Why media companies struggle to act like tech companies
Why media companies struggle to act like tech companiesQuality journalism doesn’t scale like tech; in fact, that may be one of its greatest features.Welcome! I'm Simon Owens and this is my media industry newsletter. If you've received it, then you either subscribed or someone forwarded it to you. If you fit into the latter camp and want to subscribe, then you can click on this handy little button: Let’s jump into it… Why media companies struggle to act like tech companiesOne attribute that separates the good pundits from the bad pundits is a willingness to admit it when you’re wrong, and so I want to start this piece out by acknowledging that I was wrong about The Washington Post’s ability to succeed as a tech company. Let’s start with some context: for the past several years, WashPo has built out two separate tech platforms. The first is called Arc XP and it’s the content management system that powers the newspaper. The second is called Zeus and is a proprietary ad tech tool that makes it easy for brands to buy ads on publishers’ websites. Under Jeff Bezos’s ownership, WashPo launched these two platforms as SaaS products that could be licensed out — in some cases for millions of dollars per year — to other publishers. In 2019, I was so bullish on Arc XP and Zeus’s prospects that I published an article titled “How Jeff Bezos is taking on the Facebook/Google ad duopoly and why it matters.” While the first half of the piece focuses on Amazon’s advertising growth, I also devoted a significant portion to WashPo’s tech ambitions. My thesis was simple: WashPo now served as an incubator for a best-in-class publishing ecosystem that, when scaled across thousands of news outlets, could provide the reach and efficiency that had thus far eluded the publishing industry. To help make that argument, I quoted from a Nieman Lab piece by former Vice CTO Jesse Knight. Here’s what he wrote:
Of course, that’s the pitch made by every media company that’s tried to build scalable tech products — that tools developed for their own internal use would be just as effective if adopted by those outside their own newsrooms. What I underestimated in my 2019 piece is how a product used by a single newsroom requires vastly different skill sets and resources than one that’s geared toward an entire industry. As you can probably guess, my thesis didn’t age well. Last week The Wall Street Journal reported that Bezos was entertaining pitches to spin off Arc XP into a separate company. The reason? Its struggles to recruit top talent under its current media ownership structure:
Zeus’s future is even more dire: Axios reported this week that it would no longer be operated as a standalone business. “Folding Zeus into The Post's existing ad sales team ends its efforts to make money by licensing its ad tech software to other premium publishers,” Sarah Fischer wrote. A day or two later, Adweek reported that Vox Media would stop licensing out Chorus, its own content management system. These setbacks are by no means anomalies. For at least 20 years, media companies have attempted to scale their own tech beyond their core journalism operations, all with the hope of achieving Silicon Valley-level revenue growth. Over a decade ago, publishers like HuffPost, BuzzFeed, and Forbes embraced “platisher” models — the idea being that they could grow much more quickly if they opened their publishing platforms to user generated content. Of the three, only Forbes achieved consistent profitability, and it came at great expense to its journalistic brand, so much so that it’s widely derided as a spam website that’s littered with pay-for-play editorials. So what gives? Why do media companies struggle so much when trying to make the transition into tech companies? The Rebooting’s Brian Morrissey made good points when tackling this same question:
Indeed, these efforts to build out scalable tech platforms seem to have a better chance of surviving if they’re spun off from the core media assets. Case in point: Megaphone. In 2015, the online magazine Slate launched a sister company called Panoply, the idea being that it would take the podcast expertise developed at Slate and scale it up into an entire network of shows. While that network struggled to gain a financial foothold, the hosting and ad tech platform it had developed showed real promise, and in 2019 it ditched all of its original programming and rebranded as Megaphone. That company was later bought by Spotify for $235 million and is now one of the largest platforms for podcast hosting and ad delivery. Which brings us back to Arc XP; perhaps my original thesis about its potential wasn’t wrong, it was just a little misguided. As it turns out, WashPo isn’t an incubator, but rather it’s an albatross, weighing Arc XP down with its legacy media business models and hiring practices. That doesn’t mean that WashPo can’t be a great business in its own right, but its incentives will never align with those of a SaaS company. Quality journalism doesn’t scale like tech; in fact, that may be one of its greatest features. Supercharge your ad sales with Who Sponsors Stuff: Sales Pro[Sponsored] It doesn’t matter if you’re a solo newsletter writer or a newsroom with an entire sales team — nearly every newsletter operator says they need help selling ads. But some of the biggest names in newsletters have found a solution: Sales Pro, a powerful advertising database from the team at Who Sponsors Stuff. Who Sponsors Stuff: Sales Pro is the largest database of advertisers who spend money on email newsletters. They’re tracking hundreds of newsletters and 4,000+ sponsors. (And they’re adding about 50 new sponsors per week. Sales Pro customers get daily email alerts as new sponsors are added.) They’ll tell you not just who might be a good sponsor for your newsletter, but who the right person is to reach out to at that sponsoring company. Plus, Sales Pro isn’t just for newsletters — it also works great for selling podcasts! Sales Pro might be just the tool you need to help ramp up your email revenue. Reach out to their team about a subscription to Sales Pro here. Also, to see 10 free sponsor listings a week and keep up with the latest in the newsletter space, you should subscribe to Who Sponsors Stuff's FREE newsletter: Email Intelligence. A ringing endorsementLast week I received an email from Tony Mecia, the founder of The Charlotte Ledger:
He’s referring, of course, to my regular Office Hours calls with my paying subscribers. These aren’t boring webinars. They’re live, interactive calls where some of the top media operators in the world get to swap insights and network. I’m planning to increase my subscription price in January, but everyone who subscribes before then gets grandfathered in at the current price. Subscribe at the link below and get 10% off for your first year: Quick hitsIt looks like Substack created a customized website for Bari Weiss's new media company. Is it a sign of how the platform plans to work with larger publishers going forward? [Substack] This is a good case study on the perils of trying to build a product company on top of a media brand. [Insider] "Subscriptions and advertising require a long time to build up. An events business, if you do it well, can be monetized right away.” [Adweek] A Substack writer who runs his newsletter as a side-hobby played a key role in taking down FTX. A reminder that investigative journalism doesn't require the backing of traditional media; you just need an obsession and a bit of specialized knowledge. [The Atlantic] Legacy newspaper chains aren't going to save local news. [SF Reporter] ICYMI: How an interest in whiskey birthed a thriving media companyThe Whiskey Wash capitalized on the rise of craft distilleries and is almost entirely funded through digital advertising. Are you on Post?I’ve been really enjoying its simple design but am having a difficult time finding good people to follow. You can find my profile over here. So far it’s the most promising Twitter alternative I’ve tested out. You're currently a free subscriber to Simon Owens's Media Newsletter. For the full experience, upgrade your subscription. |
Older messages
How to leverage paid marketing to drive newsletter signups
Friday, December 9, 2022
Welcome! I'm Simon Owens and this is my media industry newsletter. If you've received it, then you either subscribed or someone forwarded it to you. If you fit into the latter camp and want to
What the next crop of media startups will look like
Thursday, December 8, 2022
As the Creator Economy matures, the media industry will need to adapt to the new economics of content creation.
Ask me a question! (December edition)
Monday, December 5, 2022
Hey there! This is my regular Q&A feature that allows readers to ask me questions that I can answer in a future newsletter. Last month I managed to devote several newsletters to answering some
How to sell your media business
Friday, December 2, 2022
Welcome! I'm Simon Owens and this is my media industry newsletter. If you've received it, then you either subscribed or someone forwarded it to you. If you fit into the latter camp and want to
It’s time for the media to embrace self-service native advertising
Thursday, December 1, 2022
News publishers haven't lifted a finger to copy the tech industry's most successful ad innovation.
You Might Also Like
Microsoft@50 recap: Company faithful mark first 50 years, look to the future at GeekWire event
Friday, March 21, 2025
Amazon launches carbon credit service | Vote for AI Innovation of the Year ADVERTISEMENT GeekWire SPONSOR MESSAGE: A limited number of table sponsorships are available at the 2025 GeekWire Awards:
669002 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 669002 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
Friday Sales: Half-Off Frame Jeans and an Under-$1,000 Sofa
Friday, March 21, 2025
Including Lunya pajamas and $29 Fila sneakers. The Strategist Every product is independently selected by editors. If you buy something through our links, New York may earn an affiliate commission.
962228 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 962228 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
974376 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 974376 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
141787 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 141787 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
913480 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 913480 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
755316 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 755316 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
881244 is your Substack verification code
Friday, March 21, 2025
Here's your verification code to sign in to Substack: 881244 This code will only be valid for the next 10 minutes. If the code does not work, you can use this login verification link: Verify email
People are doing weird skin stuff
Friday, March 21, 2025
Plus: What really happened in the 2024 election, optimizing your algorithms, and more. View this email in your browser Each week, a different Vox editor curates their favorite work that Vox has