Implosions and explosions: The dawn of the fragmented media era

Media is imploding and exploding - at the same time.

Into millions of fragments.

In the past two decades, the cost of publishing has gone to near-zero - spawning an explosion of millions of grassroots creators. At the same time, traditional media outlets like CNN and The New York Times are imploding - unravelling into an exodus of old-media personalities going direct to consumer. Put these two together and the decade ahead looks to be radically different from the past 1,000 years of media: fragmented.

What does the future of these digital media businesses look like?

In this blog I dive into how we got here, what lies ahead - and how the creators and media companies of tomorrow can preserve the best of fragmentation, without the impediments of sub-scale businesses.

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The building blocks of a media business

Before we begin, here’s a quick primer on media. Through all eras - the business of media has been the same model built on these 4 building blocks: production, distribution, content sales, and advertising. Production and distribution to get your media out there - direct sales and advertising to monetize it.

For example, here’s how 3 typical newspaper, news channel, and consumer streaming businesses work:

Alright, let’s go.

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The oligopolistic history of media

Running a media business has always required assets for production and distribution. In its earliest forms, this quite literally meant owning a printing factory and hiring distributors. Just like today - people had stories and news to tell - but few had the capital to both produce and distribute it. Unfortunately this inequity of information production would persist for centuries.

However, over time technology has been able to innovate out some of the production and distribution costs of media to make it more efficient to distribute content on a per person basis. The most notable technological revolutions included the printing press, radio, and television. Concerningly, looking at each of these 3 eras of innovation - each still ended up captured by big media incumbents. Let’s take a look at US Media in the 80s to early 2010s as an example:

As the visual above suggests, the US is one of the worst examples. Radio control in the US has gone from thousands of independent stations to 9 corporations controlling 65% of US listeners. In television it’s worse. In 1983, 90% of American Media was owned by 50 companies - by 2012 that number shrunk to 6. Despite innovation, the oligopoly remained.

Why?

Despite great innovations to amplify distribution - the production costs per listener were profitable - but only at scale. The fixed costs of production were still insurmountable for upstarts, and more importantly: access to distribution was restricted. Sorry to say, but regardless what stories your father told you about ‘Rebel Radio’ broadcasting from a basement in the 70s - without the proper licensing and distribution agreements - big media ate them for breakfast.

With this combination of cost base and distribution control, being a media business in the 1900s entailed either being a media empire - or being part of one. However, in 1999 someone dropped a bomb at the castle wall.

Web 2.0.

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Explosion - the big bang

If David Attenborough was a media fanatic - he’d commentate this part.

The dawn of the internet and Web 2.0 plummeted the fixed costs of media production - obliterating almost any barriers to publishing in the developed world. This gave birth to new life in media: content creators.

However, the impact of the internet wasn’t instantaneous - creators didn’t storm big media like the Bastille in 1789. Instead, the transition was perhaps best described as a "leak in the big-media dam".

However, within a decade of human creativity with internet access, that leak turned into a full on rapid.

The big bang.

The initial inhabitants of the new internet media landscape were internet bloggers writing posts on their self-hosted websites with the occasional JPEG. However, as new enabling internet services and platforms like Youtube, Instagram, Substack, and Podcasts arrived - grassroots content creation flourished. It’s impact on the average adult’s content consumption was remarkable.

In 2005, as an American you would start your day reading The New York Times for your morning coffee and end it tuning in to NBC Nightly News with Brian Williams after work. Today, that same American may listen to a startup tech podcast on the subway to work, and a Youtube breakdown of the intricacies of the conflict in the Middle East while they cook.

Suddenly, Old Media’s grip on information and public discourse was challenged with diversity of content at unprecedented levels. From 9 television networks - you could now go hyper-focused in any interest you have. This great fragmentation of media happened on 2 dimensions: platform and topic. The video platform that was television split into Youtube, Instagram, TikTok, Twitter, and more. The same goes for written formats - newspapers and magazines fragmented into blogs, newsletters, and written social media. Within these platforms the diversity of topics exploded - exponentially increasing the variety of content available to consumers.

When you map it out it looks like cell reproduction and mutation - and it sort of was.

This fragmentation hasn’t happened just in news. It’s everywhere, and led to some pretty wild niches. Here’s some of my favorite examples:

We went from 50 shades of grey to double rainbow.

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Implosion - the fall of big media

As this access to a broader spectrum of information reached the world in the 2010s - our public and media institutions came under unprecedented scrutiny. Terms like “Bought and paid for” became a death knell for politicians and media houses alike. The people you saw on TV weren’t telling you the news - they were giving you their sponsors’ version of it. Worse yet, even if they were telling the truth, nobody believed they were. Thus began the implosion of American big media.

With this implosion - immensely talented people who have spent their entire lives in journalism, reporting, or broadcasting are facing a choice: stay in the house that’s burning, or get out.

They’re getting out.

Tucker Carlson, Matt Taibi, Don Lemon, and Shannon Sharpe all are examples of old media personalities who fell at odds with the economic capture of their previous institutions and went direct through Newsletters, Podcasts, and Youtube channels. To many people’s surprise - their audiences left Fox, CNN, and the New York Times to go with them. Substack is even founded on this premise.

People follow people.

This exodus of talent from old media into direct media has added further fuel to the explosion and fragmentation of media. The original grassroots creators and the exodus of old media professionals are now converging in what we call the Fragmented Media Era.

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The persistence of scale and network effects

Just like we learned with the dawn of Radio and Television, this platform shift and wave of new creators doesn’t mean that the inherent merits of scale in media have disappeared.

The network effects of being a staple brand and their impact on economics has introduced a new era of digital-native media businesses such as Barstool, MorningBrew, and 1440 to name a few. These initially small single person shops found a core audience that they served better than others, and were rewarded for it. For example, today Barstool is valued at ~$600 million and was acquired by Disney (more to come on this soon), similarly MorningBrew serves 4 million subscribers doing over $50m in annual revenue. They’ve swung into the network effect of brand and now behave on very similar ways to old media - just on different platforms.

So will network effects make the digital-era media converge back to 9 big conglomerates?

Probably not.

Diversity of content mandates a need for authenticity. The problem (or beauty) of passionate audiences is that they’re passionate. If your content and partners aren’t in line with your audience - you get discarded. Penn Entertainment learned this when they were forced to sell Barstool back to Dave Portnoy after Barstool’s content wasn’t suitable for their regulated gambling interests.

Where exactly this media era will land on the scale of consolidation and fragmentation is unsure - but it will definitely be more fragmented than the media we’ve seen the past centuries.

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Taking a step back

So 300 years have passed since the first newspaper - and everything has changed. Yet, at the same time, nothing has changed.

Media is an audience business. Throughout the shifts of medium - the business has been the same: audiences.

So how do you finance these fragmented audience businesses?

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Wherever there’s an audience, someone will pay for ads

Whether you were reading the Gazzetta Di Mantova or watching Mr. Beast’s Youtube channel - a company will pay to get your attention. The medium doesn’t matter, the audience does. Take NASCAR as an example. The amount of time spent looking at cars has rendered them plastered in logos, and teams even being named after sponsors. If people loved watching cows - there’d be sponsors on them. If you’re curious, it would probably look something like this:

Ads have historically been the easiest way to monetize a media business - especially if your business doesn’t reach critical mass. Our old friends at Gazzetta Di Mantova today serve a meager audinece of 20,000. Check how their front page looks today:

“But ads suck - and destroy the experience. The audience will leave.”

Yes, and no. Ads are annoying - but the average person will go irrationally far out of their way to save money - no matter the time or ads it costs.

Let’s look at the streaming wars of the past decade as an example.

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The de-coupling and re-coupling of cable

Going direct and the subscriptionification of everything.

In 2007 Netflix launched their DTC streaming service with a catalog of merely 1,000 movies. And needless, to say it was a pretty good idea.

“Your profit is my opportunity” - Jeff Bezos

The problem with good ideas is people want to join the party. In the next 15 years, streaming has exploded with Disney, HBO, Paramount, NBC, Amazon, CNN (may they rest in peace), Discovery+, Hulu, and many more wanting to get in on the action.

The problem: the consumer wallet only has a finite carrying capacity.

As a consumer, if you want to keep up with all streaming content in the US today you’ll be paying more than you previously did for cable. The promise of direct streaming has ultimately fallen prey to siloed IP library wars.

So how has this played out? Right now all the big streamers are fighting high churn rates (4-12% per month) which means they’ll be replacing their entire user base every other year. Currently all providers find themselves on a content spend and acquisition re-cycling hamster wheel - and the only way out seems to be consolidation. Being able to retain a customer is hard when their wallet’s already strapped. Streaming companies are therefore faced with the predicament of spending more per customer - with no top-line room in pricing.

So what does this mean? Streaming is converging back to “cable”.

Fighting high churn and user replacement rates - Netflix and Disney are re-introducing an ad-supported tier to better monetize their content and capture the value of the 50% of users that leave them every year. These users want to watch Netflix - they’re just not willing to pay out-of-pocket for it. So they’ll sell their time and attention to some advertisers to pay for it.

Ok, so 400 years later and ads still exist - and likely will continue to do so - especially for fragmented media.

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So how do you build a profitable media-business in 2025?

The same lesson that Netflix is learning will hold true for smaller creators: without a significant mass of content and ability to retain subscribers - ad-supported is the way to go. The problem for our fragmented media friends is that the old guard like Disney, HBO, and Fox have decades of advertiser relationships, teams to uphold them, and systems to run them.

So how does the future SMB media company build an ads business?

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The ads stack for new media

As seen in 'Creators, The New Entrepreneurs', it takes a lot to compete with the media giants. Fragmented media, means smaller audiences, which means smaller revenues - hence smaller costs. These new digital SMBs will need to do what larger companies do operationally - but much cheaper.

Given publishing and distribution costs have largely gone to near-zero - the last thing creators can do to improve their cost position is make acquiring and managing advertisers cheaper.

Initially, this has meant that these new media businesses mortgage 50% of their business to platform owners to subsidize their ads (Google Ads, AdSense, Meta Ads). However, as they get larger they don’t want to give 50% away to Google - they want to own their ads business. This brings me to one of my favorite features in the creator economy:

The paid promotion tag is built into platforms. Big tech has learned that for their creators to remain happy, sharing profits on the platform’s ads isn’t enough - they must allow them to own their ads business too.

However, as any creator knows - running your own ads business requires time, people, and tooling. So if you really want to build a meaningful lean media business in the 2020s - you need great tooling. At Passionfroot, we believe the solution to this is a new stack for ads tooling that is purpose-built for creators and media companies.

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Why we’re bullish on the fragmented media ad space

So, to recap: ads businesses are here to stay and the media publishing landscape is more diverse than ever. That’s great news for advertisers, consumers - and the new publishers. Why?

Diversity in content means ultra-focused audiences and closer relationships. Rather than the Food Network broadcasting you now have an abundance of food creators. Cut and slice it by drinks, food, country, budget, diet, or whatever you want - there’s someone out there creating it.

People follow people, and they assign legitimacy to the creators they follow. And more importantly, in the Girardian theory, they form their desires through them. The mimetic nature of creator advertising and trust that they hold is unique.

“In 2024 - regardless what business you’re in - your number 1 product is trust” - Mark Cuban on What Now? with Trevor Noah

You can’t trust Google Ads, Meta Ads, Linkedin Ads, or Banner Ads - but you can trust a creator.

This is great news for creators. Doing bespoke collabs and owning your ads business, creates better value for your audience, and your sponsors. It’s also great news for advertisers. Achieving above-market returns on brand ad spend has never been easier.

Products are meant to enhance your life. Creators that partner with the right brands and provide actual value will be rewarded. At Passionfroot we see this today - certain creators turn down 90% of brand deals, and their audience’s love them for it. The fragmented media era provides the biggest opportunity to deliver value to consumers - if done correctly.

Big dollars still go to the traditional channels, but over time we believe the smart dollars are and will continue to trickle down through the diverse publisher base.

The problem here: advertisers can’t easily access and deploy dollars in fragmented media at scale - and creators don’t have time to manage their ads business without jeopardizing their content. So we just need one amendment to our formula above:

This is our proposition to creators and media businesses: bring your advertiser acquisition cost to zero, and automate your ad operations. Conversely for advertisers: make creator advertisements as easy as Google Ads.

That’s it.

We hope to see you out there!

At Passionfroot we’re here to help creators build and own their ads business, and to help advertisers access and deploy smart dollars in the new fragmented media landscape.

If you’re a creator looking to automate and scale your ads business - sign up to our waitlist here

If you’re an advertiser looking to build a leading B2B or tech brand - sign up for Passionfroot here.

See you soon.

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