Web2 Media Is Broken. The Future of Media Is Tokenized. – nft now
“We need more reach.”
“This will get a lot of clicks.”
“The client won’t be happy with these numbers.”
We’ve heard these narratives nonstop since our media careers began more than 15 years ago. They are thought patterns that have been normalized in newsrooms and ad agencies across the world.
And this is just the beginning of the issues with the current state of media.
The truth is this: Web2 media is broken.
The traditional models and ways of doing things in media just don’t work anymore. This behavior did not come out of the blue. So how did we get here?
With the rise of social media, the traffic floodgates opened to media websites. Media companies saw an unprecedented explosion of reach due to these platforms and became addicted to this traffic, which helped fuel the rise of programmatic advertising. This is the technology that powers those annoying banner ads on your favorite media websites, from The New York Times to YouTube. The more people visit your website, the more impressions the ad gets, and the more the platform gets paid.
Funny enough, the very platforms that fueled this business model ended up changing their algorithms after seeing how much revenue they were allowing to leave their ecosystem by encouraging users to click away from Facebook or Twitter onto a separate publisher website. So in 2015, Facebook’s notorious algorithm change decimated the traffic sources for hundreds of media companies to keep more of their traffic inside of Facebook. Due to declining revenue, some media properties even went out of business.
We know this because we’ve lived it. As Editor-In-Chief of SPIN, Matt saw firsthand how traffic does not equate to revenue when the publication was forced to undergo layoffs despite exceeding growth goals. As Director of Innovation and Culture at Elite Daily, Alejandro saw how the publication rode Facebook traffic to a sale to Daily Mail only for traffic to significantly decline after the algorithm change.
As media companies prioritized audience scale over quality and optimized for algorithmic platforms like Facebook and Google, there were a number of alarming developments.
First, media platforms found themselves locked in a clickbait race to the bottom. As algorithms rewarded sensationalist headlines and quick trigger fingers, the quality of coverage declined. The race to be first to a story also produced public embarrassments for major media brands who had to retract factually inaccurate reporting. As credibility eroded, public trust in media reached an all-time low.
Second, people became the product. Programmatic advertising reduced us to eyeballs to be monetized and discarded. In the eyes of publishers, there was no distinction made between the quality and the quantity of an audience. Put simply, we were all diminished to a single metric: traffic. By virtue of working at social media companies, the brightest minds in Silicon Valley ended up building an advertising optimization machine, the likes of which had never been seen before. As a result, publishers began prioritizing their advertisers over their audiences.
Third, as publishers and platforms optimized for advertising revenue, they began to attack our privacy. Platforms began to track users across the web without their explicit consent in order to sell more ads – though technically, users consented by accepting the all-too vague and legally verbose “terms and conditions.”
The rise of tracking users using pixels and cookies invited privacy violations across the web. Platforms could now track users’ every move, click, and keystroke, even beyond their own website, to serve them “better” ads.
Technology has always pushed storytelling forward. The Gutenberg printing press catalyzed the information revolution. The invention of the internet forced print publications to become digital. The rise of the smartphone moved digital media to embrace mobile. Web3 technology is of the same caliber. And with it, we have the chance to build something better.
Centered on an ecosystem of technology products that are decentralized, trustless, permissionless, and interoperable, Web3 technologies have the power to create fairer models that benefit everyone. They return ownership to users, bypass the gatekeepers that control traditional media and social platforms, and allow creators and their communities to share in the value they create.
But significantly, this tokenized revolution will not only change how stories are created and consumed, it also has the power to fundamentally redefine relationships that have been cemented for centuries. This technology can actually help us foster the deeper and more meaningful human relationships we want. This comes down to the difference between audience and community.
Your audience is aware that you exist. They may recognize your brand and see you in their social feeds. They may even attend your events or buy your products. But ultimately, there’s a limit to their participation, and they are largely on the receiving end of the content you produce. As coverage became more homogenous to exploit algorithms, media brands became interchangeable, such that readers have little incentive to choose one over another. In web2, consumers became loyal to the headline, not the brand.
In contrast, community wants to win together. And in web3, more often than not, they actually have a literal stake in doing so. By aligning incentives and rewarding participation by decentralizing ownership and governance, communities are the prime drivers of value creation.
In web3, digital ownership is front and center. For the first time since the origins of the internet, the blockchain allows for root ownership. Now media companies and creators can build community in a digital asset economy as an end in itself and monetize directly by sharing in the value that they create.
We envision a future where digital publishers liberate themselves from the mindless tyranny of clicks, pageviews, and CPMs. Users will no longer be the product being sold in antiquated and exploitative systems; they will be active partners and owners in the content and experiences being created.
Introducing the Now Network
Because of these experiences, we wanted to do things differently from day one. If you visit nftnow.com, you’ll notice there are no banner ads. We refused to implement programmatic advertising because of the misaligned incentives it creates to prioritize advertisers over users, sensationalize coverage, and violate users’ privacy. We believe that media companies shouldn’t serve you ads; they should serve you opportunities.
We also refused to include any pixels and cookies to track our users. Principles like consent matter more to us. We believe privacy is a fundamental human right and should be respected across the internet.
The Now Network is our next step in pioneering a community-centric media model and building a creator-friendly future. The Now Pass is the key that unlocks that door. You can learn more about the details and mechanics at nowpass.xyz.
Here’s how the Now Network will begin to share the value being created with our membership community.
Super-serving our community with exclusive content and access
From early access to information and insights to curated private chats where you can connect with experts and other builders in your industry, the Now Network will offer you the tools you need to succeed alongside insider access to web3’s leading minds.
Now Pass holders will also be eligible for exclusive access to our acclaimed IRL and virtual events, including our tentpole events The Gateway, NFT100, and nft now presents, alongside our satellite events around Art Basel Miami, NFT NYC, Frieze LA, ETH Denver, Faena Rose Miami, Jackson Hole, and many more.
Increasing retention and rewarding participation
We believe media should be more than a one-way street. With the Now Pass, community members will be incentivized to engage with content and provide feedback through our reward mechanisms. By realigning incentives and reimagining how a publisher can create and share value in a web3 context, we will encourage deeper, more authentic connections and a greater sense of loyalty.
Decentralizing content creation and curation
We want our community to become co-creators in the stories being told. The Now Network is our first step towards progressive decentralization. We believe this will create a more inclusive and transparent ecosystem to incubate ideas and uplift new voices. We’ll be transitioning some of our most popular content series (ex., Next Up) to a community-curated Token Curated Registries (TCR) model with on-chain voting that empowers our community members to have a say in who and what gets covered.
This is only the beginning
The Now Network will be built over time, not overnight. We are being intentional and taking our time to create something sustainable. This is a first step — a foundation for all of our initiatives in building the future of tokenized media. We may not always get everything right – and that’s okay. Experimentation is a critical part of pioneering a new paradigm. But our commitment to this space is long-term, so we will build in public over the coming months, years, and decades. We invite you to join us in learning, growing, and co-creating this future together.
You’re more than a pageview. It’s time to change the relationship between publishers and their communities.
Matt Medved & Alejandro Navia
Co-Founders of nft now
Twitter source code partially leaked online, court filing says – Al Jazeera English
GitHub removed code shared without permission after request by social media giant, court filing says.
Twitter’s source code has partially leaked online, according to a legal filing by the social media giant.
Twitter asked GitHub, an online software development platform, to remove the code after it was posted online without permission earlier this month, the legal document filed in the US state of California showed on Sunday.
GitHub complied with Twitter’s request to remove the code after the social media company on March 24 issued a subpoena to identify a user known as “FreeSpeechEnthusiast”, according to the filing with the US District Court of the Northern District of California. San Francisco-based Twitter noted in the filing that the postings infringe on the platform’s intellectual property rights.
The filing was first reported by The New York Times.
The leak of the code is the latest hiccup at the social media giant since its purchase by Elon Musk, whose tenure has been marked by mass layoffs, outages, sweeping changes to content moderation and heated debate about the proper balance between free speech and online safety.
Musk, who bought Twitter for $44bn last October, said recently that Twitter would open the source code used to recommend tweets on March 31. Musk, who also runs Tesla and several other companies, said the platform’s algorithm was overly complex and predicted people would find “many silly things” once the code was made public. It is not clear if the leaked source relates to the code used to recommend tweets.
“Providing code transparency will be incredibly embarrassing at first, but it should lead to rapid improvement in recommendation quality,” he wrote on Twitter. “Most importantly, we hope to earn your trust.”
Utah is first US state to limit teen social media access
Utah has become the first US state to require social media firms get parental consent for children to use their apps and verify users are at least 18.
The governor said he signed the two sweeping measures to protect young people in the state.
The bills will give parents full access to their children’s online accounts, including posts and private messages.
Under the measures enacted on Thursday, a parent or guardian’s explicit consent will be needed before children can create accounts on apps such Instagram, Facebook and TikTok.
The bills also impose a social media curfew that blocks children’s access between 22:30 and 06:30, unless adjusted by their parents.
Under the legislation, social media companies will no longer be able to collect a child’s data or be targeted for advertising.
The two bills – which are also designed to make it easier to take legal action against social media companies – will take effect on March 1, 2024.
Governor Spencer Cox, a Republican, wrote on Twitter: “We’re no longer willing to let social media companies continue to harm the mental health of our youth.
“As leaders, and parents, we have a responsibility to protect our young people.”
Children’s advocacy group Commons Sense Media welcomed the governor’s move to curtail some of social media’s most addictive features, calling it a “huge victory for kids and families in Utah”.
“It adds momentum for other states to hold social media companies accountable to ensure kids across the country are protected online,” said Jim Steyer, Common Sense Media’s founder and CEO.
Similar regulations are being considered in four other Republican-led states – Arkansas, Texas, Ohio and Louisiana – and Democratic-led New Jersey.
But Common Sense Media and other advocacy groups warned some parts of the new legislation could put children at risk.
Ari Z Cohn, a free speech lawyer for TechFreedom, said the bill posed “significant free speech problems”.
“There are so many children who might be in abusive households,” he told the BBC, “who might be LGBT, who could be cut-off from social media entirely.”
In response, Meta, Facebook’s parent company, said it has robust tools to keep children safe.
A spokesperson told the BBC: “We’ve developed more than 30 tools to support teens and families, including tools that let parents and teens work together to limit the amount of time teens spend on Instagram, and age verification technology that helps teens have age-appropriate experiences.”
There has been other US bipartisan support for social media legislation aimed at protecting children.
President Joe Biden’s State of the Union address in February called for laws banning tech companies from collecting data on children.
Last year, California state lawmakers passed their own child data law. Among other measures, the California Age-Appropriate Design Code Act requires digital platforms to make the highest privacy features for under-18 users a default setting.
The passage of the Utah bills coincides with a bruising congressional hearing for TikTok CEO Shou Zi Chew.
The digital media rollup dream is dead for the moment — now it’s all about core brand strength
When a marriage or an engagement fails, it’s common for the participants to take time to work on themselves.
That’s where the digital media industry finds itself today.
After years of focusing on consolidating to better compete with Google and Facebook for digital advertising dollars, many of the most well-known digital media companies have abandoned consolidation efforts to concentrate on differentiation.
“What you’re finding is companies are trying to find a non-substitutable core,” said Jonathan Miller, the CEO of Integrated Media, which specializes in digital media investments. “The era of trying to put these companies together is over, and I don’t think it’s coming back.”
A 90% decline in BuzzFeed shares since the company went public in 2021, a failed sales process from Vice, the collapse of special purpose acquisition companies, and a choppy advertising market have made digital media executives rethink their companies’ futures. For the moment, executives have decided that more concentrated investment is better than attempts to gain scale.
“Right now, everyone’s trying to get through a tougher market by focusing on their strengths,” BuzzFeed CEO Jonah Peretti said in an interview with CNBC. “We’re in this period now where we should just focus on innovating for the future and building more efficient, stronger, better companies.”
What’s happening in the digital media space echoes trends from the biggest media companies, including Netflix, Disney and Warner Bros. Discovery. After losing nearly half their market values, or more, in 2022, those companies have emphasized what makes them different, whether it be distribution, brand or quality of programming, after years of global expansion and mega-mergers. Disney CEO Bob Iger said the word “brand” more than 25 times at a Morgan Stanley media conference this month.
“I think brands matter,” Iger said. “The more choice people have, the more important brands become because of what they convey to consumers.”
Making strategic decisions based on consumer demand rather than investor pressure is a pivot for the industry, said Bryan Goldberg, CEO of Bustle Digital Group, which has acquired and developed a number of brands and sites aimed at women, including Nylon, Scary Mommy, Romper and Elite Daily.
“Too many of the mergers were driven by investor needs as opposed to consumer needs,” Goldberg said in an interview.
The rollup dream’s rise and fall
From late 2018 to early 2022, the digital media industry had a shared goal. Pushed by venture capitalist and private equity investors who had made sizeable investments in the industry during the 2010s, companies such as BuzzFeed, Vice, Vox Media, Group Nine, and Bustle Digital Group, or BDG, were talking to each other, in various combinations, about merging to gain scale.
“If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti told The New York Times in November 2018, kicking off a multiyear effort to consolidate.
The rationale was twofold. First, digital media companies needed more scale to compete with Facebook and Google for digital advertising dollars. Adding sites and brands under one corporate umbrella would boost overall eyeballs for advertisers. Cost-cutting from M&A synergies was an added benefit for investors.
Second, longtime shareholders wanted to exit their investments. Large legacy media companies such as Disney and Comcast‘s NBCUniversal invested hundreds of millions in digital media in the early and mid-2010s. Disney invested more than $400 million in Vice. NBCUniversal put a similar amount into BuzzFeed. By the end of the decade, after seeing the value of those investments fall, legacy media companies made it clear to digital media executives that they weren’t interested in being acquirers.
With no strategic buyer available, merging with each other using publicly traded stock could give VC and PE shareholders a chance to cash out of investments that were well past the standard hold time of seven years. Digital media companies eyed special purpose acquisition companies — also known as SPACs or blank-check companies — as a way to go public quickly. The popularity of SPACs picked up steam in 2020 and peaked in 2021.
Deal flow accelerated. Vox acquired New York Magazine in September 2019. About a week later, Vice announced it had acquired Refinery29, a digital media company focused on younger women. BuzzFeed bought news aggregator and blog HuffPost in 2020 and then acquired digital publisher Complex Networks in 2021 as part of a SPAC transaction to go public. Vox and Group Nine agreed to a merger later that year.
BuzzFeed, generally thought by industry executives at the time to have the strongest balance sheet with the best growth narrative, successfully went public via SPAC in December 2021. Shares immediately tanked, falling 24% in their first week of trading. The coming weeks and months were even worse. BuzzFeed opened at $10 per share. The stock currently trades at about $1 — a 90% loss of value.
BuzzFeed’s underwhelming performance coincided with the implosion of the SPAC market in early 2022 as interest rates rose. Other companies that planned to follow BuzzFeed shut down their efforts to go public completely. Vice tried and failed. Now it’s trying for the second time in two years to find a buyer. BDG and Vox, meanwhile, abandoned considerations to go public. Vox instead sold a 20% stake in itself in February to Penske Media, which owns Rolling Stone and Variety.
The industry turns inward
Consolidation was always a flawed strategy because digital media could never become big enough to compete with Facebook and Google, said Integrated Media’s Miller.
“You have to have sufficient amount of scale to matter, but that’s not a winning formula by itself,” Miller said.
Vice’s deal for Refinery29 is a prime example of a deal motivated by scale that lacked consumer rationale, said BDG’s Goldberg.
“The digital media rollup has proven successful only when assets are thoughtfully combined with an eye toward consumers,” Goldberg said. “In what world did Vice and Refinery29 make sense in combination?”
Vice is engaged in sale talks with a number of buyers that fall outside the digital media landscape, CNBC previously reported. It’s also considering selling itself in pieces if there’s more interest in parts of the company, such as its TV production assets and its ad agency, Virtue.
Vice is a cautionary tale of what happens to a digital media company when its brand loses luster, Miller said. Valued at $5.7 billion in 2017, Vice is now considering selling itself for around $500 million, according to people familiar with the matter, who asked not to be named because the sale discussions are private.
A Vice spokesperson declined to comment.
“In the old days of media, with TV networks, if you were down, you could revive yourself with a hit,” said Miller. “In the internet age, everything is so easily substitutable. If Vice goes down, the audience just moves on to something else.”
Companies such as BuzzFeed, Vox and BDG are now trying to find an enduring relevancy amid a myriad of information and entertainment options. BuzzFeed has chosen to lean in to artificial intelligence, touting new AI-generated quizzes and other content that fuses the work of staff writers with AI databases.
BDG has chosen to primarily target female audiences across lifestyle categories.
Vox has focused on journalism and information across a number of different verticals. That’s a strategy that hasn’t really changed even as the market has turned against digital media, allowing Vox CEO Jim Bankoff the opportunity to continue to hunt for deals. Just don’t expect the partners to be Vice, BDG or BuzzFeed.
“We want to be the leading modern media company with the strongest portfolio of brands that serve their audiences on modern platforms — websites, podcasts, streaming services — while building franchises through multiple revenue streams,” Bankoff said. “There’s no doubt M&A is part of our playbook, and we expect it will continue to be in the future.”
Finding an exit
While executives may be making strategy decisions with a sharper eye toward the consumer, the problem of finding an exit for investors remains. Differentiation may open up the pool of potential buyers beyond the media industry. BuzzFeed’s emphasis on artificial intelligence could attract interest from technology platforms, for instance.
It’s also possible that there will be an eventual second wave of peer-to-peer mergers. While Integrated Media’s Miller doesn’t expect a future industry rollup, BuzzFeed’s Peretti hasn’t closed the door on the concept if market conditions improve. As executives invest in fewer ideas and verticals, the end result could be healthier companies that are more attractive merger partners, he said.
“If everyone invests in what they’re best at, if you put them back together, you’d have that diversified digital media company with real scale,” Peretti said. “That helps drive commerce for all parts of a unified company. I think it’s still possible.”
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
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