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Plus Report - By Thomas Baekdal - November 2019

Publishers, you need to think like fashion companies

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There is a question that people in the media industry have started asking. It is, "now that we have so many publishers doing subscriptions, when will we reach the point of subscription fatigue?" ...Or, "now that we have so many podcasts ...when will we reach the point of podcast fatigue? ...Or newsletter fatigue? ...Or streaming services fatigue?"

My answer to this is really simple: We won't!

The problem is that we are thinking about it the wrong way. What is happening is that we are moving from one type of reality to another. In the old days, we lived with media scarcity. There were always only a few movies you could watch in the evening; there were always only a few newspapers relevant to your area, and you only had about 5-10 radio channels that you would ever really consider listening to.

And, in this space, we spent a lot of time thinking about which one to pick.

However, today we live in a world of abundance. We don't have 10 radio channels anymore, we have 100,000 podcasts to pick. We don't only have a few movies to watch, we have the entire Netflix, Google Play, HBO, Amazon Prime, Disney+, Hulu libraries (just to name a few)... as well as another 100,000 YouTube and Twitch channels.

This creates an entirely new reality. A reality where trying to figure what to pick from the whole (which is impossible) is replaced by the same type of reality we see in so many other markets.

One good way to understand what this means is to compare the media industry to the fashion industry ... and the way people buy fashion.

So, let's talk about that.

The media world has become a fashion world

As some of you know, I know a lot about the fashion industry, because that was where I worked before I became a media analyst (many years ago).

And one of the things that is fascinating about fashion is how similar it actually is to how publishers work.

Now, obviously, there are differences between fashion companies and media companies. For one thing, fashion companies are not trying to 'keep those in power to account'. Nor are they spending every day reporting about crime or corruption.

But most of the other things are the same, especially in terms of consumption and the market.

Let me give you an example. The fashion company that I worked for was, at the time, the second largest fashion company in Denmark. We had several brands, and one of the largest of these brands launched 14 different collections per year, some big ones like the "Winter Collection", several pre-collections, like a "Pre-Winter Collection", and several fast-collections between to keep people's consumption up.

In total, every year, we made about 1,600 different styles (different pieces of clothing).

Think about that in relation to media. That's 4.3 newly designed pieces of clothing every single day. This is a release schedule that might not match that of newspapers, but it exceeds that of most magazines.

Today, many fashion companies have an even crazier schedule. Most of the big companies have already abandoned the concept of 'collections'. Instead, they now release clothes like a continuous stream of new products.

Does that sound familiar? Yep, this is also how digital media now works. If you are a magazine, you can't survive by just publishing something once per month. Instead, you have to continually give people new things.

Take a company like H&M. They now operate exactly like a digital media company. They have constantly renewing releases, what they call "new arrivals", they offer people topics of interest where the style of clothes fit whatever need people have, and then they have an always changing number of campaigns to get people to feel that there is always something new going on.

And, as I'm writing this, H&M has 7,403 items available for women, and another 2,015 for men. This is newspaper level volumes we are talking about here.

The fashion world exists in the same type of reality as publishers. They constantly have to keep up the volume, and they constantly have to produce something new.

But, more importantly, they also live in the same type of hyper-abundance, where at any point in time, there are simply too many choices for people to pick.

For instance, if you are looking to buy a pair of jeans, ASOS currently have 1,519 styles available for you. If you instead go over to Diesel, they currently offer 257 different pairs, Levi's another 129 pairs, Wrangler 90 pairs.

But what's even more insane is how many other companies also sell jeans. Carhartt, Uniqlo, AE Ne(X)t, Revtown, Buck Mason, APC, DSTLD, Bonobos, J.Crew, PAIGE, Tommy Hilfiger, Lee, Polo Ralph Lauren, Ksubi, Rag & Bone, Frame, American Eagle, even Amazon now has their own jeans brand. The list just goes on and on.

You see what is happening here? This is exactly the same problem as we have in the media industry. There are too many companies all doing the same thing.

But what is different about the fashion world is that nobody is talking about 'jeans fatigue'. In fact, the denim jeans market is expected to grow 2.81% over the next three years, reaching a total of $113.10 billion in 2023.

This is fascinating from a media perspective, because it illustrates how people truly behave once you have a market in abundance.

The reason why people don't suffer from jeans fatigue is because people are not trying to look at the whole. Instead, fashion is just something that flows. Some day a friend tells you about something amazing, and then you buy it. Other times you need something specific, you look for it in some of the places that you already like ... and that's it.

The same thing is now happening in the media industry, although many haven't shifted their mindset yet.

Take something like streaming. The reason people talk about streaming fatigue is because they are still thinking about it like cable TV channels, where they have to pick one package and then hang on to that for life (like your parents did).

But in the future, this will not be how people subscribe to streaming channels. Instead, there will simply be too many streaming options to even know about, so people will start buying streaming services the same way they buy clothes.

What I mean is that someday you might hear about a new show, like Disney+'s The Mandalorian, and because of that you decide to subscribe to Disney+.

Then a while later, you hear about Star Trek: Picard on Amazon Prime TV, and so you also subscribe to Amazon Prime TV. Meanwhile, since Game of Thrones is no longer on HBO, you cancel your subscription there, and you drop your subscription to ESPN to instead subscribe to the Athletic ... and then next month you might make other choices.

This is how people engage with fashion companies, and this is also how people in the future will engage with media companies.

And as publishers truly start to realize this type of market dynamics, we will see more and more publishing products that are tailored and optimized for it.

"But, wait-a-minute," you say. "This is bad. It means people are not loyal to anything". And yes, it can seem that way at first. But, again, think about it like fashion.

You probably have a few fashion brands that you are going to pick over any other, because you just like them more.

Right?

For instance, for leisure or exercise gear, I'm pretty much exclusively buying Nike, because I really like how it fits me. I feel so comfortable with that choice that the last time I needed something, I didn't bother looking at any other options.

That's loyalty.

Or think about it like what we see on YouTube. Here we see exactly the same dynamics. People don't subscribe to a YouTube channel for life. Instead, people subscribe to channels that they find interesting, and then they stick with them until something better comes along, or until their interests change.

But just like with fashion, there are always a number of YouTube channels that you just absolutely love. Channels that you are super-loyal to.

And what is really amazing about this market, is that the more diverse it is, the more the public loves it. People like the idea of constantly having new options to choose from. It's the diversity of the market that makes the fashion industry so strong to begin with. Think about it. If it wasn't for this abundance of companies, if we only had a few big fashion companies and that was it, people would get bored and they wouldn't buy as many clothes.

So, how should we as publishers approach this market? Well, again, think about the fashion industry.

The second biggest mistake we ever made

The media industry has made a lot of mistakes over the past 30 years, and one of them was how we responded to increasing competition in the market.

And a good way to illustrate what I mean by this is to look at Netflix.

Netflix has undergone two massive changes to their business focus. The first change was in 2007, when Netflix announced that they would start streaming movies and TV shows online. This shift was similar to how newspapers have shifted from print to digital.

But the change to online streaming was only the first step. The second was the shift to focusing on 'Originals'.

We have all seen this. In the beginning, back when Netflix was the only large streaming service, they could win simply by offering people a large inventory of random movies and TV shows.

But once Hulu, Amazon Prime, HBO and many others entered the market, just offering people a large collection of content wasn't enough.

Netflix realized this. They realized that as more and more streaming channels were created, all offering essentially the same thing, nobody would be able to stand out and instead they would all just end up in a never ending pricing war. A pricing war that none of them would be able to afford.

So Netflix needed to find a way to keep people thinking that Netflix was better than the other channels, but they needed to do something unique so they could keep up their prices.

The result was a shift to originals.

This is Netflix's answer to abundance. The more abundant a market becomes, the more unique you need to be. And it's this focus that will now drive Netflix's future success.

And most of the big players in the streaming world have now realized this. Netflix, Hulu, Amazon, HBO, Disney+, they are all focusing on standing out with originals. Disney+ in particular is 100% about originals (which I wrote about here).

But we also see it with many streaming startups and especially the niche channels. Look at niche streaming channels like CuriosityStream. It's all about creating shows that are unique to them.

So think about this, again, in relation to the publishing industry. What did we do when we were faced with the same market dynamics?

Well, newspapers have also shifted from print to digital, but remember, this is only the first step. The second step is how you respond to abundance ... and here the publishing industry has massively failed. While Netflix and others focused more on original content, most newspapers went the other way. The more competition we faced online, the more they started to do the same as everyone else.

The worst example is how the media industry responded to Facebook. Instead of trying to be more unique and to create more original content for people to connect to, almost every publisher suddenly focused on creating the same type of low-intent content.

This is why so many newspapers are struggling today. We did this:

Some publishers are starting to realize this. We see an increasing number of publishers who do try to offer more unique things. This is great, but the problem is that the publishing market as a whole is so far behind.

And even today, most publishers still don't get this. Every month I hear about publishers trying to 'be digital' by doing more common things. We see publishers launch a new newsletter, but then they just fill it with the same random focus that everyone else has.

This doesn't work.

Then we have the Facebook News Tab. This entire site is based on the idea that every publisher is the same, and that people should just read random articles.

The whole platform is designed around people just reading content made the same way and for the same random audience.

Imagine if this was what Netflix did. It would decimate them compared to all the other channels offering something more special.

So, the question is, what do we do now?

How to fix this?

There are two things we need to realize.

The first one is what we have already talked about, which is the need for publishers to focus more on original content. We cannot win the future by just trying to do what everyone else is already doing.

The problem, however, is that in the media industry we have a very hard time creating original content because of the culture of stealing. What I mean is that every time one newspaper publishes an 'exclusive report', every other newspaper suddenly publishes it as well.

This is a terrible problem by itself, and we need to talk about this in the industry. The way newspapers are stealing from each other is wrecking the industry as a whole.

But this is a bigger problem that I can't address just with this article. Instead, we need to find other ways of being original.

There are many ways we can do that. We can create specific things, like how the New York Times launched The Daily. The stories they bring each morning might not be original by themselves, but the way they present them makes it uniquely a NYT show.

Another way to be original is to change your approach to journalism. For instance, here in Denmark, we have a newspaper called Zetland that isn't trying to publish 150 articles per day like everyone else. Instead they publish 1-3 articles per day which are seriously high-end.

Yet another approach is to think of publishing more as a service. For instance, if you are business publishers, what is it that people really need? Solve that instead of just publishing random news articles about which companies hired which people.

Or maybe you want to create a publication for the 'young people', the Generation Z. What do you do? Do you focus on shallow, low attention span TikTok channels ... just like everyone else? Or do you help this generation get a much better future? Are you helping your audience, or are you just publishing social memes?

The point is that there are thousands of different ways to be original, pick one of them and make it the thing that defines you.

The second and final thing we need to talk about is how to create a new media company, because so many people make the same mistake.

You cannot be H&M from the start

The problem that I come across almost all the time is that when publishers try to start something new, they are trying to run before they can walk.

Let me give you a simple example. A while back, former editors from a big publishing group decided to quit their jobs and start their own publication.

The idea was to create a site that was better for women, which sounds okay, but then they started talking about what type of stories they would publish. They would publish stories about politics, #metoo, about parenthood while working, articles about culture and entertainment and the list went on and on ... and you can see how it suddenly falls apart.

The mistake they are making is that they are trying to be everything before they have even defined themselves.

It's the same mistake that many fashion companies make. Every single year, hundreds of new fashion companies are born, and almost all of them fail.

The reason is almost always the same. They tried to do too many things at once, while not having anything specific enough to make them stand out.

Think about it, if you were to start a fashion company, and your strategy was to just open one of those stores with a bit of everything, nobody would care.

Instead, the only way to succeed is to do this.

You have to start by doing one thing really well, and then from there you can expand if that is successful.

You cannot start by doing seven different things. We are living in a world of abundance. We don't need yet another company that is doing seven different things in a somewhat mediocre way, because we already have access to 700,000 different things.

Again, think about Netflix here. They used to be random in 2007 but now their focus is to create originals.

Think about Disney+. They could just have put all their content on Hulu (which they also own), but they realized that there was far more money in creating a separate streaming channel just around their biggest brands.

Or think about fashion companies. Let's say you want to sell t-shirts. Well, there are already thousands of companies that do that, including all the big companies like H&M. So, you can't win by just selling more t-shirts.

So what do you do?

Well, what H&M is doing is to sell t-shirts in standard sizes, so what if you created a company that sold t-shirts in, 'your size'. As in custom fitted to just you ... using an algorithm to calculate the right fit for you.

Well, this is exactly what one company here in my country is doing, and it is growing very rapidly.

It's not the t-shirts that make this work, it's the algorithm. Their business model is based on changing how clothes are defined.

As a publisher, you need to think the same way. You need to define the thing that makes you original.

 
 
 

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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé

 

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