Opus 9: Media in 2020: The Individual vs. The Institution

Bundle, Unbundle, and Rebundle

The individual has not been passed over; it is he who has passed over corporation, university, novel, and play. The individual has left institutions to become an institution in himself.

- William Irwin Thompson, NY Times: “The Individual as an Institution”, 1971

Bundle, Unbundle, & Rebundle

Pause for a moment and swipe through your phone’s home screen. Look through your apps within music, personal finance, news, travel, etc., and try to understand which apps are directly “from the source” and which are aggregating data and don’t actually originate anything themselves. Your music app doesn’t produce a single note of music.

Most of what we call “innovation” is actually a comedic cycle of bundling, unbundling, and re-bundling of services. These bundled services often times have a new sexy name and are marketed as new and innovative solutions to age-old problems. More times than not, though, they are reincarnations of solutions almost as old.

Examples can be seen in travel and hospitality as airlines and hotels originally held the customer relationship. Aggregators like Booking / Expedia abstracted away from the service providers as they owned the customer. Now the airlines are working to regain this power. Entertainment started on our TVs, and bundles of content reigned for most of the 20th century. Today, content publishers are taking control back and unbundling content into a dozen different apps and platforms that you must now separately subscribe to. Only a matter of time that these are rebundled - look at Disney’s December 10th announcements and their recent bundling of all their individual (ESPN, Disney, etc.) streaming services. Music is waiting on its unbundling away from Spotify that I predict will happen in the next few years as artists work on direct distribution and start to band together against Spotify’s hilariously bad royalty structure. Consumer financial products are beginning their rebundling efforts as the likes of Robinhood and Acorns offer cards and normal bank accounts in addition to their main investment products to build “finance super apps.”

A similar phenomenon is happening within media today. Well-known publishers and journal houses are losing readership as famous, or infamous, writers are leaving the institutions to write independently. The reasons behind these departures are voluntary in some cases, involuntary in others, or somewhere in between, depending on the case. Most of the time, it is a result of writers wanting independence on content selection. Matthew Yglesias of Vox, Andrew Sullivan of New York Magazine, and Glenn Greenwald of The Intercept are some of the most notable examples as of late.

But this exodus of journalists is not new, just like the timeless bundling cycle mentioned above. Throughout the 20th century, popular pundits tried out the independent newspaper / newsletter route, as Michael Waters of Wired explains:

In the 1930s, as today, the shift to newsletters arose amidst a crisis of confidence in the newspaper industry and was enabled by the spread of new technology. Though the first mimeograph had been licensed at the end of the 19th century, a mass-produced version of the machine ballooned in popularity around World War II. Now, regular people could become their own publishers for a one-time cost of just $50 to $100—equivalent to about $500 to $1,000 in today’s dollars.

[…]

These days, companies like Substack are offering a new way out. For now, the platforms let readers find and discover new publications with ease, and they make starting up a newsletter even cheaper than renting a mimeograph ever was. But the context has shifted, too. The journalism crisis of the 1940s was ideological, not financial: When Seldes left the Tribune, the industry was booming and he could easily have found another job, says Bauer. He chose to leave anyway, because he wanted to report the news in his own way.

Within the tiny corner of tech-heads, Substack has been the refuge many of these newly minted independent journalists seek. A select few are already making low six figures while controlling their fate with no one looking over their shoulder to dictate content, style, or distribution rights.

But, can they survive, let alone be successful?

1%, 9%, and 90%

I will read Matt Levine’s Money Stuff, Ben Thompson’s Stratechery, and Byrne Hobart’s The Diff Every day: come hell or high water. These authors can go to any institution, write on any platform, or monetize in any way they want. In my opinion, they produce original content that is orders of magnitude above others. I have become loyal to them as authors and trust their opinions. My worldview is partly formed and informed by theirs. In many cases recently, I have trusted their singular opinions more than I have a brand name publisher’s opinion. But, most people in today’s world couldn’t care less about who wrote the content they are reading.

One of the few in-person dates I have had in the Corona Era was with my friend, Sumorwuo Zaza of Nickl, who is building a bundling tool for all tier 1 publications. He broke down his view of the media consumer landscape. I am paraphrasing him in the following passage,

Like many things, media consumption can be broken down into the 1, 9, and 90%.

There is the 1% of news readers, like you and I, who care about who is writing the text we are reading. They are loyal to the writer, the personality, and the style. They digest and reflect on everything we read. They will pay for them wherever they go whether that be Substack, Medium, or elsewhere.

Then there is the 9% of journalism consumers. These are the vast majority of white collar media consumers. They need the latest news and trust the brand names for each world: New York Times for politics, WSJ for finance, CNN for breaking news, etc. etc. They might pay for a handful of publications but most likely will use their free trials and cycle through emails. They may be able to name a few of their favorite authors but are not loyal to those names, they are loyal to brands.

Finally, there are the 90%. These are the local news consumers, the headline readers. They could not name the author of the last article they read and pledge their allegiance to a select few of publications.

The “Great Unbundling” of journalists has little applicability to most. While Substack may seem like an unstoppable force within financial and technological journalism, the truth is that most consumers could care less and just wanted a trusted brand name organization in their inbox rather than a singular author.

I do not think Substack will be a successful platform in its current form as an independent writer’s toolset in the spirit of having opinions and making predictions. However, calling it a “refuge” would be more accurate so far. This is a hypocritical stance considering you are reading a Substack right now :)

The Rebundle

Journalism is not just writing. Like anything else, it gains complexity as it scales. Administrative tasks start to eat up more and more the writer's time, but the writer is not an admin, nor do they want to be. They will hire a person, or people, to start running this side of the house so they can go back to focusing on writing. Financials will stop being an end of the month exercise and start taking up time every day. The organizational structure will form around these writers. And look at that, we are back where we started: a full-fledged media publisher.

Before that happens organically, a more likely route to the same destination is to have writers starting to sell their distribution rights:

What happens, for instance, if a corporation comes along looking for talented Substack writers, then buys up the rights to their newsletters, or poaches them for other projects? Newsletters were corporatized once before, and they could be once again.

Another Substack writer ponders about the inevitable rebundle:

She has roughly 23,000 subscribers, more than 2,000 paid, she said. She wondered aloud if some of Substack’s soloists would eventually join forces, to make it easier on subscribers. “People don’t want to do this a la carte, paying for six subscriptions,” Ms. Petersen said.

This cycle seems to rebundling before it is even fully unbundled!

I predict bundled Substacks will begin appearing in 2021 as writers are forced to join forces either organically as a result of their subject matter and readership or forced by financial constraints and buyers moving into the space and bundling. All other consumer spaces have seen the cycle, media and journalism will be no different.

The Bear Case for Substack as a Product

In its current product state, one could argue Substack’s success is surprising. The product is objectively underwhelming - lackluster analytics, the content editing is almost too simple, the content organization is not customizable, and the monetization schema does not scale. It isn’t just Substack’s brand that scares away large publication houses, the product can’t support them. On the other hand, I suppose the product’s simplicity and distribution’s elegance is driving its early success.

Tanner Greer of The Scholar’s Stage provides a bear case on Substack from a product perspective rather than a commercial one:

What Slack and Discord are to the old forums, Substack newsletters are to the old blogs. All three are closed off from the outside, difficult to navigate, and impermanent. That impermanence is relative—conversations on Discord do not disappear, and anyone who receives a Substack newsletter can save it if they wish. But most Discord chat messages are buried in the stream, never to be read again. Most Substack send-outs are deleted from inboxes as soon as they are read. None of it is indexed for the search engines.

[…]

Is a mailbox delivery system really enough to distinguish future Substack magazines from existing journals sitting behind paywalls or begging for support on Patreon?

Substack constructed a strange hybrid between the original blog / forum structure of the old web morphed with today's closed communities like Discord, Slack, and group chats. Writers are discoverable (albeit mainly through other platforms as the link), but most of their content is not as it hides behind paywalls. The site’s native search feature is hidden and the best way to discover is via Google queries on “name + substack” which is far from optimal. There are no recommendations or discovery mechanics for new writers to gain exposure.

Of course, Substack will continue to innovate and build out the product suite — they have already announced an Inbox product that describes itself as, “a cozy new space for reading your newsletters,” whatever that means.

Homework Reading

We certainly have a lot of catching up to do. Some of my recent favorite reads:

52 Things I Learned in 2020 - an enlightening read on all fronts

Involvement Capitalism - “The thing is, post-scarcity doesn’t quite look like we expect it to, in naively idealist-utopian terms. We think it looks like the orderly Star Trek Federation, but it looks more like the chaotic Culture universe.

Loyalty Tests - we made everything a subscription drive loyalty and retention, now subscriptions are driving us in the opposite direction.

Utah’s Exceptionalism - a fascinating read about the state’s success historically and as of late.

Science is Getting Less Bang for its Buck:

The picture this survey paints is bleak: Over the past century, we’ve vastly increased the time and money invested in science, but in scientists’ own judgement, we’re producing the most important breakthroughs at a near-constant rate. On a per-dollar or per-person basis, this suggests that science is becoming far less efficient.

Liberalism and Its Discontents:

Liberal values like tolerance and individual freedom are prized most intensely when they are denied: People who live in brutal dictatorships want the simple freedom to speak, associate, and worship as they choose. But over time life in a liberal society comes to be taken for granted and its sense of shared community seems thin. Thus in the United States, arguments between right and left increasingly revolve around identity, and particularly racial identity issues, rather than around economic ideology and questions about the appropriate role of the state in the economy.

The author, Francis Fukuyama, is the famous Rand Corporation alum that stated the end of history in 1989 with the Berlin Wall and The Soviet Union's fall. This is a particularly striking conversation when it is put in context along with Yuri Bezmenov’s Stages of Societal Subversion:

Propaganda of "strong government" and necessity of "controls" -- militarisation of the "grass roots" movements and minority groups and sidetracking of the public attention to the non-issues (dogs dropping on the sidewalks etc). Propaganda of gun control for the law-abiding population with simultaneous relaxation of attitude towards recidivist criminals.

Today’s Music

In the spirit of this Opus’s discussion around history repeating itself, I thought I would share a personal favorite video of mine around the reuse of classical songs in modern-day music: