There's a Digital Media Crash Coming. But No One Will Say It

By: Josh Marshall


Yesterday I appeared on a panel about digital publishers who are ‘pivoting to video’. I’ve written about this before. But in case you’re new to it, there have been numerous cases over the last six months to a year in which digital publishers have announced either major job cuts or in some cases literally fired their entire editorial teams in order to ‘pivot to video.’ The phrase has almost become a punchline since, as I’ve argued, there is basically no publisher in existence involved in any sort of news or political news coverage who says to themselves, my readers are demanding more of their news on video as opposed to text. Not a single one. The move to video is driven entirely by advertiser demand.

What crystallized for me from this and other discussions I had yesterday is that we’re actually in the midst of a digital news media crash, only no one is willing to say it. I’ve noted before that digital news media in the midst of a monetization crisis. But it’s more than that. It’s a full blown crash.

Here’s why.

You have three different factors coming together at once: two primary ones and one secondary but critical one.

First, digital publishing has always been ruled by a basic structural reality: there are too many publications. Now, how can there be too many publications? The more information the better. Well, it’s like this: There are too many publications relative to the funding available to support them, given that it has been almost universally assumed that the funding comes from advertising. That creates the furious competition for clicks and the ever growing intrusiveness of ads. The advertisers have all the power. So rates are always going down.

This has been a fact for more than two decades. It is driven by the extremely low costs of entry in digital publishing which makes it very difficult to set up the kinds of de facto monopolies that existed for big city newspapers for most of the second half of the 20th century.

Then came the platform monopolies: Google, Facebook and a few others. Over the last five years or so but accelerating rapidly in the last 24 months, they’ve gobbled up almost all of the growth in advertising revenue and begun to engross a substantial amount of the existing advertising revenue as well.

Let’s try a very simple visualization of what I’m describing. Remember, there are too many publications relative to advertising revenue. So let’s imagine there are 30 publications and 25 revenue seats. The publications fight like hell to secure one of the seats. Then the platform monopolies came along and sat down in maybe 5 or 10 of the 25 seats. You can see the problem. The competition of 30 publications competing for 15 seats gets insane. A bunch of the publications are going to die or be forced to find another way to fund themselves.

Now, here’s the too little discussed part of the equation. A huge, huge, huge amount of digital media is funded by venture capital. That’s not just to say they had investors at the start but in effect a key revenue stream of many digital publications has been on-going infusions of new investment.

Much of that investment has been premised on the assumption that scale – being huge – would allow publications to create stable and defensible business models. There are a lot of moving parts to the strategies. But it essentially comes down to this idea: get big enough and you can solve the chronic problem of over-supply of publications in your favor through sales at volume and being able to command stable, premium advertising rates. But that hasn’t happened. Just as one fact point, The Wall Street Journalreported today that Buzzfeed is going to miss its revenue target this year by as much as 20%. That’s a lot.

Now, this doesn’t mean Buzzfeed’s about to go under. I don’t know all the details of their internal business operations. And in any case, this isn’t really about Buzzfeed. That’s just a number I saw today. But it does probably mean BuzzFeed likely won’t do an IPO in 2018 – which means their investors aren’t going to be able to get their exit any time soon. Indeed, they may never be able to get it at the level they expected. The point is that investors are realizing that scale cannot replicate the kind of business model lock-in, price premiums and revenue stability people thought it would. Another way of putting that is that the future that VCs and other investors were investing hundreds of millions of dollars in probably doesn’t exist. That means that they’re much less likely to invest more money at anything like the valuations these companies have been claiming.

The big picture is that Problem #1 (too many publications) and Problem #2 (platform monopolies) have catalyzed together to create Problem #3 (investors realize they were investing in a mirage and don’t want to invest any more). Each is compounding each other and leading to something like the crash effect you see in other bubbles.

Let’s go back to our chair analogy.

We had our 30 publications and 25 chairs. The platform monopolies came along and took 10 chairs for themselves. Now it’s 30 publications fighting over 15 chairs. But wait, how can 30 publications compete for 15 chairs? That means 15 have no place to sit? Well, the hidden part is that a lot of them are surviving on on-going infusions of venture capital. Once that disappears, it’s something like a crash. Because everyone really needs a seat. And there’s more! Maybe 5 of those chairs weren’t advertising at all. They were on-going investment too. So really there’s 30 publications competing for 10 chairs. Or maybe it’s 7.

To be clear, I’m taking these precise numbers – 10, 30, 7 – as broad guesses. But the general picture is painfully accurate. And as you can see, the real trap door is the withdrawal of on-going re-investment which has created what amounts to a phantom revenue stream. Problems #1 and #2 are either chronic or relatively slowly growing. Problem #3 is rapid and possibly total.

Like I said, it’s a crash. It’s largely because scale hasn’t worked in most cases. But it’s definitely a crash. Just no one’s willing to say so yet.

Author: Josh Marshall

Source: URL:

Retailers Take Another Look At Printed Catalogs

By: Ronald D. White


In one TV commercial from this year’s Toys R Us holiday campaign, a mother sweats through her cycling workout while her suspiciously helpful daughter tries to stir up a breeze.

“I’m just going to leave this right here,” the girl says, covering the stationary bike’s display with her impromptu fan — an old-school mail-order catalog.

The Toys R Us catalog appears in several of the toy merchant’s holiday ads, which coach kids that “the naughty list is not an option.”

In a time of explosive growth for online buying, retailers and shoppers are showing renewed interest in a humble purchasing device that uses paper instead of pixels.

For the first time since 2011, Sears Holdings sent out the Sears Wish Book, a holiday tradition for generations of children. Although this year’s catalog has the heft of a magazine rather than the phone-book size the department-store chain produced when it was a retail juggernaut, the offerings are more extensive and searchable online.

Neiman Marcus Group, in the 2017 edition of its venerable Christmas Book, used a social-media contest for 1,500 photos capturing happy moments to be featured in a cover collage. And home furnishings retailer started mailing full-line catalogs last year.

Lauren von Bernuth, a Los Angeles boxing trainer, said the Sears and Neiman Marcus catalogs bring back pleasant memories of looking through them.

“It’s nice to just put the phone down for once and have a physical object in your hands,” von Bernuth said. “just doesn’t have that Christmas vibe.”

Fewer catalogs are in the mail these days, 9.8 billion in 2016 compared with the 2007 peak of 19.6 billion, but consumers are paying more attention to them than ever, according to research by the Data and Marketing Association and the U.S. Postal Service.

“The ability to stand out in that physical mailbox is easier than it was 10 years ago,” said Neil O’Keefe, senior vice president of content and marketing for the DMA. “Marketers are taking advantage of that, and they are beginning to see a positive response.”

In 2016, the response to catalogs increased 23 percent from the year before, O’Keefe said.

Companies are using print catalogs to cut through email clutter and social media saturation, said Denise Lee Yohn, a retail brands expert. The catalogs help “differentiate brands and sustain existing customer relationships,” she said.

That works for Natalie Montoya Farrow, who likes to relax with a glass of wine and the Anthropologie catalog of clothing and decor.

“It’s colorful and inspiring, not just shot in a studio but on location,” Farrow said. “They use very thick paper, so it’s tactile. Something real in a world that seems to be becoming less so.”

Social media has made her “hyper-aware of everything, so it’s nice to sit and fantasize with a catalog,” she said.

Yohn said catalogs won’t help all struggling brands.

“Resurrecting the Sears catalog might have been a good idea five years ago, when the brand still enjoyed enough goodwill and the company still had some great product brands,” Yohn said. “But at this point, nothing is going to save that company.”

O’Keefe said print catalogs will never be as popular as they once were, but retailers appear to be using them as part of what he called an “omnichannel” approach that tries to more closely integrate a store’s website with its physical stores, such as buying online and picking up at the store the same day.

A survey included in a recent DMA report found that nearly one-third of those polled said getting a catalog drove them to shop online.

Sears was looking for some of that success when it brought back its Wish Book.

The catalog “had to draw in the digital experience of shopping online and be interactive,” Sears spokesman Brian Hanover said. “So, there’s the capability to create Wish Lists. You can hover over items and mark them with a heart, and then share those with your family, your friends.”

Neiman Marcus executives felt the catalog deserved something extra in the company’s 110th year, said Theresa Palermo, vice president of brand marketing and public relations for Neiman Marcus Group.

But the response was much bigger than expected when the retailer ran a contest for a chance to get a tiny photo on the Christmas Book’s cover. For 1,500 spots, the company received submissions from 17,000 people.

“We wanted the holiday book to create a story, a memory for consumers,” Palermo said, “not just through the user-generated content like the photos, but also in the writing of it, the colorful displays, the way it features our products.”

Author: Ronald D. White

Source: URL:

Mattress Company Shutters Web Publication, Pivots to Print

By: Jack Marshall


Mattress brand Casper is launching a print magazine and shuttering Van Winkle’s, the sleep-focused online publication it launched in 2015.

The company said its new magazine, titled Woolly, will be published multiple times a year and focus on themes including comfort, wellness and modern life. It will be bundled free with some Casper products and available for $12 per issue from Casper’s retail stores and website.

Companies have flocked to so-called content marketing in recent years in an attempt to align their brands with certain topics and issues without relying on straight-forward advertising. The tactic has become prevalent online, but some companies, such as Airbnb, have since taken the approach offline with their own branded print products.

But according to Casper, Woolly shouldn’t be viewed as marketing designed simply to drive mattress sales. Rather, it says it wants to use it as a vehicle to link the company to subjects it “believes in.”

“This isn’t traditional content marketing; there are no ads for Casper,” said Lindsay Kaplan, Casper’s vice president of communications and brand engagement. “It’s not about building a revenue stream either. It’s really about owning the conversation around wellness and health.”

Casper has hired nonprofit publishing company McSweeney’s to help produce the magazine, which will be headed up by former New York Post editor John DeVore. (The New York Post is owned by News Corp, which also owns The Wall Street Journal.)

The launch of Woolly marks somewhat of a pivot for Casper’s media efforts from digital to print, a move that bucks recent media trends. In 2015 it hired four veteran journalists and launched a website called Van Winkle’s with the goal of selling ads and building a stand-alone media property dedicated to all things sleep.

The site failed to gain significant traction with readers, however, and will cease publication to make way for Woolly. Van Winkle’s one remaining editorial staffer will now work on Woolly instead.

Woolly plans to focus on a broader range of topics than just sleep alone—topics people might enjoy reading about when, for example, they’re lying on their Casper mattress. The first issue includes a “love letter to comfort pants,” confessions from your yoga instructor, a non-chronological history of snoring and a coloring book.

“When people buy a Casper, they cover it up with sheets, so there’s something special for us knowing this will remain on someone’s nightstand and remind people to get in bed, relax, unwind and get comfortable,” Ms. Kaplan said.

Billed as a “quarterly,” Casper said Woolly won’t stick to a specific publication schedule. The first issue, which is 96 pages, is available today.

Author: Jack Marshall

Source: URL: