revenue. But the fact that that’s not our only source, we have a content studio that serves all of our brands that create original content for sponsors around ads. And, we have awards programs, and we do licensing, like we have a Japanese site, and obviously getting people to pay us directly is a big, big focus now.
The key is, are you at the center of, and do you mean something to a valuable group of people? So we see all these moves on the consumer side, I just think it’s a lot harder. It’s just a lot harder, because the nature of being a consumer publication applies to the push back on media profit.
You know that are the p-r-o-p-h-e-t-s that are coming from the B2B side, because the B2C side is dealing with a completely different set of challenges because, by nature the areas that they’re focused on tend to get more generalist, and they tend to get pulled that way because the model of modernization when it comes to B2C media are usually advertiser driven, and you need a certain amount of scale to do that.
It’s easy to say you’re not about scale when you’re constricted by scale. We’re not about scale, of course we’re not, we’re focused on these industries. I mean how many people…I want everyone to read Digiday, but come on, I’m realistic, like it’s not going to reach a hundred million people. So yes, we’re not about scale but why would we be?
So when you see people like Conde Nast who say they’re going to put everything behind a paywall…
I think that’s really challenging, that’s really challenging. Like I went on Glamour the other day and I saw a story about how about how Meghan Markle is now not closing the car door herself. The issue there is, this is on Glamour. This could be on our neighbors here, Business Insider (now Insider), they have their chartbeat that shows up outside the ladies room, and I swing by it every now and again…not the ladies room, the chartbeat. And there’s usually the same Meghan Markle story on there. The challenge there is like, everyone has the Meghan Markle story, it’s commodity celebrity fluff.
It’s really difficult and there’s a reason the Glamour is doing that, because like you’re trying to feed the beast of an advertising model. Suddenly charging for that? That’s really difficult. They’re just different models. So, I think you’ll see subscriptions work in a few instances, but they’re going to fail in more instances than not, because look, someone like Conde Nast will bring in McKinsey and put in place these subscription programs.
But in order to get enough people to convert, you’re gonna have to lower the price point to such a degree that the numbers simply do not work with the cost base that a lot of these publications have. That’s what we’ll end up seeing continue. I would love to say that the recent rounds of layoffs and stuff are the last ones that we’ll report on, but I don’t think that’s necessarily true.
I think that there’s a lot of publications that are going to end up having to really get their cost base under control, and the reality is, at a media company your biggest cost is your pay roll.
The notion of scale that you’ve just described in B2B, do you think some of these consumer types just need to get a clue and start working on a different kind of scale? Both their cost base and their audience.
Some of my favorite models are in B2C, but are a little bit more focused. So, one example, they’re in Europe but also in the US too, is HighSnobiety. So this is a bootstrap publication, started in David Fischer’s dorm room in Zurich. And he was just really into sneakers and stuff. And this is right when the streetwear boom was really starting, and he started this blog and then moved to Berlin, because Berlin is where like young people go to retire, right? And so…they grew this publication and this media brand that really means something to a group of people, particularly young men who are into sneakers and fashion.
When I was growing up a lot of people were not into this stuff. I look around at a lot of the young people here, and they really are. And it’s dance, and the music, and other parts of culture. They have a brand that means something to a valuable audience. And they have a bunch of different ways that they can monetize.
So, I think there are models out there for people that are making it work that are kind of taking B2B-type approaches in that they are focused on specific areas, and they’re putting themselves at the center of this specific area. And then they’re building diverse revenue models around that.
So does a business like Conde Nast then just become a bunch of really really niche titles?
They should’ve. I mean you can argue that they should’ve. But I mean it’s the innovator’s dilemma right? If you have Vanity Fair, and you are doing the Vanity Fair Oscars party with all these celebs like, that’s pretty attractive. But, you’ve got to bet on something.
I was actually just in London and did a podcast with Wolfgang Blau at Conde Nast International. I think it’s very interesting because the US Conde Nast has lost tons of money and stuff, and the International has always done better at least for the last several years. And I think the opportunity there in really doubling down on Vogue, and really finding ways for, you could argue that they’re late, but a brand like Vogue in all the different markets that operate, there’s so many different ways that that brand can make money.
Forget about the focus now, I think the second part a lot of B2C publications that have met with these diverse revenue models because, look everyone criticizes advertising now, but the truth about advertising is, it is high margin, and can be a very lucrative business. Advertising is a good business.
Now everyone is talking about ‘Oh sponsored content’ and stuff like that, man that is low margin. You will end up spending all your margin on production. Advertising its fantastic. Free. High margin.
Everyone should be back selling space.
I’m not saying that you should go back to that but…there’s a reason that people do not diversify their business.
Yeah I guess we forget that. We kind of go, ‘Advertising, why didn’t people move on years ago’. But I see you’re absolutely right. Why would you move on when you’re making a bunch of money?
Well no reason. Everyone here likes to mourn newspapers, how did newspapers allow this to happen to themselves. Well I’ll tell you how, because they were cashed out.
I mean it was, I forget who said it, was like, oh sounds like a license to print money. And there was a lot of changes going on around newspapers that they ignored because they were printing money.
So you started out with these two channels you were looking at: media marketing and publishing. Are those coming closer together, or are they still quite separate?
No they’re not separate. I mean that’s why it’s under one brand. You can’t really cover the media side without covering the marketer side because, leaving aside the pivot to page and stuff, up until now most of media has been driven by the advertisers. The advertising has been supplying the oxygen to the room. And so I think you can’t cover one without the other.
You read articles about BuzzFeed and stuff like this. And it never touches on things like programmatic advertising. I mean it might not be a sexy topic, but I don’t think you can really write a story about the challenges BuzzFeed is going through without talking about programmatic advertising, whether or not it is too late to actually adopt programmatic advertising.
Do you think that’s a problem with media in general, that people don’t talk about money?
I think it’s getting a lot better. I think some of it is sort of, the clinical wall that has existed in journalism for many years. It was almost a point of pride for journalists to not really understand how businesses worked. And it was painted as the ethical sort of thing. But look, the truth is like everything on newsroom, the more you rose up, the more you had to deal with the [self-censoring]. So, I think that was more like on a junior level.
But I think now just because of all of the changes going on, reporters are a lot more aware of the business reality of how the companies they work for make money. I know like when I’m doing interviews now particularly, with more inexperienced and younger people, they really want to know about the business model, and how it works and stuff. That’s just learned through, I mean how many rounds of layoffs do you go through before you stand up and question it?
So who should we be watching? What media companies out there should we be paying attention to? Who’s doing it right?
Oh gosh. I mean I don’t know. I mean I mentioned some. Look I like a lot of people, and maybe this is my bias. I find more interesting the people that have narrowed in on specific audiences, and are building diversified businesses around them. I think we’re going to continue to have the story about the large, venture-funded media companies that are going through challenges, and are cutting their cost base, and unfortunately that involves laying off people.
But I think that can obscure a lot of success cases when it comes to media, both small, and I think it’s easier to point to models that are a lot smaller, that are able to build sustainable media businesses. I’m very proud that we have a very sustainable model that’s profitable, and I like meeting people. But it’s small compared to a lot of these bigger things, and you operate different businesses.
But I would point to like someone like Complex Networks, I think they made a really good decision to, at the time of everyone pivoting to video which was really a pivot to Facebook, they really focused on building franchises. Yes they “pivoted to video” but they did it in the right way. And I think building up franchises and IP that they can sell and make money off in a variety of different ways…that is like a success case of a pivot to video that I think sometimes is obscured. We do some of this ourselves with some of the people that pivoted to Facebook, and we call it the pivot to video.
So I think there are a lot of different models out there, and I hope that we can, on my own podcast and the Digiday podcast, I’m hoping to highlight a lot more of those. And without it being just about small publishers who are able to build profitable businesses, because again I’m not saying it’s easy, but it’s just completely different. It’s a completely different proposition, building those more niche businesses than it is to trying to operate a giant B2C media company.