The Robots Are Coming
Everything is Changing
Where is the Money?
Doug Shapiro has a very impressive Substack - The Mediator. He is my go-to source for anything related to Media (big M). This week he published -
The Mediator by Doug Shapiro
Video: Follow the Money
You might think that sizing the market for an industry is relatively straightforward. But that's often not true, for reasons that include: 1) lack of data; 2) no authoritative source of data; an...
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2 years ago · 23 likes · 2 comments · Doug Shapiro
This lengthy essay asks where the money is in the video industry and goes to great lengths to show that there is no new money and has not been for years. He documents the decline of broadcast networks and the rise of streaming and social media, and his big conclusion ( my interpretation) is that there is no more money; it is just changing hands.
Doug states that his work assumes
the inclusion of YouTube and exclusion of other short form (although the inclusion of TikTok and Reels wouldn't change the story much). With that squared away, looking at both the waterfall build for last year and the time series of these data yields a couple of conclusions.
His work disabuses many myths, including one I believed, that live sports would move online and grow revenues from video:
Going forward, an important and largely unanalyzable factor will be the competitive bidding dynamic for sports rights. Obviously, if there is significant consolidation among traditional media companies or if Amazon, Apple and/or Google decide to pull in their horns, that might reduce the demand for sports rights and, consequently, rights fees.
His chart demonstrates that sports is an attractive category. He believes there will be a lot of competition to acquire rights, but he does not believe that the total wallet to spend on video will grow.
I agree with him, but only because the sports franchises are challenged to consider their asset's value. I'm most familiar with the premier league in the UK. Here, each week for 38 weeks, there are 19 games. The total audience is well over 2 billion. If each person paid an average of $1 a game, that equals 38x2 billion at a minimum, or $76 billion. The league sells the rights globally for four years. The most recent deal for UK rights was 2024:
The latest domestic EPL media rights deal is worth a total of £6.7 billion over a 4 year cycle, beginning with the 2025/26 season. (National Law Review)
The rest of world rights will be higher when the conclusion is reached. From the same article:
Since this latest EPL deal covers the UK domestic rights only, the next round of overseas broadcast EPL deals will be eagerly anticipated. In February 2022, it emerged for the first time that the value of the EPL's UK broadcast rights (£5 billion for the period 2022-25) would exceed the value of its overseas rights (£5.05 billion for the same period). Several analysts have forecast that the value of these overseas rights deals look set to increase further.
Suppose the total is £15 billion ($18.5 billion). That translates to $4.65 billion a season. Less than 6.5% of valuing the sport at $1 per viewer.
The league cannot unlock that value without directly selling the games to fans. I guess $1 a game is well below the achievable average. With the rise of Apple Vision Pro and Oculus now open source, the audience for streamed games with in-stadium-like viewing experiences will multiply this greatly.
The obvious course is to build a direct technology stack and provide a global stream that is wholly owned. In that case, the revenues would dwarf current forecasts. But the chances of a conservative, technology-challenged leadership going down that path are low. So, in the end, Doug will probably be right.
The same question about "Where is the Money?" runs through Freddie Deboer's essay about writing. "Publishing is Designed to Make Most Authors Feel Like Losers Even While the Industry Makes Money".
Freddie deBoer
Publishing is Designed to Make Most Authors Feel Like Losers Even While the Industry Makes Money
This week Kathleen Schmidt of Publishing Confidential, a newsletter to which I subscribe, took some swings at this piece by Elle Griffin, a post skewering the state of book publishing that was remarkably well-read by the standards of contemporary independent media. Schmidt is an insider with 25+ years in the industry, while Griffin is an outsider who ha...
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2 years ago · 250 likes · 57 comments · Freddie deBoer
Freddie is a writer of books. He focuses on the power law of publishing. Most of the rewards go to a small number of writers. He does not believe that Substack, or this week's startup of the week beehiiv, will be able to bring money to more creators materially.
Substack has championed writing and writers, for which I'm very grateful, but of course it's a financial necessity for them to oversell the amount of opportunity out there on their platform. Here's the reality: there's always been far more entrants into creative fields than those industries can bear in terms of providing people with a living, and the digital tools that have torn down barriers to entry have simply increased the competition and made the overall Pareto distribution even more brutal. That's not gonna change, no matter how many of the gatekeeping industries go down. You can't have a society where no one feels fulfilled unless they're an actor or a musician or a novelist, but that appears to be the exact culture we're building, and it's tough.
Freddie is right, of course. Thank goodness I don't write this editorial or work on the curated pieces for payment. Writing it helps me think and be relevant, and I get attention from about 60,000 of you each week. In some manner, that translates into my earning ability - but not directly. Some of you do subscribe, but most do not.
The money is in having a skill that connects with a large enough or wealthy enough audience willing to pay.
Many venture capitalists are betting on the likelihood that individuals will be able to build $ billion businesses using AI rather than hitting people, and some will, of that I am sure. Marc Andreessen and Ben Horowitz discuss it here:
The future of earning does involve having something worth buying. Individuals will also be able to scale their earnings using new tools. Let's see how it goes.
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