Daily Briefing for Monday, April 10th
Good morning and welcome to Business Side.
In today’s briefing we cover:
Substack’s skirmish with Twitter
Google’s move to bring conversational AI to Search
Muck Rack’s new AI tool
Plus other developments across the industry
Let’s get to it.
Substack vs. Twitter. Last Wednesday Substack announced Notes, a new feature that lets users publish short posts and recommendations. It looks a bit like Twitter, but its network is based on subscriptions, not ads. In the words of co-founder Hamish McKenzie, “It's social media with a heart transplant.”
Last Thursday, Twitter responded. It appears the social network began throttling the reach of tweets that include a Substack link and also began showing warnings to users who click on Substack links within tweets. Twitter users were also reportedly unable to like or retweet tweets with a Substack link.
Over the weekend, the two companies continued the back and forth:
Late Friday, Substack published a post that positioned Twitter as an incumbent resistant to a more writer-friendly media ecosystem.
Early Saturday, Elon Musk tweeted that “Substack links were never blocked” and accused the company of “trying to download a massive portion of the Twitter database to bootstrap their Twitter clone.” Musk didn’t acknowledge the other restrictions Twitter had reportedly implemented.
Later on Saturday, Substack CEO Chris Best responded on Substack Notes, refuting Musk’s claims.
Then late Saturday night, Substack tweeted: “We’re glad to see that the suppression of Substack publications on Twitter appears to be over.”
As of last night, though, it appears certain restrictions were still in place. For example, searching for “Substack” on Twitter returns results for “newsletter.”
In the immediate term, the skirmish risks harming Substack and its writers. Twitter has been an important audience acquisition channel for Substackers, and any restrictions will interrupt this Twitter-follower-to-Substack-subscriber pipeline.
Taking a longer view, these restrictions create an opening for Substack. As Benedict Evans tweeted: “Elon really doesn’t seem to understand that screwing around like this makes people even less likely to build on Twitter, not more. Platforms require trust, and why would you trust anything Twitter does?” If Notes specifically and Substack generally can siphon off some of this trust, Substack stands to benefit.
Relatedly, Substack published a required disclosure last Friday as part of their recent $7.5 million crowdfunding campaign. Of note, the company currently counts 35 million active subscriptions and 2 million paid subscriptions; they lost $22.9 million on $11.9 million in gross revenues during 2021. (Substack declined to release more recent financial information.)
Conversational AI is coming to Google Search. When Google announced Bard last month, the company took a characteristically conservative approach, limiting access to the feature and keeping it separate from Search. In a Wall Street Journal interview ($) last week, Google’s CEO struck a more aggressive tone: “Will people be able to ask questions to Google and engage with LLMs in the context of search? Absolutely.”
Microsoft has of course already integrated ChatGPT into its Bing search engine, and Google is feeling the pressure to respond. Both companies are navigating the tradeoff between speed and caution as they push out new generative AI features. Increasingly, it appears speed is winning.
Zuora’s subscription report. Subscription platform Zuora released their annual Subscription Economy Index (SEI), which analyzes billing data from over 500 of its customers. Overall, companies in the SEI grew revenue by 12% compared to 10.6% growth among S&P 500 companies. Media companies within the SEI grew by only 4.6% on average.
Relatedly, PressGazette compiled a chart that approximates different publishers’ ability to convert users to paying subscribers. The Athletic, Barron’s, and WSJ are the top three outlets, each with an estimated user-to-subscriber conversion rate above 10%.
Muck Rack’s new AI tool. The product, called PressPal, uses AI to assist users in writing press releases and identifying journalists to pitch. Notably, the company highlights the importance of keeping a human in the loop. From their site: “PressPal.ai is more of a brainstorming tool than a final draft generator. Always review and edit a press release so it is factually accurate and free from errors and omissions.”
The Guardian grapples with AI. After discovering several examples of ChatGPT fabricating Guardian articles, the publisher has created a working group to research the technology and develop an approach. In the coming weeks, the team will publish an explanation of how they plan to deploy generative AI. The transparency is notable amid several recent instances where publishers ran AI experiments with few disclosures to readers.
Brut’s new funding. The French video-first publisher Brut recently raised $44 million to continue its expansion to the US and India. The company has raised a total of about $153 million in funding from several ultra-wealthy backers, including James Murdoch, Gucci owner Francois-Henri Pinault, and French shipping billionaire Rodolphe Saade. Brut counts about 500 million monthly uniques, largely on social platforms like TikTok and Snapchat, but has plans to continue building out its own app and website.
Plus:
Publishers experiment with how generative AI tools can help their SEO strategies
Twitter changed the label on main NPR account from “State-Affiliated Media” to “Government Funded”
Twitter Blue subscribers should see about 50% fewer ads in the For You and Following tabs
Condé Nast aims ($) for carbon neutrality by 2030
Tech and media-focused bank Raine Group acquires ($) SF-based boutique bank Code Advisors
Media Substacker Simon Owens launches a new interview series focused on tech tools
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