Creators rejoice. For the first time… in a long time… there’s joy for you in Mediaville. The days of tech being the only thing media people value is abating. Damn. I wish I were pithy and timely enough to have come up with something, like, “Words are eclipsing tech in media’s sky.” But that’s not quite true and I’m not quite that smart. So, instead, you get this.
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You know how you can finish iconic phrases that start, “Four score…,” and, “One small…,” and, “I have…”? Well, your money-focused friends live their investing lives by the philosophies espoused by catchers like, “Irrational exuberance” and “Jet fuel.”
The folks whose faces light up when their phones light up that S&P one-hour futures look ready for a C-wave breakout love the idea of fast money and are willing to get there by skipping steps. It’s amazing how treasure maps to free money always sound like a finance convention for nerds in Middle Earth.
On the other end of the spectrum, consider a boring old muffin shop. One that just sells tops. Let’s call it Toppers. They buy some sugar, flour, and whatever other stuff goes into a muffin. Let’s pretend it costs them twelve bucks for the “ingredients” to make a dozen toppers. That’s one dollar per topper. They sell each topper for two bucks. They *make* one dollar on each topper. MAKE. You know what? Forget the name Toppers. We’ll call it Make Muffins because Make makes money. On each unit.
There is no early unit economics for companies that rely on jet fuel. Each new user on a service like Slack or Loom costs the company more money than the new user brings in. Which is — to rationally thinking mortals — insane!
Many of the services we love started with jet fuel. Amazon. Uber. Almost all social media. Google. Jet fuel paid the bills for a long time until the revenue caught up. In some cases, it never does. See We (used to) Work.
Media fell for this glitz and glam short-cut. For the last twenty or so years, media’s biggest problem has been mostly self-inflicted. They opted to try to scale low-quality ad businesses driven by worthless clickbait. So, they bought techy, potentially scaleable low-quality ad tech and farms that delivered worthless clickbait. Their hard-won dollars made frivolous VC bets look sane. Media bought into C-wave charts and lost sight of positive unit economics.
“Hey, Charles, I’m a writer and you promised me good news not a warmed-over economics lesson and G to the D knows I need good news so get on with it.”
The other day, the media outlet, Puck bought Artelligence, a newsletter published on Substack. Yes, the very Substack that you’re reading this on right now.
Marion Maneker started Artelligence as a periodic podcast in May 2014. He talks about art stuff. What paintings are worth. The value of the brand Art Basel. That kind of thing. Marion produced pods until he published his first story in October 2018. Today, Marion has 32,000 subscribers.
It’s not clear how many people pay the $12/month or $120/year for Marion’s premium content. But, we can do some back of the envelope math. If 10% of his subscribers pay the annual price, Marion makes $384,000. After Substack’s cut, Marion may clear $350k per year. Not bad. Not bad at all. A business like that might sell for a couple of million bucks. Yeah, you read that right. Assume I’m optimistic. I usually am. So, chop it in half. Maybe Marion makes a little less than a couple of hundred thousand a year and sold his Substack for a million dollars. Still not bad. Marion built his busienss with ligroin.
Ligroin is the antithesis of jet fuel. There’s nothing glamorous about the old school lab solvent that catalyzed combustion in early car engines. Maybe Puck got inspired seeing Bertha Benz (yes, that Benz) use ligroin to go 65 miles from Mannheim to Pforzheim in 1888 in the adu-mentary short, the the Journey that Changed Everything. Puck is on a journey to change everything.
There are no shortcuts in Puck buying Artelligence. Marion has thousands of readers not millions of visitors. He’s a real person writing real words to consistently engage real people multiple times per week. The Puck deal foregoes media’s typical get rich quick scheme for real unit economics.
Heck this could catch on. Other media companies could start buying newsletters from other Substackers. People who found these things could make a living and cash out too. The media buyers who own one, two, … a dozen of these things would be a lot like Make Muffins. Each newsletter would make money. Together they’d make a valuable store. In fact, this could change the entire concept of media venture funding (more on that another day).
And, maybe, just maybe, this is the elliptical way words partially eclipse tech in media.