Welcome to another edition of In Transit. This one is longer than usual, but I hope you take the time to read it!

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TLDR;

• Content battles for attention in a finite media landscape.

• Attention gravitates towards either major hits or niche content, sidelining mid-market content.

• Big IPs grow through network effects, while niche content thrives on passionate communities.

• Generative AI boosts niche content creation, making it easier and more efficient.

• Successful adaptation for mid-market creators involves focusing on niche passions and direct monetization.

We're in an interesting time for entertainment and media. The landscape is shifting, creating challenges and opportunities for content creators and media companies.

Before discussing the Barbell thesis, let's focus on core media content principles.

1. At an atomic level, all content competes for the same resource: attention (time). A modifier to this is that we prefer different types of content in different contexts (watching a movie is not the same as listening to music), and we have tastes (some like pop, others like rock). 

2. There's a natural limit to how much content we can consume. The content market, basically. Technically, the demand/market size is 24 hours times the population on Earth, but realistically, it's less than that. Market growth can come from population increases or the average time spent on content per person. According to a recent survey, the latter is 12 hours of media per adult daily in the US. Add ≈8 hours of sleep, and there's not much room for growth. Attention is a scarce, constrained resource and content competition is a zero-sum game.

There are currently two forces that are impacting this spectrum. The forces work in tandem to push attention to edges, the hits, and the long tail. In turn, it creates a vacuum and difficult conditions for mid-market content.

Force #1: Network Effects of Hits

Big IP and entertainment franchises have long been the industry's golden goose. The biggest branded hits will continue to thrive. Hit content benefits from strong network effects. They become self-reinforcing attention machines. For instance, Taylor Swift gets a lot of media coverage and visibility because of her status. That media coverage increases her exposure, feeds the attention machine, and grows her status further.

The proliferation of social networks and online aggregators is a two-edged sword for creators. For most, it means trading revenue for distribution. Social platforms build strong network effects, but the value accrues to the platforms because of content lock-in and unfavorable revenue sharing (if any) for creators.

For big IPs, it's different. Even exposure on these platforms feeds the network effects of the IP itself, and the IP accrues attention and value, regardless of platform. Monetization can happen in other avenues (live concerts for Taylor, movies for Disney, etc.).

The network effects of hits will continue to accelerate as we continue our march towards living online-first, globally connected lives.

Further, the point of IP capturing the value of its network effects is also interesting because a new technology shares the same trait: NFTs. What is the value of network effects squared? 

(A topic we'll explore in an essay later this spring)

This doesn't mean that it is the same IP that continues to thrive forever. As consumer behavior and preference change, it allows for previous stars to fade and new ones to rise. The mechanic will be the same. The breakout hits will be big and get bigger and continue to vacuum attention from the mid-market.

Force #2: Infinite Content

At the other end of the content spectrum is the niche content. Thousands, millions of different niche verticals of varying sizes. From indie horror movies to TikTok accounts about cooking Korean BBQ. This is where the content creator economy lives. While some traditionalists will say that this content is not the same as the "professional" content that resides on the opposite side of the spectrum, let's remember what we discussed in the intro: all content competes for the same constrained resource: time.

The primary benefit of this content is that the consumers are passionate. You watch Marvel movies because of their social status and attention. You watch all those knitting TikToks because you f*cking love to knit.

There's a lot of niche content. Soon it will be infinite (or close to infinite). 

This is where we'll see generative AI impact first. It's a technology unlock that will enable more creators to create more niche content with less complexity, efficiency, and higher quality (read it again).

Why spend your time-consuming content that is of medium quality and vaguely interesting if you instead can watch something you really, really love?

(Sidenote: This also creates massive upstream opportunities in discovery and curation.)

As this type of content reaps the benefits of efficiency and is combined with new types of business models, it will make it sustainable for more niche creators to build small content businesses surrounded by a passionate community. It's the thousand true fans theory in effect.

This force drives attention from the middle of the spectrum towards the opposite end of hits and thus completes the gap and creates the barbell.

Mid-Market What?

These forces will increasingly move consumer attention towards global phenomena and the niche content that hits their passions on the other end.

What, then, about (all the) mid-market content?

Mid-market is the content that is neither big enough to benefit from network effects nor targeted enough to build passionate audience communities. These forces will create diminishing returns for this content because it will exist in an attention-deprived environment.

All is not lost, but a lot of creators in this middle tier will fail. They will fail by making one of two mistakes:

• Carry on as before to work "through it." This will not work because the forces described above are too strong to "work through".

• Recognize the dynamic, overestimate their content's potential and get burned by moving in the wrong direction (attempting to force hits).

The content creators that succeed will find ways to leverage these dynamics beneficially. They will make the bet that it's better to niche down and create a passionate community. They will choose the depth of engagement over the breadth of distribution (because the latter will be futile). New business models will enable these creators to monetize content vertically along the engagement axis rather than opting purely for shallow and wide monetization (like all-you-can-eat streaming buffets).

These creators will also use the technology at hand to become more efficient so that the cost of content matches the new reality of targeting a smaller, passionate community. They will use technology to build direct relationships and monetization channels, increasing their margins.

New Opportunities

In the future, what was the mid-market will be a gap. A chasm to cross for niche content to become a global phenomenon. We will see some content communities grow from niche and cross that chasm. These are the future entertainment franchises. They have a special capability in that they are internet-native: organically networked and global from day one.

These content ecosystems will eventually grow their own internal content maps containing big hits, mid-market (transitory), and niche (branches of community-driven creation) content.

For the rest, the time to adapt is now. Adapting means recognizing opportunities. Unfortunately, it also means recognizing opportunities that are no more and adapting accordingly.

Thanks for reading another edition of In Transit, let me know what you want to read next week:

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