The Future of Media

Welcome to a fresh edition of Growth Croissant! 🚀 🥐

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

---

Hello friends,

The post below is a summary of a recent interview I did with Alan Hunter at FIPP World Media Congress, where we discussed a few key trends shaping the future of media:

1. Large media companies → niche media led by individuals and small teams.

2. Renting audiences → ownership of audience.

3. Ads-based internet → subscription-based ecosystems.

Waving hands and saying words.

While predicting the future is always a fool’s errand, the people publishing on Substack are a big part of these trends, so I thought it would be a good topic for the Croissant. Let’s get to it.

---

Large media → niche media

Throughout the history of media, each technological breakthrough has ushered in a new wave of companies trying to control distribution to gain leverage over their customers and suppliers (including creative talent):

• The Big Five film studios dominated the dawn of Hollywood.¹

• Newspapers enjoyed regional monopolies.

• The three broadcast channels controlled TV for decades.

• Cable TV became an oligarchy of companies laying wire across the country.

The Big Five dominated the “studio system” of early Hollywood. H/t StudioBinder.

Then along comes the internet, which dismantled many mechanisms that throttled distribution and drastically changed the media industry.

I was fortunate to ride one of the waves of change as immense value shifted from cable TV to streaming video. Netflix has morphed into a powerhouse global media company that reaches more people than any network could have imagined. On the more niche side, Crunchyroll is a perfect example of a media brand that wouldn't have found distribution as a cable TV channel, but now has a direct relationship with 10 million paying subscribers.

Another meaningful change is the increasing commoditization of a media company’s “tech stack”. When I got to Hulu over a decade ago, it’s hard to describe how hard it was to accept credit card payments and how much more tepid folks were about giving their payment info (rightfully so!). Today, it takes a few minutes to create a Stripe account and start collecting subscription payments.²

The same can be said for other pieces of technology that power media businesses: content management systems; text, image, audio, and video publishing; customer relationship management; advertising solutions and products; data infrastructure and analytics; and so on.

Not long ago, these tools weren’t really accessible to individuals or small teams. Creative talent had to work at big media companies to reach an audience. Many larger media companies leaned heavily on the value of their technology, including Vox Media’s Chorus and WaPo’s Arc & Zeus.

Media tech stack: Vox Media’s Chorus & WaPo’s Arc

There’s been significant improvement in open-source software and commercial products, all of which continue to put pressure on “tech” as a competitive advantage for larger media/tech companies. Writers, video creators, podcasters, and all sorts of creative talent no longer have to work at big media companies — they can pick up their phones and start their own media companies.

---

Renting audiences → owning audiences

In a post-internet world, where distribution is accessible to everyone, building an audience becomes more challenging. The big tech platforms — including YouTube, Instagram, TikTok, Spotify, Twitter, LinkedIn, etc. — have become essential for any media company looking to connect with its audience and reach new people.

As many have found out, depending on the big tech platforms is a double-edged sword. Anyone that’s built a business on these platforms is probably aware of how hard it is to navigate whimsical moderation, opaque policy adjustments, or unpredictable algorithm changes.

Making matters more difficult: the big tech platforms don’t give you access to your audience. It’s impossible to communicate (e.g., via email or text) with your audience outside any platform; in most cases, reaching your audience within the platform is tricky. If you leave the platform, you’re effectively starting from scratch.

It’s hard to build a viable business in an environment where you can’t communicate directly with your audience or know your creative work will reach your audience.

The good news is that the momentum is starting to shift. For folks publishing on Substack, they own their work, their audience (i.e., email list), and the billing relationship (i.e., Stripe account). If nothing else, Substack has been a huge agent of change — just a few weeks ago, Elon announced Twitter “will provide email addresses of subscribers (who opt in) to content creators”.

Tweet.

To the degree this is true, it’s a massive change for a huge platform. Regardless of what happens, it’s a strong signal of which way the wind is blowing.

---

Ads-centric internet → subscription-centric ecosystems

Advertising has powered the tech platforms where people meet, communicate, and discover new things on the internet. Advertising has also served as the backbone for many new media companies. But over time, advertising incentives have bent these platforms and new media companies toward a hunt for eyeballs and attention.

There’s a growing set of platforms that offer better incentive alignment by letting people sell goods and services directly to their audience, including subscription-centric platforms like Substack and Patreon. These platforms are enabling a wide variety of new types of sustainable media businesses to emerge.

As an individual or a small team, creating your own media business is still challenging and intimidating today. It may involve leaving behind a salary and the corresponding stability; the camaraderie and support from team members; writing under a meaningful masthead; and other benefits. Even in success, you’ll find champagne problems in various new business opportunities and challenges, which can be hard to balance with creative or editorial aspects.

Given the difficulty, early pioneers are primarily people with large audiences that face less risk of making it or those that are entrepreneurial and excited by the idea of starting their own business. But each successful pioneer pulls more people into these subscription-centric ecosystems, helping develop this new type of consumer purchase behavior and making it easier for the next wave of folks making the leap. 

This cycle reminds me of how unusual it was to buy a streaming video subscription when we launched Hulu Plus just a decade ago. While the few streaming services at the time offered some benefits (e.g., cost, convenience), the content wasn’t great, the product experience was janky (remember the buffer wheel?), and using these services was a strange consumer behavior.

Over time, as more folks signed up for streaming video services, the content got better, the product experience improved, and it was less strange to use these services. Fast forward to today’s “streaming wars” and most households have several streaming services.

Today, it’s a bit uncommon for folks to buy subscriptions to an individual or a small team of writers, podcasters, or video creators. But there’s no doubt it’s becoming more common: Substack has over 2 million paid subscriptions and Patreon has 8 million patrons.

I hope we see a similar cycle repeat for these new subscription-centric ecosystems so that buying a subscription on Substack, Patreon, or similar platforms feels as normal (and more emotionally satisfying) as buying a subscription to Netflix or Spotify.³

---

Summary

The internet has eroded distribution as a viable competitive advantage, and now the commodification of tech is making it even easier for creative talent to start their own media company. Further, we’re seeing early signs of major tech platforms starting to allow people to communicate with and own their audience, creating a much more stable environment to build businesses.

These are radical changes to how the internet operates. The net impact of these trends has been an explosion of lean media companies (i.e., operated by an individual or a small team), satisfying a wide variety of niches.

Personally, I’m very excited about this future. I think it will add texture, quality, and richer media ecosystems around stuff people are passionate about. Hopefully, it will also bring people together in more healthy online communities.

I’ll stop rambling for now — let me know what you think! What do you agree with, where am I out of my mind? What did I miss? I’d love to hear examples of how these trends have created thriving media ecosystems around your passions or hobbies.

As always, thank you for reading,
Reid

1. The studios had a lot of control over distribution, granting them leverage over theaters and their employees (i.e., creative talent). Since then, the roles have reversed in a remarkable way. Through a series of key events, star writers, directors, and actors have accumulated more control and financial upside from their creative work. Most studios have been relegated to a “cost plus” business model with little to no ownership in the underlying IP, sharing in less of the upside if the show or film does well. It’s a fascinating history.

2. I know, only in supported countries!

3. Does that mean advertising will disappear? Definitely not — the large tech platforms will continue to be big and advertising-centric. Further, there are no large media businesses that monetize only through subscriptions; Netflix was the exception to the rule for the longest time, but now they’re quickly becoming a substantial player in online video advertising.