Joshua Reader’s Post

I had fun speaking with my friend and former colleague at AMC Networks, Marco Bresaz! Thanks, Marco Bresaz, for the (as always) great conversation and for your excellent newsletter, Potentially Focused, which has become one of my weekly must-reads!

Does anyone out there doubt that the balance between traditional and creator-driven media has hit a critical inflection point? Juxtapose these two headlines from the past 24 hours, one from Variety yesterday and another from The Information today: Variety: TV Networks Fight for Fewer Dollars in Upfront Amid Big Streaming Rollbacks (article by Brian Steinberg) The Information: America’s TV Advertisers Shift Shift Spending as Creators Launch Competing Brands (article by Kaya Yurieff) In times past, while TV delivery has decreased, networks were typically able to raise prices to at least hold onto, if not grow, advertising revenue.  As a result, declining delivery was painful but not necessarily economically catastrophic.  According to the Variety article, at least for upfront pricing, that trend no longer holds.  Advertisers, at least for inventory in entertainment (in contrast to sports and live) content, seem to be commanding rollbacks this upfront season. (“Upfront” sales are the advertising that networks “pre-sell” for the upcoming broadcast year, therefore removing some of the risk/reward of waiting for more seasonal trending to affect the price of ads that a network sells over the course of the year.)  To be concise, delivery and pricing are now declining - not a good combination. Meanwhile, over in creator world … according to the article in The Information, the amount spent on influencer marketing in the U.S. is expected to rise 16% compared to last year to $8.16 billion, and brands that have traditionally relied on TV advertising are shifting heavily to marketing with creators. Given the economic reality of these trends, why are brands that have for decades been major customers of traditional media companies now ahead of those same companies in recognizing how to reach their audiences best and most efficiently? #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

Creators, are you wholesale or retail? If you’re creating a distributing video content, make sure you understand the differences between reaching your audience through a third-party aggregator and going directly to your fans.  There is a big difference in benefits, costs, and strategies if you are primarily connecting with and monetizing your audience on a direct-to-consumer retail basis through an app on the platform of a device manufacturer like Roku, Amazon, Apple, or Google, and distributing content, whether a la carte or as part of a curated offering, through an aggregator like Roku Channel, Amazon Channels, Apple Channels, or Youtube. If your primary goals are to have direct access to first-party data, escape the whims of somebody else’s user interface or the almighty algorithm, keep a larger share of a (most likely) smaller revenue pie, and have direct connections with your audience, then you want to be retail. If your primary goals are focusing primarily on making your content over operations and marketing and reaching a (most likely) much larger audience, and you are willing to share more of the monetization of your content with a distribution partner for those benefits, then you want to be wholesale. You can, of course, pursue both, and there are multiple ways to do so, such as windowing content, but the dual approach, particularly if you’re pursuing both simultaneously, comes with its own costs and trade offs, including (most likely) diminished marketing efficiency.  Understand your ecosystem and know what you’re trying to achieve so that you can optimize your approach. #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

Building something new always requires overcoming a perception gap, the space between where “most people” are and the opportunities available to them. There likely wouldn’t be an opportunity if that gap didn't exist. There is a perception gap between traditional entertainment executives and creators. On one side, too many in Hollywood think that creators need them more than they actually do, and are misapplying traditional media metrics to assess the promise (or perceived lack thereof) that certain creators can bring to their platform. On the other side, creators of a certain scale feel that traditional media is undervaluing them and that they should be getting more love and attention. Here’s the catch: Creators who feel underloved can return to making content and monetizing their brands through their social channels and, in many cases, make just as much, if not more, money doing that than diverting their time and attention to a project for a traditional media platform. I am also seeing creators willing to be more creative and flexible in how they approach a partnership with a traditional media platform. Traditional media executives with a misapplied mindset will eventually get to the right place because the market will demand it, particularly when a more forward-thinking peer successfully applies and executes the model. Unfortunately, they won’t be able to recover the lost opportunity cost of being too slow to adjust their paradigm. #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

For a glimpse at the future of the media and entertainment distribution models, look to the north! There is a lot of talk these days about the “great re-bundling,” and how streamers - whether directly (the Disney+/Hulu/Max and Venu bundles) or through third parties (Comcast’s Peacock/Apple TV+/Netflix bundle) - are recreating cable.  Yes, the re-bundling permutations were inevitable as the streaming models reached market saturation.  But where is it all going? In his latest piece, Doug Shapiro argues that the legacy media model has plenty of room to keep spending on sports rights, which today are driving consumption of “the cable bundle.” However, even in the best scenario, that will come at the expense of expenditure on non-sports entertainment options. So what does that mean? The Canadian cable model is generally composed of data access (effectively, a utility service), combined with a basic tier of broadcast networks (live and sports), and a panoply of genre-focused bundles (or “pick-a-packs”) available on top.  I think this is where we’re headed in the US. Consumers with device loyalty will purchase video entertainment through Roku, Amazon, or Apple.  Device-agnostic consumers will purchase bundles and data access through Comcast, Charter, Verizon, AT&T, or T-Mobile.  Consumers who care about only a few services and don’t care about sports may still buy direct-to-consumer offerings from their programmers of choice, but that subscriber base will shrink in favor of slimmed-down “service + video” bundles. This will require cost rationalization for entertainment services from a content and marketing perspective.  This is where creators come in.  There will still be large, expensive attempts at tentpole offerings based on high-profile IP, but more entertainment brands will turn to creators to make cost-effective programming with built-in, easier-to-reach fan connections to round out their content offerings.  They’ll be able to take more shots with this more efficient content, and some of those will hit larger than expected. Meanwhile, a sizeable contingent of consumers who don’t care much about sports or entertainment will get everything they need on YouTube, where content quality and format will continue the current trend of elevating, TV consumption will continue to grow, and creator monetization models will continue to evolve to support the upwards trend of quality, format, and engagement time. It will be fun to look back on a few years and see how much of the above I was wrong about. If I’ve totally missed the boat, I’ll just delete this post and move to Canada. #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

I'm participating in a panel led by Brad Samuels at #StreamTVShow in Denver, CO, from June 24-26, 2024. If you're interested, come hear the panel at 4:50 pm on Tuesday, June 25. It will be just like reading my LinkedIn posts, except in my voice instead of that voice inside your head. Use code SPKSTV24 for a $200 discount on your pass.

Dear Creators (and those who work with them), Your fans are your most important asset, and that cuts both ways.  You have an opportunity to deepen your relationship with your most engaged fans, to develop direct relationships with them, and to allow them to participate in your success so that both you and they can grow alongside your creative endeavors.  Your most engaged fans want to come along for that ride, and you’re not imposing on them in offering them the opportunity to do so. You do, however, have to protect them (see “most important asset” above), and this is where equity crowdfunding not only becomes an important construct for growth-oriented creators but also one perfectly suited for them. Equity crowdfunding allows you to offer your fans the opportunity to invest - in your project, your channel, your business - in a way that is regulated by securities laws and regulations, protecting your fans in ways similar to how those laws and regulations protect our investments in large, publicly traded companies.  The two key regulations that govern equity crowdfunding in the US are: *Regulation CF, which allows companies to raise up to $5 million within a 12-month period from both accredited and non-accredited investors. *Regulation A, which enables companies to raise up to $75 million in a 12-month period, but with more stringent disclosure requirements. Equity crowdfunding is cost-effective compared to a traditional initial public offering (IPO), and is well-suited for creators who have built an engaged community of fans and want to align the interests of those fans behind their success.  The SEC regulates equity crowdfunding, providing safeguards for both creators and fans who invest, to protect your most valuable asset. Remember, equity crowdfunding isn’t just, or even primarily about raising money - it’s about building a direct connection with a community of invested stakeholders who believe in your vision and want to see you succeed.  It’s a powerful tool for creators to take control of their creativity and build a sustainable future. Note that, while I am a lawyer, none of this is legal advice or should be understood to create an attorney-client relationship, and if you are considering allowing your fans the opportunity to invest, please contact a licensed attorney and make sure you’re working with a platform that is fully compliant with all applicable laws and regulations. Best, Josh #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

How did “lifestyle” become a dirty word for a startup? The world of venture capital seems to divide new businesses into two categories: “venture,” which meets the criteria for “venture capital,” and “lifestyle,” the definition of which seems to have expanded to any business that the startup world does not deem to be “venture.”  Among other things, “venture” businesses are thought to be: *Disruptive where “lifestyle” businesses are not; *Built on the foundation of a prototype, while “lifestyle” businesses are more bespoke; *Highly scaleable where “lifestyle” businesses cater to a niche market and *Built by founders who are willing to work hard, reinvest in the business to scale, and “change the world,”  while “lifestyle” founders are more focused on generating an income to support (I suppose) their lifestyle. Here’s the problem: The basic tenets of Clayton Christensen’s theory of disruptive innovation, the incontrovertible cornerstone of modern disruption theory, are that simple, more affordable products catering to niche, low-end markets develop over time to solve a problem for a base of customers that grows over time as the “low end” product redefines quality for an increasingly larger market.  That sounds more like the pigeonholed definition of a “lifestyle” company, not a “venture” company. As for the nature of the founder, I could exceed the character limits of this post listing founders, from Sam Walton, to James Dyson, to Ralph Roberts, who ground themselves to the bone and invested to get to scale, yet either were not or would not have been considered founders of “venture” businesses at their early stage. So, what is the real distinction? It has to be more than “can reach a $1 billion valuation in 5-7" years because that hardly seems like a reliable leading metric …  #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

Do you want the four keys to surviving and thriving in today’s capsizing entertainment landscape? 1. Identify where the audience is. 2. Understand that fans’ thirst for entertainment hasn’t gone away; it’s just become more decentralized, meaning we need to serve more discrete audiences, each on a smaller scale. 3. Accept that the institutions that got us to the current point in media and entertainment are not currently structured to get us through media and entertainment’s next evolutionary phase - “the large institution's frameworks …were built for another age.” 4. Focus on getting creators to their audience more efficiently and cost-effectively. For anyone in traditional media and entertainment or The Creator Economy, Cynthia Littleton’s interview with Sherrese Clarke Soares, founder and CEO of HarbourView Equity Partners, is not just recommended; it's essential listening.  I’m not sure I’ve heard anyone (I hate to say, myself included) state with such clarity the principles and vision for the future of entertainment that led me to leave my role at a legacy media company and around which I am building CreatorCut. That’s all I’m going to write about today because you should stop reading and go listen to the podcast episode. #EquityCrowdfunding #Creators #CreatorFinancing #CreatorEnterprise #CreatorMiddleClass #NewHollywood

I attended a panel earlier this week about raising venture capital for early-stage founders.  One of the panel members said as a means of encouragement to those of us in the audience (I estimate about 200+ early-stage founders): “Your competition is sitting in their offices working and you’re here growing your network, so you already have a competitive advantage.” I’m not clear on how I feel about that statement. If you’re looking to raise funds, it is, of course, both helpful and important to have a network.  At the same time, I think the most valuable thing founders can do when nursing an early-stage company into growth is protecting their time and enforcing the self-discipline to get and keep their butts in their seats and do the work of building. What do you think?