When Quality Leads to Profitability

In Spielberg’s The Post, bankers sit around a table with owner Katharine Graham in the middle, discussing taking The Washington Post public. They’re debating the price per share, with The Post’s team wanting to push the price up to $27 a share, whereas the bankers wanted it at $24.50. It’s a more than $3 million difference which “is five years’ salary for twenty-five good reporters.”

Despite not saying it aloud then, Graham has written on her notepad that an investment in quality will lead to profitability. By investing in great reporters, Graham, in the movie, believes that profitability will follow.

That scene has stuck with me as I’ve invested in content. And if we look around at the most successful media companies, they all take that attitude to heart. Disney, The New York Times, HBO, The Wall Street Journal, etc., have all done this. By investing in quality content, they have grown their businesses and thrived.

I’ve been thinking about this a lot this week because there has been an explosion of interest in using generative AI like ChatGPT to create content. This is the second time I’ve mentioned it on AMO in as many weeks. And it’s controversial. CNET, obviously, experimented with and then paused publishing articles created by the technology. At an event this week, Neil Vogel, CEO of Dotdash Meredith, said, “we will never have an article written by a machine.”

Some are for. Some are against it. But as I process my thoughts on it, I struggle with where my opinions lie.

On the one hand, so much information could benefit from a straightforward narrative, but hiring someone to write it is not profitable. For years, many finance sites have used automation tools to write short articles about earnings releases. And I think the technology makes a lot of sense for that sort of structured information.

On the other hand, do I want plagiarized information regurgitated to me? More importantly, do I want original thought or not? Remember, this technology is an algorithm that has been trained on an abundance of information. But can it contextualize that information?

As I said, I am unsure where I fall in the debate over generative AI. But Paul Graham, co-founder of Y Combinator, had two fascinating tweets on Thursday:

Idea: Before writing an essay, have ChatGPT write one on the same topic to show you what would be the conventional thing to say, so you can avoid saying that.

The point here is not to be contrarian. I’m not saying that you should write the opposite of what ChatGPT does. Just that anything ChatGPT says about a topic won’t be surprising, and since surprise is the point of an essay, you don’t need to say it.

Surprise is one word. Another would be unique. When The Information launched, founder Jessica Lessin said that the only content you’d see published is information you could get nowhere else. There were many tech sites out there, but they were all publishing the same information everyone else was. Lessin decided to give her readers information they could only get on her publication.

Now readers had a choice. They could wait for another site to aggregate her team’s reporting, or they could pay hundreds of dollars for a subscription for well-sourced, timely tech news. Many opted to pay.

Let’s look at the inverse: St. Cloud Times. According to Axios:

The sole reporter left at the St. Cloud Times is leaving the paper next month, raising questions about how the 93-year-old paper will continue operations with no on-the-ground, full-time editorial staff.

Catch up quick: The paper’s parent company, Gannett, has laid off or bought out almost every journalist at the St. Cloud Times in the last six months. That’s left a metro area of 200,000 without a well-resourced news organization.

This publication will have zero original reporting. Instead, it’ll just republish wire stories from other newspapers in the Gannett network. Gannett might tell you that it couldn’t afford to staff a deep team of reporters. But what came first? The lack of money to staff a team of reporters or a poor editorial vision?

If we use The Information as an example, what would readers of St. Cloud Times want? I suspect that it’s content about the town and region around it. They’d want information they couldn’t get anywhere else that also impacted their lives.

This is also why B2B media has had a bad reputation for years. So many of these publications whittled their newsrooms down to effectively nothing. Was it any wonder that people were unwilling to continue subscribing? People pay for high-quality, original content; they’re uninterested in vapid, press-release regurgitation.

And ultimately, profitability is a lagging indicator of the leading indicator of creating quality content. By deeply appreciating who your audience is and delivering the information they can get nowhere else, you have the foundation for a sustainable business model.

This requires a deeper appreciation for the people responsible for creating the product. Years ago, I wrote that your newsroom is your biggest asset. And in it, I said:

I like to think about it this way… Sales and marketing ensure there’s money to afford paint and canvas; the product and technology team stretches the canvas into the proper size and shape; and then the journalists paint on that canvas. If you want a painting, you don’t get rid of the painter before finding another way to save money.

…

There are fixes to this problem from top to bottom. Media CEOs can start looking at their newsrooms as assets rather than liabilities. We can focus on creating content that people want to pay for. And journalism schools can teach business reporting.

If you want people to pay for your content, or if you simply want the right people to see your ads, you need to give them quality information. Maybe one-day ChatGPT will do that, but as it stands today, operators are looking at it as a way of creating more content for less money. Instead, they should be asking how to create better content. And if they do, profitability will follow.

Thanks for reading today’s AMO. If you have thoughts, hit reply, or join the AMO Slack. I hope you have a wonderful weekend.