On the economic illiteracy of digital media
ALSO: Has Prince Harry gazumped himself?
Just before new year, I published a piece of media futurology, immodestly titled “2022: the year podcasting died”. You can read it here, but I did send it round on Substack at the time.
It is a rare piece for me, these days, that has obviously cut through. The thesis of the piece was quite simple: the historic conventions of podcasting, and the design of that product, are outdated. The on-demand audio content of the future will look different to the podcasts of the past decade, and probably a video on-demand product will dominate. The piece is broadly optimistic about these trends, but does suggest that there are a number of exogenous factors that I think podcasting ought to be very wary about.
Horn tooting time: on Medium, where the piece was originally published, it has been read 8,500+ times (not bad for a 3,500 word piece). Additionally it has received 47 responses, which is more than anything else I’ve written on Medium (I think, ever). They’re largely from people who are either sceptical about podcasting in general, or who have been worn down by the process of launching a not-wildly-successful podcast.
But perhaps more telling than the response on Medium, has been the fact that the more celebrated corners of our industry. Now, I’m not trying to take credit for that (though I would like it, if it’s offered). I was simply quite early in predicting that 2023 would be a difficult year for podcasting. This was a theme picked up in Bloomberg (where the piece’s authors, Ashley Carman and Lucas Shaw, quoted my blog) and in Vulture (where I was not cited and therefore the entire publication is DEAD TO ME). Long story short, all the markers of economic movement in podcasting are either slowing or moving in the wrong direction.
Anyhow, this edition of Future Proof is about economic illiteracy. I was reading, at the weekend, Ruchir Sharma (an investor and Financial Times columnist) writing about the 10 trends he was predicting for 2023. These are big macro trends, like the overvaluation of the dollar, the turbulence of Big Tech, and the investing potential in the ROW (Rest of the World, i.e. not America). This all has nothing to do with digital media, though you might want to read up before taking out a mortgage. But what the Sharma piece made me think about was the extent to which there is a tendency, in podcasting, sure, but in digital industries more generally, to bury ones head in the sand. Because, for every person who wrote in to agree with my piece on podcasting’s issues, I had someone (usually in a position where it would be professionally advantageous, if a reality) tell me I was wrong.
Take, for example, a brief exchange I had on Twitter with a chap called Chris, who is, according to his bio, the creator of the iHeartRadio podcast network. That’s a big deal. Anyhow, Chris was replying to the Bloomberg piece and he wrote: “Podcasting is being influenced by market conditions, similar to basically all of media. Plenty of reasons to be incredibly bullish on podcasting, especially compared to other audio. We're still in very early innings of podcast growth and huge opportunity lies ahead.”
Now, I don’t normally reply to people I don’t know on Twitter (and I waded in having not read the piece, and not realising that it quoted me), but I asked him: “Just out of curiosity, at what stage of maturity will podcasting cease to be in a "very early innings"? After a bit of back and forth, the opinion that he put out was “adoption will continue to increase across the globe as spoken word audio moves to digital. Ad-tech will continue to improve and we'll see that grow exponentially and we've barely scratched the surface with subscription revenue. Huge opportunities.”
Ok, look, I’m not going to refight this battle on a newsletter where Chris can’t respond (and which he won’t read). He has an optimistic take and I have a pessimistic take. And the history of Big Tech has favoured those of the optimistic persuasion: almost every successful entrepreneur, from Elon Musk to Mark Zuckerberg, pushes an optimistic agenda. Yes, the future of social interactions are an EXCITING journey into DAZZLING virtual reality that can be accessed from your TINY living room! Of course we’re going to BEAUTIFUL Mars where you will likely DIE from ingesting poisonous gases but will be a PIONEER of humanity’s future!!
There are very few successful pessimists, and my accountant is encouraging me to rethink that persuasion. But then I read a piece like Ruchir Sharma’s and I feel corroborated. Take this segment from the introduction to his trends, which underpins the entire piece:
“Tight money is not a temporary shock. The new standard for inflation is closer to 4 per cent than 2 per cent, so interest rates won’t be falling back to zero. As this phase wears on, tycoons, companies, currencies and countries that thrived on easy money will stumble, making way for new winners. Some things will improve. The time of lavishly ridiculous digital coins and TV shows will pass. An age of more discriminating judgment will shape the trends of 2023.”
Sharma, and the world of economics, has called time on the era of “cheap money”, where interest rates were kept low in order to stimulate borrowing (essentially, making it easy to create businesses, and buy houses). Now we are in an era of “tight money”, where high interest rates are used as a drag on inflation. It’s why the “growth” targets of governments on both sides of the Atlantic seem so laughable: right now we are in survival mode. Inflation needs to be brought down to a position where people aren’t going to starve in developed nations, and doing that requires high interest rates that take cash out of the economy.
If you understand that fundamental dynamic, then I think it is hard to see any world in which 2023 is a progressive year. For technology more generally, but for digital media as a subset of that. Put simply, it’s a horrible time to build a business. It’s a horrible time to spend discretionary money, on marketing or advertising or CSR/thought leadership initiatives. (Another FT trends piece makes this point: “In 2023, budgets will be tightly managed, and all marketing investments will be scrutinised,” it says. “Any programme that looks like a nice-to-have will be vulnerable to budget cuts.”). I cannot think of any reason to be bullish about any technology product right now.
Does that mean we have to be bearish? Is it necessarily a recessive industry? I’ll leave that to people who really understand the economic picture. But I think it’s important to try and look at the macro trends rather than (or rather than just) the micro ones. There’s always a way of spinning things to your advantage: both the Bloomberg and Vulture pieces concede that podcast advertising revenue, in overall terms, is growing. So that could be perceived as a reason to be bullish. Except that it’s not happening in a vacuum, and here the macro trend (the calamitous decline of digital advertising) seems more relevant.
All in all, I am cautiously pessimistic for 2023. But above all else, I hope that there are not people in the digital media sector who are positioning themselves dangerously far from economic reality.
BELOW THE PAYWALL: SOME THOUGHTS ON PRINCE HARRY’S ENDLESS MEDIA TOUR.
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