What Do Media Companies Really Want?
Technology giants like Facebook, LinkedIn and Amazon -- along with the data analysts at legacy media companies like Disney and Time Warner -- spend their days trying to seduce their audiences by creating ultra-targeted streams of news, television clips, opinions and other pop culture ephemera. When members of that same audience log on to social networks, Hulu accounts, Netflix or Amazon Prime they consume ads, videos and news items that cater to what the algorithms driving those services believe users want.
I’ve always disliked living in this hall of mirrors. So I still read newspapers cover to cover, peruse the op-eds and trawl blogs and newsletters to know what the world cares about -- that is, the world beyond what my friends and contacts care about.
Over the past few years I’ve also turned to Jason Hirschhorn and his merry band of curators at REDEF for their daily e-mail of media and fashion stories, to see what they care about too. (Thousands of people also subscribe to REDEF's free, link-filled notes on music and sports.) I use REDEF's e-mails to filter out most of the Internet’s random content, in part because REDEF shares important, compelling stories, even when it disagrees with the writers. That’s what you have to do to deliver the most compelling ideas online.
Even the executives who helped bless this new world of ultra-targeted media have been longtime subscribers to Hirschhorn’s product, including insiders such as Barry Diller, Reed Hastings, Judy McGrath, Dick Costolo and James Murdoch. Steve Rosenbaum, the CEO of a video curation site, Waywire, notes that these influencers rely on Hirschhorn to keep abreast of what’s important and what will spark conversation within a sophisticated, engaged audience.
Hirschhorn, a former executive at MySpace and Viacom, is in many ways part of that same group, but he was also early to the idea that technology would upend their business models. It’s part of the reason why nearly a decade ago he became an executive at Sling Media, which made a streaming device, the Slingbox. He reportedly told Steve Jobs early on that Apple needed to build a streaming music service, which today seems like a no-brainer. His views always carried weight with the old guard, but he was also absorbing some important ideas, opinions, tastes and trends that they had a harder time accepting.
“We’re a concierge service like Postmates,” Hirschhorn told a room full of media execs from companies like NBC and Time Inc. in a talk in New York last week at the Paley Center for Media. “We’re reaching a moment when people will pay for convenience.”
We’ve also arrived at a moment when people want more than what Hirschhorn describes as a world where “data optimizes a current behavior and doesn’t introduce a new one.”
Sure, algorithmic targeting generates lots of clicks, shares and digital ads, but it also can blunt curiosity. Barry Diller has noted that to survive in today's media business you have to be curious because it’s not enough to be smart anymore. Other executives seem to agree.
In other words, the titanic, valuable and troubling changes technology and the Internet have brought to the media world have landed publishers at this crossroads: Do they want reach or do they want influence, and can they or can't they have both?
For his part, Hirschhorn says he isn’t trying to build a Buzzfeed-size audience (which is the current yardstick for any media company seeking bragging rights about Web traffic). He won’t give out specific numbers, but he says he currently has tens of thousands of subscribers. That's an extremely small audience compared to the tens of millions of unique visitors major media sites reel in, but Hirschhorn says the ultimate size and value of his business depends on something other than traffic, something that no tech company has been able to measure very accurately -- the value of influence.
"My worry is that if I created an impression-based revenue model, I’d be on the advertising treadmill,” he says. “First, that’s a cyclical business. Second, those companies are just mechanisms for gathering traffic, and they’re not necessarily about what their stories are saying. The model forces people to do things for page views that don’t create more engagement or ideas. A lot of Miley Cyrus listicles doesn’t create the value I want to create for readers.”
A subscription price hasn't been set yet, but Hirschhorn is betting that lots of those people will pay somewhere around $10 a month for him to help them consume wisely and be part of a more refined conversation.
He raised $2.25 million to build his subscription business and he plans a small test launch within the next month or so. REDEF will probably never be a billion-dollar business, but Hirschhorn thinks it could someday be a $50-million company. In that regard, it is very much a boutique operation and is likely to stay that way.
“It’s about the power of an elite readership,” says Roy Bahat, whose firm Bloomberg Beta, along with the Chernin Group, Greycroft Partners, Upfront Ventures, James Murdoch, Jeffrey Katzenberg, Mark Cuban and the sports agent Casey Wasserman, invested in Hirschhorn’s company. (Bloomberg Beta is controlled by Bloomberg LP, which also publishes Bloomberg View. But the only reason I'm writing about Hirschhorn is because he's interesting.)
“The content is an excuse to have a conversation with the right group of people,” adds Bahat, who says that REDEF thrives because it creates a virtual community.
Hirschhorn says that tech and advertising executives have asked to buy corporate licenses to REDEF’s e-mail blasts so they can distribute them to their employees and help them keep informed. “They want to expose their workforces to ideas happening outside of their own industries,” Hirschhorn told me. “Some have told me they’re trying new things because of the ideas they’ve found in the newsletters.”
Websites such as Gawker, Business Insider and the Huffington Post have spent years aggregating content for clicks and ads, with varying degrees of success. REDEF, on the other hand, gives its readers only a headline, a teaser and a link to the work it curates. The writers and publishers of the original story get the credit, traffic, and attention.
“We’ve never had a journalist dislike being in REDEF,” Hirschhorn says. “We’re not traffic generators but we make sure important people read their stories.”
He sees this effort as supportive of the media outlets that put in the resources and money to create original work. But he has no plans yet to arrange revenue shares with the publishers of work featured on REDEF properties.
“I’m dependent on a world of creators and I love that I can put a writer who writes for Medium right next to a piece by David Carr. REDEF is a celebration of media in that way, but we’re not reblogging or taking traffic away from a publisher.”
In essence, REDEF will make money by exposing original publishers' work to a broader audience that trusts Hirschhorn's judgment and by bringing that attention to the publishers' pages. REDEF, of course, doesn’t begin to solve media companies' overarching revenue problem, but it doesn’t add to their woes either.
Hirschhorn realizes he may always be niche, but he and his investors believe that niche represents a viable, valuable business. How well or poorly REDEF and its kind ultimately stack up against other media properties will be one small data point informing the debate about the value of reach versus the value of influence.
For now, the Web’s uninhibited ability to replicate and distribute content has allowed consumers to be far less concerned about who produces the best stories and ideas. REDEF, and what it's attempting to build, is a bid against that trend and on behalf of the media role played by savvy, discerning curation.
(Corrects status of revenue sharing in the 19th paragraph.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the editor on this story:
Timothy L. O'Brien at email@example.com