This piece was originally published on May 28, 2022.
The media companies of tomorrow should look something like the record labels of today.
In the record industry, talent is the driving force behind the business. Talent is the source of the reputation and the end of the line when it comes to driving financial returns. Without great, world-class talent, it doesn’t matter how well you can promote or polish an artist, it will not have the same returns.
Business models are product strategy and revenue is a proxy for how an industry serves its customers. In media, traditionally, the economics place value and attribution on brand driven products that put an emphasis on audience (advertising) and “all you can eat” consumption behaviors (subscriptions). But these models are only as stable as the companies ability to maintain their talent, grow an audience and continue building their brand’s reputation. Those times are changing.
Media companies have always been talent companies but their business models don’t necessarily reflect that. That’s because while talent was a driving force behind their business, the financial focus was tied closer to content ownership and distribution; two things media companies once had complete control over. Content access was limited based on what was available through distribution channels, which often meant just a handful of stations or papers within your city or town. And as media began to evolve, so did the reputation beyond the masthead, and writers, creators, producers all under bylines became a core value proposition for media companies and consumers alike. The media business suddenly had a three pronged strategy for revenue with talent plus ownership and distribution, all driving their business forward in parallel. And then, with social networks among other things, there was a shift.
Ben Smith of The New York Times wrote an article this past Sunday on media’s next business model: monetizing the individual. In it he points to the development of platforms like Cameo & Substack that serve as a network to enable creator independence. He highlights the talent that’s moving from traditional media to “go solo” and the promise of these platforms to disrupt traditional media the same way that it disrupted Big Tech. Basically, with the insertion of Venture Capital in the technology sector, talent like engineers and product managers at larger institutions were able to spin out and go build a business on their own. What this shows is that talent who wish to control their own direction or have their own ideas outside of a traditional set-up are able to go out and do so. With that, money — and customers — will eventually follow.
We could look at this trend as yet another existential moment for media companies that have been disrupted by platforms across all business pillars. Or, and hear me out, we could see this as an opportunity to lean into something we as an industry have always been good at and build a new business around it. As the media industry thinks of models of expansion, talent is an opportunity to build on top of an existing foundation to explore business models that focus on the creator, the relationship of a creator and brand, and the undervalued importance of creator operations.
The “monetize the individual” disruption should serve as a catalyst for the business reinvention of media companies who choose to recognize and react to this “new” (I know it’s not new but what’s old is new again) trend forming. It’s not just about enabling and “liberating” creators and talent, but more importantly about maintaining, supporting and growing an individual’s business better than they’re able to do on their own or elsewhere. The future media business will be inclusive of its foundation of advertising, subscriptions, events & brand reputation but will extend to newfound territory that fortunately is right in its wheelhouse: Talent Management (Artists and Repertoire A&R).
In 2018 I went on a Twitter rant on how media companies should start looking at record labels and, more broadly, the evolution of the music business to help influence its next wave of focus. Mainly to show that there is tremendous opportunity in the ability for artists and labels to work together in order to grow both their businesses and reputation in parallel. Labels are masters at managing a creator and building a brand while allowing the artist to go out and do what they do best; create.
In it I explain that media companies, while fighting against the platforms, are uncovering an entirely new value in the media ecosystem: being an agency & platform for talent. If the future role of a media company mimics that of record labels, then we start to see a significant shift from these institutions to attribute more of their value as operators and begin to diversify their business of being *just *a brand. But what I didn’t realize at the time that is very clear now is that this is also where traditional media companies have a head start. Media is an industry where brand matters and that reputation is earned not learned. Media institutions have spent years perfecting audience development, learning how to acquire consumer trust and deliver on product expectation that puts their reputation at incredible heights that platforms and/or challengers often cannot reach. If you pair brand reputation with a business operation that manages/acquires/maintains talent better than challenger platforms, then this truly looks like a next generation media property.
So what does that look like? The media business is finally hitting its Napster moment. Well, we’ve really been in our Napster moment for years but the accelerated trend-parlay of a “monetize individuality” movement, an advertising bottom out due to coronavirus and everyone becoming a membership business, has made the existing revenue opportunities insanely competitive and unattainable for many. This disruption is a catalyst for reinvention, and extended business opportunities from those that manage, operate and support talent. And this decision to extend ownership of responsibilities to include talent management on top of brand’s that matter, and are reputable, will push these institutions towards a new world. To build off of the Napster moment, and to parallel this change with music, by getting into the talent business media success will look lot more like record labels than record stores.
Putting talent at the center of its business opens up entirely new opportunities for media companies when the core asset and value is attributed to the individual. The new line of business now becomes somewhat inverted: instead of everything being limited to under a brand halo where advertisers buy on the brand and consumers subscribe to the brand, the company and its customers now look at the individual as their business. This presents a business opportunity that’s so often seen in the media industry tied to talent which is interoperability (see: Kara Swisher, Andrew Ross Sorkin). If the talent within your organization wants to write, produce, create elsewhere, then with a new business model that enables equity and investment in the individual by that brand, that is beneficial to the both parties bottom line. Again, look at the record industry: emphasis on the talent (artist) only drives more value and more revenue for the label (brand). The label pays for a song to be produced so they can partially own the song. There is equity in their investment of that artist. Record labels are having record years because they own the publishing rights to songs. People hear a song, the label gets paid. It’s a formula that on top of existing revenue opportunities (advertising, subscriptions, events) opens up an entirely new well of business.
The financial incentive changes from “keep creator on platform” to “enable the creator to go everywhere”. Noah Chestnut connects this notion with Lorne Michaels business model for SNL and I think that’s brilliant. Lorne owns Saturday Night Live. The brand holds a lot of reputation and value for the creators who act and the consumer who watch. And what it shows is the power of brand reputation in order to build** **an individual’s reputation. The actors choose SNL in order to launch their career based off of the reputation of the brand. They do so and, if successful, move onto film, television, everything and anything off of the SNL platform; and Lorne Michaels benefits.
But note, the opposite can also take place. Take ESPN for instance. Creators leverage the ESPN platform, build their reputation and audience but that following and reputation doesn’t necessarily stick with them when they leave. Everything can also start and stop within that system.
Reciprocity is key.
This welcomes discussions around the role of the creator and the equity opportunities of how brands can *invest *in this new individual model. Like the music industry and other agencies, in order for new models to be explore the brand needs to think of themselves as creative operators. This should be somewhat easy for media companies to wrap their head around and execute, and we’re seeing many of them doing it today (see further below).
But what’s in it for the talent? Why should they continue to want to create at larger, legacy institutions outside of the brand’s reputation? Independence is so great! But wait… what about medical? And libel insurance? And PR? And… And… Damn! That stuff is hard. Also, how about all of the creators who haven’t already accrued a large following? Or earned enough reputation to go solo? This is the value brands bring in parallel: operations and reputation. Operations to maintain and develop talent and reputation to help build and enable creators to build a brand of their own. And again, another deep connection to the functions and businesses of the role of A&R in music industry.
The value of record labels in the music business is real. Artist recruitment (A&R), copyright enforcement, distribution, booking, accounting, marketing… it’s a lot. And this is where the value lies. There are labels that are reputable and labels that are not but the reason why artists sign to them is because there’s an acknowledgement by the talent that it’s somewhat critical to their success. Creator trust and brand reputation is the formula.
With the growth and acceleration of The Passion Economy, we’re entering further into new consumer value where reputation is attributed and put on creator/writer/producer/artist over the brand itself. And with direct subscription accessibility now with creators across various platforms, consumers are building a relationship directly with the creator herself.
There are many reasons platforms have been successful in driving creator interest on their properties. But one single point is their acknowledgement of operators and distributors for a creator’s work. This is how they’ve encroached so successfully into advertising, subscriptions and now, original content. They’re identifying their purpose as operator, and enabling creators to create by giving ownership and attributing value to the creator itself. But this only goes so far. After creative independence, there is a need to grow and sustain. This is still very much untapped and unobserved, mainly because 1) it’s new and 2) this is already a core value that’s assumed by legacy media brands. Outside of reputation, operations are critical to the longevity and sustainability of the creator. And this is where the opportunity lies.
In music, the listener usually doesn’t know or care what label the artist is on, in fact it’s often purposely unknown and operating in the background (there are exceptions, like Sub Pop, and every Phish fan knows Red Light but you get the point). The reputation, ie. the consumer value, is almost always attributed to the artist itself. The artist carries consumer attention, creative development and the relationship with his/her audience and the record label, well, they handle the rest. The same formula works beautifully for media and is already being executed by many, new media brands like Barstool Sports and even traditional media properties like The New York Times.
By pairing brand reputation with the ability to execute on a creator’s behalf the ability to help build audience, scale a business, administrative operations and benefits such as legal and medical, the next wave of media will be incentivized to have a heavy financial and philosophical interest in the individuals. And so will the talent. This is an opportunity for the media business to reassert value on top of the current revenue streams by fulfilling a need for creators who should be focused on what they do best: create. The solution is building the platform for talent, pairing both brand reputation and individual reputation, and connecting it all together.
Thanks to Josh Elman, Noah Chestnut, David Turner, Julia Beizer, Web Barr and Patrick Workman for reading, editing, engaging & dealing with me.
Some additional food for thought to battle in comments or twitter or anywhere:
Are media companies equipped to become talent agencies and managers? Can they move fast enough against a Creative Artists Agency or Endeavor to represent creative talent?
Many brands are already doing this and simultaneously building brand reputation and individual reputation in parallel: WaPo, NYT, Brat, Morning Brew, Axios are a few. Who else?