Why building a business that’s dependent on Facebook is ‘crazy’ | Social

Digiday editor in chief Brian Morrissey says publishers were naïve if they didn’t think would eventually put its own interests above theirs.

On the latest episode of Recode Media with Peter Kafka, Digiday president and editor in chief Brian Morrissey talks about how the digital media and marketing is pivoting toward live events and away from Facebook growth-hacking. Morrissey says he’s happy to see the end of “flimsy, overly engineered media brands,” many of which were overly on other platforms to make money.

Last week, Facebook exec Campbell Brown allegedly told a group of Australian publishers that CEO Mark Zuckerberg “doesn’t care about publishers.” Asked about those quotes, Morrissey said that even though Brown denies making them — well, yeah.

“The fact is, a lot of publishers made poor strategic decisions,” he said. “You can’t rely on someone else to solve your problems. You have to solve your problems on your own.”

“I don’t think many people are going to build publishing strategies and their models around Facebook anymore,” Morrissey added. “I don’t think that’s a bad thing. I think that publishers should build their own strategies and as much as possible control what can you control. Facebook will do what’s in Facebook’s interest. The idea of being dependent on Facebook or being dependent on any other platform is .”

You can listen to Recode Media on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts. Below, we’ve shared a lightly edited full transcript of Kafka’s conversation with Morrissey.


Peter Kafka: Brian Morrissey is editor in chief of Digiday. Is there a grander title?

Brian Morrissey: President and editor in chief.

President and editor in chief.

I usually just go with editor in chief, though.

Do you call it Digiday Media or something like that?

It’s Digiday Media, technically.

All right, we got all of that out of the way. I think the crossover between listeners of this podcast and consumers of Digiday and listeners of the Digiday Podcast, probably 100 percent.

Does that make us rivals?

No! We’re co-something, something.

Exactly. It’s like a collaboration.

Yeah, I think it’d be weird if you were listening to this podcast and not consuming Digiday in some part, because you guys do a kickass job covering the ins and outs, and minutiae, and big picture of digital media. Right?

Yes, that’s our mission.

Stuff we talk about here, plus occasionally have a movie director in, which you don’t do. You’re a little more-

I don’t do it. I keep in my lane.

You’re narrowly focused. But thanks, I am a big admirer of you and your work. I admire the fact that when I emailed you earlier this summer and said, “Hey, you want to come on?”, you said, “Love to, but I’m in Serbia,” which is the only time anyone has-

As I’m wont to do.

No one has ever used that excuse to get out of a podcast before. What were you doing in Serbia?

My wife is Serbian, so I go to Serbia every now and again.

Because she visits there with you. She doesn’t live there.

She does not live there, no, but her parents live there.

I mean, however you make your relationship work is fine with me.

Yeah, exactly.

You’re in New York . I think you’re in DUMBO, right, from your tweets?

I am in DUMBO, yeah.

You’re someone I feel like I know really well, even though I’ve only talked to you a handful of times, and it’s almost entirely through social media, almost entirely through your Twitter feed.

That’s true. Yeah, I’m in DUMBO. I run into a lot of people from the media industry there.

Brooklyn, DUMBO.

Yeah.

That’s what happens. You live in DUBMO. You are a serious runner. What else do I think I know about you based on your tweets?

That’s mostly it.

Do you do the crazy ultra-marathon?

I have. I haven’t in a couple of years.

That’s when you run 100 miles.

Yeah, I got up to almost 60.

Jesus. What happens when you get to 60 miles?

Well, for me, I stop.

But do you reach a euphoric state at some point in the ultra-marathoning?

I don’t know if we reach-

Because my understanding of marathoning is, when you’re done running 26.2 miles, you’re tired.

Yeah. That’s true.

And they wrap you in the silver blanket and you go, “Whoo, that was a lot.”

Right.

Even the guys who are really good at it, they’re done.

But if you pace yourself, you can go longer than 26. I think that’s a great segue into media.

Do you do this to prove a point? I remember seeing an interview with Dick Costolo. Oh, you know what it was, it was his 50th birthday. Kara Swisher was interviewing him and saying, “Why are you so intent on this fitness regimen you’re doing?” I’m sure there’s a real answer involving psychology and Freud. But he said, “Well, I work with a lot of younger people, and I want to sort of keep up with them. The average Twitter employee age is 26.” Is this the impulse behind your crazy running regime?

Yeah, I have a lot of younger people who I work with. No, I think I always … I got into running basically just that, as a hobby, and you keep running, and you think well, maybe I can try this. Then at some point you just want to go farther and so you do, and it’s possible to do. It takes a lot of just preparation, and then as long as you do the numbers, it works out.

You strike me as full, full, full-on crazy. Is there a professional benefit to this?

None.

Is there a running group of dudes?

There’s a lot of-

Is there the equivalent of the golf course?

I don’t like to run with other people, so I try not to do the sort of-

You can’t do source meetings-

… networking.

… at mile 13.

I think the venture capitalists all like to cycle. They’re into the expensive gear.

You can get multiple bikes. Here, really, you buy one pair of shoes and you’re done, right?

Yeah, you get some shoes, and that’s all you need.

Unless there’s some special Vaseline for your sweaty parts, right?

Vaseline, Aquaphor. Yeah, it’s basically that, and a headband. That’s all you need.

All right. We’ve been running with Brian Morrissey, and that’s the end of the podcast. Thank you, Brian.

No problem.

Your day-to-day job when not running is … I think of you as an editorial guy, but also business guy. Am I summing up those things?

I mean, not business, just because, obviously, I can’t go out and sell ads or anything like that.

Why not?

Because there’s still a division between content and sales, but-

So you think of you primarily as the guy who puts the stuff on the page, or whatever the metaphor is for the page.

No, I think we all know that everyone who is involved in editorial, when you get towards being editor-in-chief or something like this, half your job ends up being business-related.

Yeah.

I mean, this idea that there is this strict division between what the top editor at any media organization does and the business side is just … Maybe that existed in the past. It doesn’t exist now, because-

I don’t think it ever existed, but you’ll see even Dean Baquet, like “Now I pay attention to the business side!”

No.

”That’s been a big shift for me.”

That always seemed silly, because these are … a sustainable media business, no matter the size, is really difficult. It’s always been difficult, but it’s never been more difficult. And so you have to make products that are going to make money. Otherwise, you’re going to go out of business. I mean, this is still a business.

Okay. We’ll go down this path for a minute or two: I’ll go on a sales call. I won’t literally sell the ad.

Really? I don’t.

Yeah. I mean, if someone says, “We’re talking to so-and-so, they’re interested in participating in the conference you’re doing, they want to meet you.” And so I’ll say, “Sure. I’ll go talk to them, and I have questions for them, and I won’t extol the virtues of being part of the conference, but I’ll be there with an ad sales person.” I’m comfortable with that. I figure this is a meeting I would take under my own auspices. I’m okay with that.

I read ads from Mack Weldon, make fine socks, 20% off with a promo code for Recode.

You’re wearing them.

I’m wearing them right now. I’m comfortable with it, and I sort of have drawn my own lines in the sand, and I also won’t read ads for other products, and I won’t read ads for any media-related product, and that’s sort of my internal ruler, I guess. How do you set that? Your title is president as well as editor in chief. What part of the business side do you participate in?

Mostly in the product. I mean, really, in making products that are going to fulfill business goals. To me, that’s what my role is, rather than in the day-to-day of the sales. I think in coming up with packages that people are willing to spend money on, and that deliver value to them, and don’t in any way, sort of, hopefully, harm the user experience, or in any way infringe on our credibility, so I think that’s basically-

What about the middle ground where someone either comes to you or you come to them and says, “Hey, so-and-so is interested in sponsoring a package about X.” This is a fairly standard trade publication sort of thing to do, either because a sponsor said, “We were interested in having our name attached to a bunch of stories or videos, or whatever, about X, can you make these things?” Theoretically, they keep arm’s length distance from it. Or you actually say, “We would like to create something, can our ad people go out and find a sponsor for it, we won’t make it if that happens.” That’s a newer version of that. Do you do either of those?

The latter, for sure. I mean, I think that’s a normal-

Built if sold.

Yeah, built if sold, and just making sponsorable products. To me, that’s what it is. And on the event side, obviously, with events it’s a little bit different, but not that much different.

So let’s pull back. You went to Digiday six years-

Seven and a half years ago.

Seven and a half years ago. All right. Almost got the math right. Prior to that, you were at Adweek.

Adweek, yeah.

As a reporter.

Yeah. I was digital editor, but I didn’t edit anyone. I’ve covered the industry for a long time, I guess, and I was at Adweek for about six years, I think it was? And I was looking for something new to do.

Have you done anything that wasn’t covering the business of digital media?

I was a researcher for a speech-writing firm in Washington, DC for two and a half years, directly out of school.

That’s on your LinkedIn. It says “White House” something, but it didn’t mean-

Yeah, yeah, no, no, no.

It didn’t mean you worked at the White House.

No, it didn’t. But weirdly enough, one time, because of that, Omarosa added me on LinkedIn. She thought I, I think, worked at the White House.

Have you tried messaging her?

No. I went back to find it, and I think she … I don’t know, what, do you unfriend someone on LinkedIn, un-connect, disconnect?

I just got a friend request from the woman who sings the song about Havana.

Okay. That’s a little random.

Whatever that song — I think her name is Maria something. And I assumed it was a BS thing, but I looked, and it actually is her account. I don’t know why.

That’s LinkedIn.

No, no, that was Facebook.

Oh, Facebook, sorry. Well, that can be Facebook these days, too.

I’m an influencer. So you went from Adweek to Digiday. As I recall, Digiday was, I’m going to be polite, a second- or third-tier industry trade.

Mm-hmm. Well, it was mostly an events company, right? I mean, Nick Friese is our founder, started Digiday about 10 years ago, no funding, just his own savings, and I think he took an early withdrawal on a 401(k), not to be recommended.

But he started it with events, because as you know, to build media from scratch is really hard, because you need an audience before you can get advertising. Events are difficult, but it’s easier on the business side. He filled a room with about 50 publishers, I think it was, who were trying to figure out how to make money.

See, I find a lot of people who look at events and go, “That looks great,” but then they take a look at it and go, “Oh, this is way harder than digital publishing. Digital publishing, I put something on the web, or wherever the canvas is, and I made it once, and then I can resell it as many times as I want, and sell ads against it, and my costs are super fixed, and I can’t get into too much trouble,” whereas at the very basics, right, renting a room-

Yeah, yeah, no. It involves-

… and getting an AV guy in, right? You’re already in the hole a bunch, and maybe no one shows up, it’s a disaster.

I think a lot of media companies are finding that now as they’ve sort of pivoted to events, since advertising has become less attractive as the main part of your revenue model. And actually, I joined … And Nick and I talked about, he always wanted to build it into a media brand, but events were the basis of it. And I thought it was really attractive, actually, to use the events as the basis of a media company. Usually it’s the opposite way around. And actually, that was because of AllThingsD, because-

Oh, no, what did we do?

Well, no, because I think what you guys were doing within News Corp at the time was really interesting, in that the events were a platform that was being used to power the brand, and so it not only is a really good economic model, but I think it provides a lot of advantages when it comes to building a kind of a community, if you will.

So he was running … Again, my recollection of the Digiday events is they were really focused.

Yeah, super focused.

So you weren’t getting the CEO of Company X. Sometimes you would, but very often it was the CRO or someone down the chain.

Yeah. Now, it was always very … Yeah, because the media industry … The media industry is very strange in a lot of different ways, but one of the ways is that sometimes the people at the top are not as powerful as the people like three rungs down, because the people three rungs down are making spending decisions.

Nick was always really smart about getting … because his background is from the business side, is getting really close to the transaction level, and so the transaction level, when it comes to agencies and stuff like this, is the media supervisor and stuff like this. It’s not the-

This is the famous slash infamous 26-year-old media buyer.

Well, it’s-

But above, that person’s boss.

Yeah. Yeah, that person’s boss. And not necessarily the sort of Chief Digital Officer or some figurehead who goes around from place to place.

So you have fairly small rooms, very tightly-focused audience, and then you charge not a ton of money to attend these things, either. It was a different model than-

It was a different model.

… the AllThingsD model or at the time there were sort of versions of … Mashable would sell you a $1,000 ticket to hear from thinkfluencers, and I think most people who went there probably were unemployed.

Yeah. Could be. There’s a lot of that going on with events. It’s funny, because we started doing these events … I think we were talking about … We were doing them in New York and a couple in L.A., and basically what we found was they were great for generating a fair amount of revenue, but your costs got out of control, because things are so expensive in New York and in L.A. Hotels and events spaces are really expensive.

I remember one time we did an event with box lunches and we were paying $40 per box lunch, and I was saying to Nick, “Forget about this, let’s go into sandwiches,” I mean, let’s skip the media part. But then we started doing a different model, which is more akin to AllThingsD or Recode, with more summits and … we call them “summits,” but just things that are … It’s hard to get people focused on anything nowadays, and so our model has always been to get people away so we can control the audience and stuff like this, have them in nice places.

Yeah, that part we tried to do most often, because often people will say, “Well, why don’t you have it somewhere more convenient?” and we say “No, that’s the whole problem.”

Yeah, they leave for a meeting, because there’s always someone … And you have that abandoned name tag problem. If you go to events in cities, you see it, there’s just all these empty name tags of people who have found something better to do.

It’s very sad.

It is sad. It’s a sad thing.

And there is a part of the business market that says, “Well, if they paid you $1,000 or $2,000, and they leave, who cares?”

That’s true. It really depends on-

That’s a terrible idea, but you hear that. You hear that.

But it’s a little bit transactional.

Yeah.

I mean, it sounds kind of cheesy, but I really do think events as a basis to build media is important because of the community aspect. Some people look at businesses that have events as an important part of their model and they say, “Oh, it’s not scalable.” It’s like well, yeah, it’s not an iPhone. But you can build very nice businesses in which events are a big part of it, and I think one of the ancillary benefits is this community.

Look, we’re coming out of this period where there have been a lot of flimsy, overly engineered media brands, that I call them. And by overly engineered, I mean either financially engineered using venture capital — “I’m going to take $80 million in venture capital and build a $60 million in revenue business that loses money.” That’s one way to do things. Or, they’re overly engineered in using a lot of growth-hacking tactics on Facebook in order to get audiences. They’re overly engineered with their ad models.

But with an events model, you have more direct connections to your audience, and I think-

You know who that person is. They know who you are. They’ve shown up. They’ve made a commitment of both their money and their time.

Yeah. You’ve actually met them. I mean, again, people say, “Well, that’s not scalable.” Well, that depends on what your area is. I mean, Digiday, as you said, we’re very focused on how the media and marketing industries are being changed by technology. It’s basic.

I apologize to anyone who’s bored, but this is my education about how the … another version of the events business, but I remember you guys did a ton of events, so many that I literally couldn’t understand how you were mounting them. It seemed like you were literally doing multiple events a week. You’ve stopped that pace, right?

Yes, we have.

Okay.

Although I think we’re going to do something like 50 events, I think, in the next year.

So you’re still doing one a week.

At some level, probably.

And even if you’re just like … have-

We have one on Thursday.

… Ballroom C in the whatever Hilton, that still takes people to market it, and put it on, and show it up, and break it down. It’s just a lot of labor.

Well, that’s true, but the advantage is, if you have an infrastructure … At some point, if you have an infrastructure built to do 30 events, you have an infrastructure built to do 50 events. You already have the infrastructure in place, and I always used to joke, and I still joke, that our competitive advantage when it comes to events, when everyone sort of rushes into events, is that we’ve committed every atrocity possible when it comes to an event.

You’ve stepped on all landmines.

Yes. The problem with a lot of people who move into events is if they do two a year, is they don’t have enough time to fix screw-ups. So I think that’s a big advantage, having done so many of them, and now we have a team that handles pretty much all of it.

Shout-out to the teams.

Yeah.

I want to ask you about the content part of what you actually do. I thought that Digiday was publishing before you got there, but there really wasn’t a Dig —

Yeah.

There was something.

Yeah, yeah. But I’m just saying, the model was mostly around the events.

You show up and say, “I would like to spin this up into a full-fledged news operation. We’re gonna do feature stories, we’re gonna break news. We are gonna be an incredible source of industry information that is both useful to insiders and also people who don’t pay attention to stuff day to day,” which is where you’re at now. That’s seven years later.

Yeah. Hopefully.

How long … I say, obviously, it took you seven years to get there, but how long did it take you to break to the point where you’re doing what you want to be doing?

I would say it took a year or so.

That’s all?

I mean, I think so. It’s hard to go back. The basic idea in getting started, ‘cause I know there’s a lot of people — media’s an over covered area, let’s face it.

Yes.

I don’t know if you noticed this.

Yes. Shh.

The part that I thought was an opportunity, and Nick and I did, and then Mike Shields, when he joined us, was that a lot of trade publications existed in this model in which they were, one, boring, and two, they were cheerleaders. That’s why you get the 40 under 40 lists, because they’re trying to sell congratulatory ads for … This is a well-known trade model. You do some lists and then you go to that person’s company or their clients, and the congrats ad is in the magazine.

”Congratulations, you can pay us money.”

Yeah. I saw that and I was like, “That has very little economic value.” I think that model existed because the industries were fairly static. What’s going on with media and how much it has changed is the role of a “trade publication” is totally different. I don’t think anyone makes a separation of the type of content like, “Oh, I read this content for my work purpose,” or this because I’m really interested in this hobby, or running, or something like this. It’s all kinda of similar. The role changes in a very fluid environment to be more honest about what’s going on, and particularly the challenges that have been going on with media. Now, there’s a lot more focus on it. I know seven years ago people didn’t like to talk about all the problems that existed. They were saying, “Oh, well you’re not being supportive,” and stuff like this.

So you got that feedback right away ‘cause right away you published … You have a great series, The Confessions. You talk anonymously to a publisher, an ad buyer, whoever, and they give you the straight shit. That seemed to be a trademark of something you guys were doing right away.

Yeah, I mean it’s …

You were getting push-back against that?

Of course. Because people didn’t want … There’s a lot of people who have interests in problems being glossed over in the media industry. I think it’s in many industries. There’s an opportunity, I think, to just be a little bit more honest about some of the challenges because we have it in our mission that we want to create change in media and marketing, and to make it a much more healthy and sustainable system. A lot of the things that we were all told when the internet and publishing combined, have really not turned out.

Like?

We were supposed to get all this great content. It was gonna be free. It was gonna supported by advertising. There was gonna be a long tail that enabled every single, thousands of voices to bloom. Advertising was going to be relevant and it was going to be … We would not see dog food ads when we own a cat.

I am not a cheerleader in any way. I think much more of that is actually happening than we thought. We’re in it so much that we’re disappointed with it, and then also lots of the really obvious negative — I don’t know if “side effects” is the right word — results of that have show up, and there’s lots of publications that have not succeeded. The long-haired Persian cat magazine dot com does not exist, or maybe it’s just a Blogspot. It’s barely maintained.

If you could go back and compare this to the landscape in 1992, we’re probably way better off. With the glaring exception of local news, which it’s just a total failure and we’re all gonna die because no one was watching TV locally.

That’s a pretty glaring failure, isn’t it?

Yeah it is. It is. That part sucks.

Yeah.

The part where we’re all gonna die. But yeah, I stipulate that things have no panned out in some ways. But you are producing a publication that I read for free. I don’t subscribe.

We have to change that.

Yeah, there’s a Digiday Plus-

Yeah.

-version, and that gives me what?

We have exclusive research, we have exclusive content. Each day, there is at least one story that is exclusive to Digiday Plus subscribers.

How many folks are reading you for free, on a daily, weekly, monthly, yearly basis?

For Digiday, like a million in a month.

Million. Then how many people are paying you?

Thousands.

Are the thousands … Do the million free readers, are they generating revenue for you, or is it almost entirely through the subscription business?

Yeah. We make money a whole bunch of different ways. That’s the thing with media, is we cover it but we also live it. We don’t have venture capital backers, so we fund ourselves through profits and we have to …

Through running a business.

Yeah, business. It’s the old-fashioned way. We got to support 80 people doing that, so it’s non-trivial, I would say.

80 people, no VC, no outside funding?

Nope. Nope.

You’re now an owner/funder? No, it’s still Nick’s business.

It’s Nick’s business.

There must have been a desire to take on some money, especially a few years when everyone was throwing money at media companies.

No. Not really. Mostly just because … We have a small outside investor, who owns a small percentage of the company that just … When we were building out the publishing arm, we needed some money to hire some people. Being independent has been beneficial because there was a lot of things that, it helps keep you focused on the stuff that really makes a difference to the business versus chasing the latest trends, and pivoting to video, or pivoting to anything that wasn’t going to make sense for our audience and for our business. That’s been beneficial.

It feels to me like … Again, I’m not paying you, but I am a pretty close reader. It seems like sometime, maybe three years ago, two years ago, you guys really took a big leap in terms of the kind of stuff you were publishing. The cadence was getting better, smarter. You’re breaking more stories. Did something happen there?

I don’t think so. Look, you end up … Building these things is really hard. There’s also a lag where people notice things almost like a year or so after, really, they’ve happened in some ways. That’s how brands get built in some ways, because are like, “Wow, you guys all of a sudden are doing amazing stuff.” I’m like, “Really? I thought we were doing better like a …”

Yeah. Internally, you can’t … It’s the flip side, you can’t actually see it when you’re … internally.

Right.

Right, you don’t actually see what’s happening. You think you see what’s happening.

Yeah, but it’s just a matter of getting the best … Again, it’s like clichéd, but they’re clichés because they’re true. You get a good group of people and then they’ve been working together for a longer period of time, and everyone’s on the same page, and so, it helps.

You’re talking about focus. The last time I wrote about you, it was, a couple years ago, when you guys were announcing, I think it’s called Glossy.

Yes.

Was it a print magazine?

No, no, no. Glossy is …

You have a print magazine. Glossy was a … You tell me.

Yeah, this is a new brand. That’s why it’s digital media.

Obviously the story’s stuck in my head.

Yeah. Basically, what we saw was we were doing this for media and marketing going through all these changes, and that there are other industries that have similar dynamics. For us, the best industries to focus on are those that are culturally relevant in some ways. Fashion and beauty was actually an industry that was really attractive to us.

How’s that going?

It’s going well. We started with fashion, and now we’ve added on beauty and wellness. I know you’re into wellness.

’Cause those are tough … It seems like those are difficult businesses for people to get their head around turning in … Making a business out of covering the business of things is harder than it looks. Our colleagues who were at Racked have gone back and forth about how to handle that. I think business of fashion is doing pretty well. Subscription only.

Yeah.

It’s working for you guys?

Yeah. It’s definitely working.

When you say there’s a reason to do things that are “culturally relevant …?”

’Cause look at why do people other than journalists loving journalism. Media is over-covered in some ways. It’s because it’s a sexy industry. It has …

Right, so there’s the people who are in the business who care about it, people who might want to invest in that, and there’s … What about the people who don’t read about it day to day, but might be interested in some article you wrote ‘cause it’s on TV?

Look, our core is always gonna be people who read us because that’s their job.

Even though writing about on the business of microchips or plastics might be just as relevant.

Petrochemicals is a gigantic industry.

Gigantic business. It’s never gonna have an audience of more than a few thousand people.

I’m sure it’s going through wrenching change right now. I just think that culturally relevant industries end up being a better fit.

Was there an extension that you guys have tried that hasn’t worked?

We tried finance. It might have been at the same time. We did it through a partnership and it didn’t work. There’s a whole bunch of different reasons why it didn’t work, like internally, we had a really good team on it, and we built a really good team. The partnership aspect was difficult. When you’re a small company, you start to realize that partnerships, you tend to do better when you control as much as you can. But also finance was too far outside of our core, probably, in some ways. Whereas fashion and beauty really overlap well, particularly with the marketing side of our coverage. It’s mostly brand marketing.

That to me was a good lesson for how we expand into new areas, ‘cause we want to keep building different brands.

Is there component to the fact that you are self-funded, that the money you make is the money you make, that there’s no outside cash coming in to float you. How does that figure into the risk calculation you make when you say, “We want to try a new thing. It’s gonna involve hiring X number of people committing these resources. It could go to zero.”

I talked about a lot of the benefits of being an independent company. One of the challenges ends up being that you don’t make gigantic bets because you can’t too far ahead of yourself on revenue. A lot of times that’s good. We didn’t spin up a giant Facebook Live team or anything like that. But one of the challenges is, you’ve got to make fairly measured bets. Glossy, I think, now we have like five people on it.

Sometimes you have gigantic opportunities, or ones that you see, but that you can’t put a ton of resources against.

And you live with that. You say, “This is the downside of being a modestly profitable operation.”

Modestly? No, I’m just kidding.

A profitable operation where “We’re not swimming in cash, and we can’t afford to hire 20 people on a guess.”

Yeah. It implies … It enforces discipline. But obviously, the obvious pairing to that is sometimes you can’t make as big of bets on things as you want. There’s tons of industries we would like to expand into, but we have to be pretty cautious about it. Same thing with geographies. We’ve been in the UK and Europe now for about four or five years. We’ve got a team over in the UK, although they’re visiting us this week. We’re in Japan and a little bit of Australia, but there’s tons of different geographies we want to go to.

We talk about that with events all the time and the risk/reward of doing something in China, or Europe, or Israel. Tons of opportunity there, but a ton of distraction, and a ton of resources.

Right. You have no idea about … That’s why … We have a Japanese site, and we have great partners in Japan that take on most of that, where we would have no idea. It’s finding those partners. But then you don’t have … If you’re a small company, you don’t have an entire team handling that. It’s you just do it yourself. Everyone does a bunch of different jobs.

We’ve been talking around Facebook a lot. Let’s talk about Facebook and how you view them. Generally when it come … My cynical sense of just how corporations in the world works is, when you have a company that’s been beat up for a year like Facebook has, it’s going to inevitably swing back. In a couple years we’ll go, “Well, that was weird when we all overreacted to the election stuff, and fake news stuff, and Mark Zuckerberg being okay with holocaust denial.” But maybe that’s not the case! Maybe there’s been a tipping point. Where do you come down?

I think it’s hard to talk about Facebook as one entity, particularly when it comes to media. I fall into the trap all the time, myself, and I try to make sure that we don’t. But because there’s so many different … Facebook is so big and there’s so many different constituencies, and I’m sure that there are some constituencies that are really into mending its relationships with publishers. But at the end of the day, Facebook is, probably rightly, all about Facebook’s interests, and those interests sometimes align with publishers, and often times they don’t.

Let’s break it down. There is the Facebook publisher story which people like myself have over-covered, for years ‘cause …

Why do you think it’s over-covered?

Because I think there is a handful of publishers that care a lot about it, and some of their readers are cognizant of it. It’s an important story, but I think we probably over … ‘Cause we’re writing about ourselves. Same reason the media broadly is over-covered. There’s that story, there’s the Facebook and advertising story, which is a much bigger story. Then there’s the story — which I feel very bad about really, just ignoring for almost the entirety of Facebook’s existence — is Facebook and the world. The actual impact that Facebook has on people, not industries.

I guess we could make more categories. Let’s start with one. The Facebook publisher story, there’s a great story out today about something Campbell Brown —

She’s denying it.

She’s deny … You can go back and look this up at the time, but there’s some particularly ripe comments associated with Campbell Brown who’s supposedly the peacemaker on behalf of Facebook. This is, the specifics of the language I haven’t heard before, but the tone and gist and directional is exactly what she’s been saying for a while. Which is, which is …

To be fair, I don’t it’s a bad message for a publisher. Publishers …

Right. Just to fill in the gaps in case you’re not gonna be doing your own Googling, she has said in the past and supposedly said at this meeting, “You guys are kind of on your own, publishers. We’re gonna … “

”Stop blaming us for all of your problems.”

”… Stop blaming us. We’re gonna help you in varying ways, but we’re not gonna solve your problems.”

No, and nor should they. The fact is, a lot of publishers made poor strategic decisions.

With the encouragement of Facebook, is part of the problem.

Sure. Yeah, that’s fine. But everyone runs a business. You can’t rely on someone else to solve your problems. You have to solve your problems on your own.

Many publishers were all too happy to take Facebook’s traffic, to build their strategies around Facebook’s strategies, and then they were shocked — shocked! — when they found out that Facebook did things in their interests that were not necessarily in the publishers’ interests.

To be fair though, Craigslist, which had a huge role in decimating the newspaper business, never got this kind of enmity, in part because Craig Newmark never walked around saying, “I’d like to hear more about your concerns and maybe there’s a way we can work with you” and “I’ve got a new pilot program,” or, “Here’s some funding if you all create” whatever the equivalent of live video for Craigslist would be. He never did any of that. He just went ahead, and sucked up all their money, and shrugged. Now he’s getting a couple bucks back. Facebook did this thing where they periodically went out at conferences or wherever and said, “We’d like to hear more about your concerns.”

No, without a doubt. That’s the thing is, Facebook is so big that they have a lot of people who would go out. I remember a publisher saying, “They hire nice people to say nice things to us, and the next day, they take decisions that are completely contrary to our business interests.” That’s just because Facebook is gigantic. It’s a whole bunch of different factions.

Grin-fucking, I think is the term we use in public.

Maybe now, I think Campbell Brown’s job as far as I understand it is to make nice with publishers, but she’s doing it with tough talk. That’s why it sounded credible, as far as, I don’t know whether she said it to those Australian publishers or not.

You think that ship has sailed, like a sloppy metaphor. Facebook is now going on its own direction. No one’s under any illusions about that on the publishing side. It is what it is.

I don’t think many people are going to build publishing strategies and their models around Facebook anymore. I don’t think that’s a bad thing. I think that publishers should build their own strategies and as much as possible control what can you control. Facebook will do what’s in Facebook’s interest. The idea of being dependent on Facebook or being dependent on any other platform is crazy.

What about on the ad side? It’s only a couple quarters in. The ad guys don’t move that quickly, but there doesn’t seem to be any evidence that any of the negative news around Facebook over the last year has affected advertisers’ interest and willingness to use that platform.

Advertisers are really just looking at results, and until Facebook becomes less effective to whatever results those advertisers are after, I don’t think that will change.

When we see the last quarter, you saw growth actually slowing in North America, which obviously …

Which is curious.

But obviously it’s going to, right?

Yeah.

There’s only so many people in North America. Pretty much all of them have been exposed to Facebook at some point.

That’s true, but Google and Facebook can both, to some degree, engineer results. Google famously never gave guidance, but they always changed things in order to hit numbers because they would just put more ads on a search results page.

This is a user number, but the point is …

Yes, user number, of course.

If you’re trying to gauge the health of Facebook’s business, I read a lot of hot takes over the last couple weeks saying, “This is the, Russia or whatever has finally caught up to them.”

This is going to be like predicting the “year of mobile.” Eventually, people are going to be right.

I don’t even think that’s true. I guess if, en masse, people really stopped using Facebook, and it’s easy to find the trend … I think Kara Swisher right now is working on a trend story where she’s going to quit Facebook. Eventually, Robert Scoble, I’m sure, will as well.

I don’t use Facebook.

I use it, it’s where my kids’ pictures to go. Now they show me pictures of my kids that I posted eight years ago. It’s this amazing feedback loop. There’s no reason to think that its power as an advertising platform has or will diminish.

Not right now. It doesn’t show up in results. Mostly because it’s the best alternative out there. It’s like Google and Facebook are getting all of this ad money because they’re doing a better job for their advertisers.

And then Facebook is a global entity. It’s a thing that has more power than some governments, but isn’t really regulated in any sort of meaningful way. Do you think that continues on, or do you think they actually are going to be reined in? I know there’s the GDPR in Europe, but that doesn’t seem like that really fundamentally changes the way they do business.

No, I don’t think GDPR is going to be the thing that changes the power equation, but I do think that governments, particularly in Europe, have a lot of interest in rebalancing the power when it comes to Google and Facebook. They’re not scared —

Do they have the ability to actually do that? I know they can effectively tax them a lot, but they make a lot. It’s a $5 billion Google tax.

Yeah. That’s like nothing.

The settlement? It’s almost literally nothing for them.

That’s one of many. I wouldn’t discount the severity of, or at least the intensity of Europe’s distrust of Google and Facebook because, look, there’s a lot of people in Silicon Valley who will say, “This is because Europe lost. They lost. There’s been no giant digital technologies that have come out of Europe. They’ve all come out of Silicon Valley, and so Europe is going to do what Europe always does, which is regulate and tax.” That’s one.

But there’s also the belief that the power of the platforms, particularly in Europe, is such that the governments will step in. When it comes to privacy …

And can step in, in a way that meaningfully affects the way they do business and/or their business trajectory in the way that the U.S. Department of Justice did with Microsoft 15 years ago.

Yeah. It’s very similar to that.

Do you think we can and will see a replay of that?

I don’t know if we will actually see it because …

We could.

I think it’s definitely a possibility. You can’t go to Europe much and not hear people wanting to have these gigantic platforms that are from the United States be severely regulated, and the Germans will act in that way. They’re serious about this. GDPR was, I think, an interesting wonky …

I jokingly promised a GDPR conversation, and here we are.

It is an interesting wonky thing.

Again, I can’t image that most people who listen to this podcast don’t know what it is, but for those handful that don’t, it is?

The Global Data Protection Regulation.

Went into effect this summer?

Yeah.

And whenever you go on your favorite website or not-favorite website and you’re presented with slew of EULA stuff that you’re suppose to “X” quickly. That’s the effective result for most Americans.

Yes. Bizarrely complicated, very European piece of regulation that is supposed to give people more power over how their data is collected and used.

The idea broadly was, the way that the internet advertising complex has been set up for years is, “We take all your information and do whatever with it. If you really have a problem with it, you can opt out, but good luck trying to find out how to opt out, and good luck trying to find that little icon on that banner ad.”

And anytime anyone asks any questions, everyone will just say, “Well, the direct mail guys are sketchier.”

Right.

Which is true.

The Journal had a long series years ago.

Yeah, no one cared.

They really couldn’t find gross abuses, for the most part. It didn’t seem like human beings actually cared. Seems like that might have shifted, and so GDPR as a result is an attempt to say, “Actually, we’re going to rewrite this. You’re going to have to opt in and say, ‘Yes, take my information.’” It seems practically like we’re still living in that same place though.

It is very early with GDPR to see what the impact is going to be. I think at the very least, it caused a lot of companies to think a lot about how they use data. Companies of all sizes. I’m sure Vox Media had a lot of people working on GDPR. We certainly did, because anytime you collect anyone’s data you have to really think about how you’re using that data, and whether or not you’ve given people an affirmative way to opt out of that, and whether you’re just being upfront with people.

I think the overall impact could be that the use of data will become slightly less wild. We’ve gone to this period where a lot of people are just collecting data just to collect data, and they’re not being upfront with people about how it’s used. This is why the ad tech world has grown so complicated, and so many different players [are] collecting data in so many different ways.

Right. You’ve got Cambridge Analytica, which the most gross abuse of this, I think, to the public, where Facebook was effectively collecting your data and effectively not really asking for permission. We saw it misused. It gets misused in all sorts of milder places.

My totally uneducated hunch is that if you ask people about privacy and internet, they say, “Yeah, I don’t like it when I go to Zappos, and either buy the shoes, or don’t buy the shoes, and the thing floats around after me.” Or, “Privacy’s a big deal. I know Facebook is listening me to talk, and that’s why they show these ads.” It doesn’t go much beyond that. Do you think it’s reasonable to ask a regular consumer to think seriously about privacy and what it means to them?

No, and I think that’s why … Look, I don’t know if GDPR is going to work, but the idea behind it, as I understand it, was that it would make people not have to do all that. You had to either be really into privacy or just not care at all. Those are basically your two options, and occasionally complain about retargeting. I don’t know how we’ll get to the point where people are not taking on a side job in managing internet privacy settings, but at the same time can have a say in how their data is collected and used.

Joanna Stern of the Journal did this great stunt where she printed out all the EULAs from, I don’t know, 20 top sites or 11 top sites and literally stretched them across a football field.

It must be gigantic.

Yeah. It was a great stunt. We have not spent almost any time talking about Google. They’re the other half of the duopoly. It seems to be Facebook’s time in the barrel, as Roger Stone would say. YouTube got beat up last year when people discovered, people’s a good question mark around that, or a good parenthetical around that, there were crummy ads on YouTube sometimes next to clean content. But they don’t seem to be suffering the same problems that Facebook has or did. Any idea why they’re being treated differently either by government or public court of opinion?

I think from publishers’ standpoint, it’s funny because Google has almost a more dominant position because Google controls the technology that most publishers use in order to make money off of their ads.

Right, and enormous power in directing traffic, which they’ve had forever. So long that people have forgotten about it.

Right, but Google has more control over publishers and many companies, and there’s actually probably a better case to regulate Google on the basis of their advertising technology than there is Facebook.

Facebook can control your traffic, but they can’t really control how you monetize it for the most part.

Regular people don’t really dig into the Google ad tech stack, which I don’t blame them. Look, Google has been able to make nice with publishers, which has helped it. Whether that directly translates into coverage of it, that’s up for debate. But look, they just let Facebook take all the punches.

Yeah. It’s weird because they didn’t seem like a particularly savvy political player for a long time.

Yeah, but then Microsoft.

It’s well documented that … Yeah.

Then Microsoft beat up Google a ton. They tried to get Google. They were trying to get them broke up?

Yeah, there was a whole …

I don’t even remember.

There was a series of Microsoft v. Google stories, and there was a well-documented series of trips by people from Google to the Obama White House.

Right. They got savvy about Washington. They had like two people in Washington, and then I assume they just like hired all of the lobbyists and lawyers that Microsoft had hired in order to fight against the breakup, and so they just switched to the other side after that ended.

I fear that we’ve been too gloomy for this conversation. What are you most excited about? Either stuff you cover or stuff that’s coming down the pike in the business?

Look, I’m most excited about coming out of this era of flimsy media models that were too dependent on platforms. I think there’s a lot of people making it work in media. As we said, it’s really hard, but it’s possible. I know we traffic in some of the doom and gloom, and we do love a good autopsy story of a media company that made a lot of bad decisions and went under. But there are a lot of media companies, some smaller, but some larger that are making it work. They’re doing it through having diverse business models and strong brands.

What media company are you most interested in right now who’s not in this room?

Not us? Not you?

Yeah.

I’m interested in all the media companies that are making it work when it comes to direct consumer revenue. Everyone from the Information to the Athletic because I think for too long media has overindexed on advertising, and through indirect revenue sources, I know there’s plenty of arguments for why that’s important to do and accessibility. I think to have like a really healthy media business, it is so much more preferable to have a large group of your user base paying for your products.

Do you think that just gets baked into media from now on, that if you’re running a media business, the consumer’s expected to pay for at least part of the costs?

Yeah.

That’s just the starting point?

I think that’s going to be the starting point for just about all media business.

How much would you pay for this podcast?

We do early access to ours for our members.

I like that one.

I don’t know. Actually, it’s funny because I’ve wanted to do a subscriber-only podcast, but again, this is a technology problem. There’s no easy, unless you have your own app, as far as I know there’s no easy technology that allows you to have a subscriber-only podcast.

That’s like Patreon basically, right? Or versions of that.

Yeah. This is also, there has been so much money that has gone into the advertising technology world, but then we start to build a subscription business, you start to realize how comparatively little money has gone into the basics, the basic technology infrastructure for subscribers.

Billing? Yeah.

All of it. It gets incredibly complicated really quickly.

All right, guys, Brian had just given you a new business model to pursue. Start pouring money into it. There’s a couple. We’ll save that for the second podcast. Thank you, Brian.

Thank you, Peter.

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