Welcome To The Attention Economy

What's Inside?

• Recent Headlines

• Screen Time

• Musk vs. Zuck

• Rise of Independent Creators

Recent Headlines

Twitter clone ‘Threads’ gets 100M users in first week

Twitch’s new rival Kick is off to a hot start

TikTok launches new music streaming service

Spotify looks towards music videos to take on Youtube

The Battle For Screen Time

In this edition, we delve into the evolving media landscape and the battle for user attention. We explore how legacy media companies are no longer competing with just one another but with every internet platform out there.

Spotify dives into video content, Instagram unveils its own Twitter clone called Threads, Twitter is embracing video and long-form text, and TikTok is launching a music streaming service.

The ultimate battleground for all media companies is screen time. With the average person spending approximately 10 hours a day in front of screens (phone, laptop, tablet, TV, etc.) capturing a portion of those precious hours is the new evergreen business opportunity. The unfortunate reality for companies like Disney is that they are no longer just competing against other media conglomerates; but now find themselves pitted against YouTube, TikTok, Spotify, and every content creator across the globe. Former Netflix CEO Reed Hasting even once said, “You get a show or a movie you're really dying to watch, and you end up staying up late at night, so we actually compete with sleep,” which is partially true.

Spotify dives into music videos, Instagram unveils its own Twitter clone, TV shows drop on Twitter, and even Netflix is making video games. This phenomenon highlights the fierce competition for user attention and engagement.

The act of consuming content has not fundamentally changed across generations. Whether it's a 65-year-old Baby Boomer sitting on the couch enjoying America's Funniest Home Videos on ABC or a GenZ user scrolling through curated videos on TikTok, both seek short-form entertainment just through different size screens. The key differentiator lies in the user experience, including ad-load, discovery, interactivity, and the ability to share and engage with the content.

This TikTok video of glass bottles rolling down the stairs got more than 50x the views of Succession’s finale, a show with where the final season had a $90M+ budget. Are social media views really equal to appointment television? Well if you follow the money advertisers place on ad inventory the gap is shrinking rapidly. Traditional TV monetizes at 57 cents per hour viewed as of last year vs 27 cents to 42 cents an hour on streaming, per SVB MoffettNathanson (via Wide Shot).

Now Twitter is fending off competitors Bluesky, Mastodon, Spill, and the newly Threads..

The evolution of streaming services promised unlimited content, but they have hit a wall. Consumers now crave curated services that cater to their specific tastes and interests. The internet, as an interactive medium, differs from traditional theatrical or TV mediums. This fact, often overlooked by industry veterans, is now proven by platforms like YouTube and TikTok. They understand that the true value lies in the experiences they offer around the content rather than the production quality of the content.

““From now on, the [gross margin] of search is going to drop forever,” Nadella said in an interview with the Financial Times.

There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all,” he added, referring to the competition against Google as “asymmetric”. This quote can also be applied to all legacy medias once upon a time cable was a large barrier to entry but now legacy media companies have to defend against streaming services, social media, and content creators all at once. Instead of googling teens use TikTok as their preferred method of searching for recommendations. Google search is now building in permanent columns for Youtube shorts to populate as search results.

The advent of streaming services was a revolution in the media industry, heralding an era of unprecedented access to content. However, the landscape is shifting once again. This shift is not driven by content but by innovative user experiences that facilitate content discovery and sharing. Social media platforms like YouTube and TikTok are leading this charge, stealing market share from streaming services. The internet, as an interactive medium, is not analogous to traditional theatrical or TV mediums. This is a fact that many traditional media companies, including those led by industry veterans like Bob Iger, failed to fully grasp. Platforms like YouTube and TikTok understand that in the streaming era, content has become a commodity. The real value lies in the experiences built around this content. These platforms have innovated by creating monetizable experiences that engage users in ways traditional media simply cannot. Consider the transformation of cable TV into platforms like TikTok, or the evolution of music streaming services like Spotify into video content providers. Even Twitter, a platform traditionally focused on text-based content, is now featuring videos with plans to be integrated into Tesla screens.

Musk vs. Zuckerberg Round 1

Advertising:

The digital privacy landscape and the introduction of Apple's ad privacy measures have had far-reaching implications for social networks' business models. One platform that has felt the impact of these changes is Meta, formerly known as Facebook, which has seen a decline in its advertising business. However, amidst these challenges, Twitter has seized the opportunity to position itself as a favorable alternative for advertisers.

One of the key factors that work in Twitter's favor is its ability to gather valuable data through increased user engagement. Despite facing resistance from advertisers due to viewership limitations and inconsistent value delivery, recent financial support has marked a turning point for Twitter. With additional resources at its disposal, the platform can enhance its advertising capabilities and address advertisers' concerns, thereby fostering a mutually beneficial relationship.

In contrast, Threads, a social networking platform, has carved its own niche by prioritizing meaningful interactions reminiscent of platforms like Tumblr and Facebook. Threads places emphasis on quality and depth of interactions over sheer user quantity. By offering an intimate social networking experience for a specific audience, Threads has positioned itself as a unique player in the social media landscape.

Central to understanding the differences between Twitter and Threads is the concept of economies of density. This concept refers to the advantages that arise from having a large user base within a social network. A higher user density translates into increased data availability, creating a thriving ecosystem for advertisers and generating revenue for the platform. Platforms with a greater density of engaged users can offer enhanced advertising opportunities.

Moreover, the evolving landscape of digital privacy, as exemplified by Apple's ad privacy measures, has significantly impacted social networks' business models. Meta's decline in advertising business due to these privacy initiatives has opened doors for platforms like Twitter to position themselves as more favorable alternatives for advertisers. By ensuring that users spend more time on the platform, Twitter can gather valuable data, which can then be leveraged to attract advertising revenue.

In summary, the concept of economies of density plays a crucial role in driving the success and differentiation of social networks. Twitter, with its newfound financial support, has the potential to overcome viewership challenges and attract advertisers. On the other hand, Threads caters to users seeking more intimate interactions. As social networks continue to evolve, understanding the importance of economies of density will be key for their continued growth and success.

Drawing a parallel to the creation of ESPN by Disney, it is important to note that while Twitter may not completely eliminate competitors such as Mastodon and BlueSky, it poses a considerable threat to their dominance in the social media landscape. As the digital privacy landscape continues to evolve, social networks must adapt and leverage their unique strengths to thrive in an ever-changing industry.

Straddling

in the context of business strategy, refers to a situation where a company attempts to match the benefits of a successful position while maintaining its existing position. It's a kind of "have your cake and eat it too" approach, where a company tries to capitalize on a new trend or innovation without giving up its current strategic position.

This concept can be applied to the recent trend of social media companies copying each other's ideas. For example, LinkedIn and Twitter introducing "stories" - a feature popularized by Snapchat and later adopted by Instagram. In this case, LinkedIn and Twitter are straddling. They are trying to incorporate the successful "stories" feature into their platforms while maintaining their existing position as professional networking and microblogging platforms respectively. Straddling only works if the company can understand why that new features works for their competitor and how they can implement it effectively.

Straddling often leads to trade-offs and opportunity costs. Trade-offs occur when activities are incompatible so that more of one thing necessitates less of another. For instance, focusing on developing and maintaining a new feature like "stories" could divert resources and attention from improving core features or developing new, unique features. This could potentially dilute the brand and confuse users, leading to a decline in user satisfaction and engagement.

In terms of the competitive dimensions of a firm, straddling can blur the lines between what makes a product or service an 'order winner' or an 'order qualifier'. An order winner is a specific marketing-oriented dimension that clearly differentiates a product from competing products, while an order qualifier is a dimension used to screen a product or service as a candidate for purchase. When a company straddles, it risks turning its order winners into mere order qualifiers, thereby eroding its competitive advantage.

In conclusion, while straddling might seem like a good idea in the short term, it can lead to strategic confusion, dilution of the brand, and loss of competitive advantage in the long term. It's crucial for companies to carefully consider the potential trade-offs before deciding to straddle.

📰 August Streaming Guide

Only Murders In The Building (S3) - Hulu/DisneyStar

Winning Time - Max

Foundation- AppleTV+

Hijack - AppleTV+

Lioness - Paramount+