Sovereignty

The essential challenge for publishers now is how to establish sovereignty

Just like countries, publishers have different levels of sovereignty. Countries like the United States and China have a high degree of sovereignty. A small country like, say, Belgium voluntarily gives up large chunks of sovereignty for practical reasons.

For a lot of reasons that are of varying degrees of reasonableness and rationality, publishers have since the dawn of the internet given up sovereignty. And they cannot establish resilient businesses without claiming back sovereignty. This is easier said than done. The digital media ecosystem is architected to erode publisher sovereignty.

Let’s start with distribution. This is similar to not controlling your borders. You can’t really claim to be fully sovereign as a publisher if you don’t control your distribution. The flurry of interest around newsletters, apps and even texting services – more soon on TRB’s texting project with Subtext – is at its heart a play for distribution sovereignty. If simply the need for Google Zero planning groups isn’t a good enough sign, I don’t know else is needed to drive this point home. You can shrug and do the sales guy “it is what it is” thing that somehow is thought in corporate circles as profound, but it serves to be clear eyed about the tradeoff you’re making – and then don’t cry unfair when a company you depend on changes its priorities for other reasons. Google’s only responsibility is to its shareholders.

And then it goes to ad rights. There’s a good case to be made – Troy has made this previously – that by giving away your ad rights you give away your sovereignty. This was my reaction when I saw the muted news that Google would shut down its Privacy Sandbox initiative that was a shit show from start to finish in a fruitless exercise to replace the third-party cookie. The saga went on so long that I lost track of what the purpose of it all was. It crystallized how impossible of a position it is to have limited control over both your distribution and your monetization.

The closest there is to true autonomy in media these days is in the creator economy. The most sovereign have subscriptions-heavy businesses. Ben Thompson might be the Platonic ideal of a sovereign publisher. I often have talks with successful solo media entrepreneurs who feel at a crossroads. They’ve “made it,” only they then face the prospect of making sovereignty tradeoffs that are unpalatable. I’ve had multiple conversations about taking equity investment with these operators. My reaction these days starts with: Why? The entire promise of the internet was a higher level of sovereignty. That was what made the blog era exciting.. And then it became financialized and Mashable and Refinery29 were reporting from war zones. My advice to those with breakout creator economy hits: Do not repeat these mistakes. Keep your sovereignty.

The question for institutional publishers is how much sovereignty can they claim back. I heard a compelling case this week about how agentic AI would iron out all the misaligned incentives of ad tech that has made it a game of seeking credit for a transaction. In theory, agents would route around the extractive middlemen who keep claiming to be adding value to transactions while publishers got a fraction of the dollar. The financialization of advertising has mostly benefited intermediaries and those controlling the interface level who see enough people to claim plausibly they caused some purchase they most likely had nothing to do with. There’s an interesting thought experiment where AI destroys the global economy by simply exposing just how much of advertising is a complete waste. Those ad dollars are what’s funding a lot of this compute. Microsoft doesn’t have much of an ad business, so it would be happy to play the role of chaos agent

I had a conversation with Josh Marshall earlier this week on Talking Points Memo’s 25th anniversary. I am genuinely impressed that he’s outlasted so many from that era. Josh is an incisive political commentator and prolific blogger. I appreciate people who make stuff, even if it’s words on a screen, as opposed to those involved in financialization and optimization. Much of ad tech is pure financialization. And Josh is someone who digs into complex systems who has the rare gift of being a lucid writer and therefore a clear thinker. The more he dug into ad tech, he concluded that it simply couldn’t work as the basis of the business. In 2013, even as its ad business grew, he concluded that in the long term the formula of traffic from platforms outside of publisher control combined with ad rights given over to others is a losing proposition.

“When it boiled down to everything going through Google, the effective prices were going to go down,” he said. “This is basic monopolies.”

TPM made the painful shift to focus the business around memberships. That wouldn’t be possible with ads as the central focus of the business.

“You are a small boat on a big ocean,” Josh told me. “You can’t buck the trends; you have to navigate them.”

Without that choice, he’s unsure if TPM would be celebrating its anniversary. I don’t think subscriptions are everything for a publishing business – they’re a small part of my business although I’d like to change that – but audience revenue is critical not just for sustainability but for sovereignty. If you are any kind of ad business, you are giving away sovereignty.

That’s the thesis behind the Audience Revenue Lab we’re starting with House of Kaizen. I often talk to publishers about their businesses and how to operate the legacy model while building the new model. I often feel they need to move faster, unsurprisingly. Just like tech debt, many publishers have organization debt. The Audience Revenue Strategies Lab is designed to work with publishers to operationalize the perspectives I share an have collected in my own analysis and experience in this industry. With House of Kaizen, I have a partner who is aligned on the simple but important thesis that these businesses simply must be squarely focused on audience needs that also brings the rigor of believing in testing hypotheses rather than pattern matching.