Introducing The Mediator

A Little Bit About Why and What to Expect

After posting essays on Medium for the last couple of years, I’ve decided to launch The Mediator on Substack.

In the grand media tradition of windowing, starting December 2023, I will be posting on Medium one week after The Mediator.

Sign up for free to get The Mediator delivered to your inbox “day-and-date”!

Here’s a little bit about why and what to expect.

The Mediator is About…Media

I (mostly) write about the long term structural dynamics in the media industry. I’ve been in and around media almost 30 years, both on the outside (as a Wall Street analyst and advisor) and the inside (I worked at Time Warner for 12 years).

I still find it endlessly interesting, for two reasons: media matters, a lot; and it is changing awfully fast.

Media Matters

Media and entertainment may sometimes seem frivolous, a diversion from the real business of living. It is not.

In the U.S., the average adult spends over 13 hours per day with media of some kind, so our lives are increasingly abstracted and refracted through media. Media establishes and propagates social norms; it is how we find our tribes; it is how we decide what is true and false, righteous and reprehensible; it effects our collective mental health, for good and ill; it shapes our political discourse.

When media changes, it also changes us.

Media is in Constant Flux

Some businesses change faster than others. The media business is more dynamic than most owing to a rare combination of factors.

• Media economics support a large array of business models and those models often change. Media is what is known as an “information good.” Generally speaking, information goods have very high fixed costs to create the first copy and very low variable costs to create each subsequent copy. Since most information goods are now distributed digitally, today those variable cost are effectively zero. One implication is that pricing isn’t constrained by marginal cost. They are also “non-rivalrous,” which means that one person consuming a good does not affect someone else’s ability to consume that good. So, supply is infinite. They also can have a very long shelf life, potentially remaining popular for years, decades or even centuries. And because they are digital, it is possible to create a vast number of versions of the same media product (sell vs. rent; ad-supported vs. ad-lite vs. ad-free; day-and-date vs. windowed; a la carte vs. bundled; high-fidelity vs. low-fidelity, etc.). Combined, all these attributes mean that relative to most other goods and services, there are a lot more ways to price, package, “version” and distribute media.

Relative to most other goods and services, there are a lot more ways to price, package, “version” and distribute media.

• Media is also highly affected by changes in technology. All information goods can be reduced to bits, so they can be encoded on any digital medium, transported over any digital network and accessed on any digital device. New technologies may promise new markets or threaten new disruptions.
• Consumer behavior is tough to predict, inscrutable and fickle. While most goods provide some combination of emotional and functional value, the utility of media goods is almost entirely emotional. With such an abstract benefit, consumer themselves are often hard pressed to explain their choices, their preferences and what they’ll do next.

A Medium-to-Long Term Focus

As mentioned above, I focus on the long-term structural dynamics in the industry. Partially, that’s because if you’re an executive allocating resources, navigating a career in media or an investor with the luxury of patient and stable capital, the long term is what matters. I also think that, in many way, the long term is easier to predict than the short term.

The short term is just so…noisy. In general, the world has become noisier and the media business is arguably disproportionately so. It’s a universal topic that everyone experiences directly, there is no shortage of opinions and the media loves to cover itself.

A core belief underlying my writing is that by focusing on the long-term structural dynamics in the business, we can separate signal from noise and develop a more accurate view of how the world will evolve.

There’s a great quote from Nick Bostrum that I think captures the spirit of this:

“It may be highly unpredictable where a traveler will be one hour after the start of her journey, yet predictable that after five hours she will be at her destination. The very long-term future…may be relatively easy to predict.”

Bostrum is referring here to the future of humanity, but I think the concept also applies to less lofty topics and shorter time spans. I’ll give a couple of examples from my writing.

In October 2020, I published a post called One Clear Casualty of the Streaming Wars: Profit. At the time, there was a lot of excitement in the press and on Wall Street about the media conglomerates launching streaming services (Disney+, HBO Max, Paramount+ and Peacock). The essay made the case that streaming was structurally less profitable than the linear business and the transition would be far more painful than most expected. As shown below, the press caught on a couple of years later.

As another example, about a year ago I wrote The Four Horsemen of the TV Apocalypse, which laid out the four technologies that I believe will lower the barriers to entry for creating high quality video content, especially AI. At the time, neither ChatGPT nor GenAI were household terms and few were talking about the effect of AI on Hollywood. Six months later, the potential impact of AI on TV and film production moved center stage in the labor disputes between the major studios and both the Writer’s Guild of America (WGA) and Screen Actor’s Guild (SAG-AFTRA) and, as a result, in the press.

I miss or misread signal all the time too, of course. In Getting Creators Paid is the Next Big Thing in Media, I made the case that:

“…enabling millions of creators to make a living wage — the democratization of the ‘economy’ part of ‘creator economy’ — is one of the biggest opportunities in media today.”

In reality, owing to the tyranny of power law popularity distributions on the Internet, the evolution of a large creator middle class has proved elusive. It’s been a lot harder to scale most creator economy startups than I expected.

Nevertheless, I stick by the broader point: focusing on the long-term structural dynamics of the business enables us to sort out which changes are noise and which are signal. If we tune in the signal, we can predict at least the rough trajectory of where the industry is headed before everyone else.

The Intersection of Technology, Economics and Consumer Values

So, what are those “structural dynamics?” Silicon Valley preaches a kind of technological determinism, namely that technology dictates how markets evolve. But technology alone isn’t enough.

Changes in consumer media are propelled by the intersection of three things: economics dictates where resources (financial and human capital) are allocated; technology dictates what is possible; and consumer values dictate what consumers want. (By economics, I don’t just mean the neoclassical economics of hypothetical rational actors hypothetically allocating resources. I also mean behavioral economics, which attempts to explain how real people (homo economicus) really make decisions, and complexity economics, which describes how and why markets are disrupted and lurch from one fragile equilibrium to the next.) All are necessary ingredients to lasting change.

The Importance of Data and Frameworks

Where I can, I use data to support my writing.

I also lean heavily on frameworks and, for lack of an alternative, often make up my own (like here, here and here). As George E.P. Box said (whomever that is), “all models are wrong, but some are useful.” I define a useful framework as one that provides:

• A language to describe phenomena;
• The perspective to draw parallels between seemingly disparate observations and recognize patterns over time and across domains;
• The insight to focus on the most important factors;
• And, maybe, the tools to map the probability distribution of possible outcomes.

When I use these frameworks, I try to describe them enough to provide context.

Why “The Mediator”?

There are a few reasons for the name:

• “Mediator” is a mash-up of “media” and “navigator.” My chief motivation for writing is to learn. I’m trying to navigate the key changes in the media business and invite you to come along and help out.
• A mediator is someone who resolves conflicts by finding the common ground between parties. As mentioned above, I try to find the intersection between the arc of technology, the “laws” of economics and consumer values.
• Good mediators are impartial and empathetic. Since I no longer work at a media company, I have no dog in the fight. I also appreciate a range of perspectives. Over my career, I’ve been an analyst, operator and advisor, so I understand both investors’ vantage point and the practical challenges of running big companies day-to-day. I have my biases, like everyone, but I try to be sensitive to both the coldly-rational outside view and the inside realities.
• Mediators are hopeful. Mediators are hopeful by nature, because they believe they can find common ground between parties. The Mediator is also hopeful. The media industry is in the midst of multi-decade, wrenching change. That change can be painful, especially for those on the wrong side of it. But I believe there is a hopeful future on the other side, one that benefits both creators and consumers.

My Goals

Here are my three primary goals in writing The Mediator.

• I don’t want to waste your time. I only write when I think I have something to say. I always start with a question that I think is interesting and for which there either is no consensus view or I think the consensus is wrong. Every post starts with a “tl;dr” (too long; don’t read) near the top that summarizes the main points, so that you can quickly decide if it’s worth reading or not. If you get an email from me and feel an urge to at least skim it to understand the main points, I will have succeeded.
• I hope to be thought provoking. You probably won’t agree with everything I write, but I hope to spell out and support my rationale enough that it at least makes you think.
• I want to spark a conversation. So, don’t be shy!