Three media empires offer important lessons about the future of offices, homes, and cities.
It's been a busy month for media empires. Two weeks ago, the New York Times parted ways with its Opinion Editor, after the latter approved the publication of a piece by U.S. Senator Tom Cotton. This week, Quora announced that it will no longer require its employees to come to the office.
These two stories have something in common. They show that the internet's impact on digital media is, ultimately, a threat to physical buildings. And they suggest a possible strategy for buildings and cities to remain relevant and valuable.
Is Quora a media empire? It has around 300 million unique visitors per month; the New York Times has only 240 million. Quora is ranked 72nd on the list of the world's most visited sites; the New York Times is ranked 154th. Both businesses have multi-billion dollar valuations.
But these numbers don't tell the whole story. The two companies represent opposite approaches to media. Quora was built for the internet. Its content is free to read, supported by advertising. It is also free to produce: all the questions and answers on the site were written by its users. Quora represents the wisdom of crowds, or lack thereof. Articles are featured automatically, based on votes from readers and the past performance of their author. Quora employs about 800 people.
The New York Times was not built for the internet. Its best content is available only to paying subscribers. The content is produced by paid reporters and columnists. The New York Times represents the wisdom of paid experts, or lack thereof. Articles are featured based on careful consideration by human editors. The New York Times employs about 4,500 people.
In simple terms, we can say that Quora's content strategy is based on quantity, while the New York Times's is based on quality. Quora aims to help users access (and publish) an abundance of answers. The NYT aims to expose users only to the answers (and questions) it deems worthwhile.
As Ben Thompson points out, abundance is a key characteristic of the online landscape. The Internet and personal computing drove the cost of producing and distributing content towards zero. In such a world, how could it be that the New York Times is profitable while Quora is losing money?
Before we return to this question, let's look at Quora's decision to go "remote first".
On Thursday, CEO Adam D'Angelo announced in a blog post that "Quora will be a remote-first company starting immediately". From the blog post:
What exactly does “remote-first” mean? Remote work will be the primary orientation of our company - the default for all choices. This means specifically:
- All existing employees can immediately relocate to anywhere we can legally employ them, with a small number of exceptions (for example for people whose jobs specifically depend on their physical presence).
- We will keep our current office in Mountain View and convert it into a co-working space for employees who value it and want to regularly work out of it.
- I will not work out of the office and I will visit the office no more than once a month. Our leadership teams won’t be located in the office.
- All meetings will require everyone to be on their own camera / video tile.
D'Angelo made the decision after noticing how productive his team was during the Covid-19 lockdown and the fact that 60% of Quora employees said they preferred to continue to work remotely. Even in a post-Covid world, working at an office entails costs that are now clearer to him and his team. In particular, D'Angelo highlighted:
- The time and energy people spend commuting;
- The difficulty of doing focused work at an office, especially an open plan one;
- The cost of housing in the San Francisco Bay area; and
- The difficultly and anxiety involved in getting and maintaining a work visa.
Note that a lot of these challenges have little to do with the office itself. As D'Angelo points out "If people could instantly teleport to work and live wherever in the world they wanted, and everyone could have their own office along with shared collaboration space, office work would be better for everyone than remote work." But commutes, housing costs, and immigration procedures are not likely to change for the better in the foreseeable future. Meanwhile "the technology that supports remote work is going to continually improve."
Beyond the impact on his own employees, D'Angelo expects society as a whole to benefit from from the growth in remote work opportunities. In particular, he notes the relationship between labor mobility and economic mobility. Historically, moving to a different location was correlated with increased access to economic opportunities. Americans used to move into states with better jobs and higher incomes.
Over the past 50 years, Americans have been far less willing to pick up and move. The reasons for this are explored in multiple books and media articles. D'Angelo points out a few of the reasons for this change. These are U.S.-centric, but have equivalents in many other developed and developing economics:
- Extreme gaps in costs of living: A family from, say, West Virginia might want to move to New York City in order to access better employment opportunities. But NYC and other large cities are now so much more expensive than other parts of the U.S., that moving into them might be too risky or simply impossible.
- Occupational licenses: Many jobs require a license, and licenses are only valid in a certain state. This is true for a variety of professions — from hairdressers and real estate brokers to doctors and lawyers.
- Two-income families: In the past, families were more likely to rely on a single breadwinner. Even if both parents worked, one of them (the man, usually) was likely to have a much higher salary than the other. The integration of women into the workforce and their ascension to better-paying job is a good thing in itself. But as a consequence, families now need to find two good jobs in order to move, rather than just one. As a result, it is often easier to stay put.
- Restriction on international work permits. People cannot easily move between countries in search of better jobs. This is not new, but it is more meaingful in our current globalized world. While goods and services can flow (relatively) freely across borders, people are far less free in their ability to flow towards the best employment opportunities.
In theory, access to remote work would mitigate the impact of the above and allow a better allocation of resources and the flow of better-paying jobs into areas with lower cost of living. It would also allow people not to be tied to a specific location and move based on seasonal preferences and life events (marriage, childbirth, empty nest, etc.).
D'Angelo's vision of a more mobile society rhymes with comments from a CNBC interview with Airbnb's CEO, Brian Chesky, earlier this week:
"Travel as we knew it is over and It's never coming back. .. instead of the world population traveling only to few cities, we are going to see a redistribution of where people travel. They are going to travel to thousands of local communities… more people are going to work remotely, and work from home also means work from any home and that’s an opportunity for Airbnb. Because you’re going to see major population redistribution on the table."
Both Chesky and D'Angelo envision a world with much greater flexibility and choice. If a growing number of people can live and work anywhere, an abundance of new locations suddenly become relevant. Many of the old constraints that made some cities, neighborhoods, and buildings more valuable will diminish.
This means that cities and buildings that wish to remain valuable need a new strategy — a strategy for a world of abundance. For a hint of what that means, let's go back to the New York Times.
"We seek the truth and help people understand the world". This is the motto of the New York Times Corporation. But "the truth" is often a matter of perspective or, at best, hard to uncover — especially when one is on a deadline.
In the late 1960s, the New York York Times was struggling, partly as a result of competition from new mediums such as radio and television. In 1970, partly in order to differentiate itself, the paper began publishing an op-ed section, hoping it would contribute toward "stimulating new thought and provoking new discussion on public problems". Opinion pieces have existed long before the 1970s, but the NYT's op-ed page set a standard that leading newspapers now follow.
Last week, the New York Times parted ways with the editor of its editorial page, James Bennet. Bennet's departure resulted from his decision to publish an op-ed from U.S. Senator Tom Cotton that called for the use of military personnel to "disperse, detain and ultimately deter lawbreakers" involved in the protests that follow the killing of George Floyd. The piece drew outrage from New York Times staff and readers.
At first, Bennet tried to justify his decision:
We published Cotton’s argument in part because we’ve committed to Times readers to provide a debate on important questions like this. It would undermine the integrity and independence of The New York Times if we only published views that editors like me agreed with, and it would betray what I think of as our fundamental purpose — not to tell you what to think, but to help you think for yourself.
Even the New York Times's publisher, A.G. Sulzberger, initially defended the piece, writing "I believe in the principle of openness to a range of opinions, even those we may disagree with, and this piece was published in that spirit.” But within a few hours, he had a change of heart. Bennet had to go.
Why am I telling you all this?
The New York Times survived and thrived in the era of radio and TV by opening its pages to a diversity of opinions and perspectives. In the era of abundant online content, should't the paper strive to ensure an even broader diversity of opinions?
Ben Thompson wrote a wonderful article, Never-Ending Niches, to explain why. I will try to summarize it for you, adding Quora back into the mix. Then, we can consider what all of this means for buildings and cities.
In a world of abundance, power flows from those who produce content to those who aggregate it. What is the most important web site in the world? For most people, the answer is Google. Google does not produce any content; it makes it easier for people to sift through billions of web sites and find what their need.
To attract readers, most of the web sites on earth are heavily dependent on Google's good graces. According to some estimates, 93% of all online experience begin with typing a question or term into a search engine. Nearly 90% of these searches are performed on Google.
Take Quora, for example. Nearly 80% of Quora's traffic arrives directly from Search Engines. That means that less than 1 in 5 Quora visitors actually "goes" to Quora. Instead, these visitors search for something and end up on Quora because Google "recommended" it. This means that Quora's business is highly dependent on traffic from Google and that said traffic is likely expensive to acquire. This inability to attract customers directly also hints at why Quora is still not profitable, despite hundreds of millions of visitors and its reliance on free content.
The New York Times is different. Nearly 50% of the site's visitors arrive to it directly, by typing NYTimes.com into their browser. An additional 15% arrive from referrals from other sites and newsletters. Only 35% of the New York Times's traffic arrives from search engine. It is still a considerable number, but much lower than that of the average web site. And of course, million of New York Times visitors pay to access the site, making their visits much more valuable than those of a random web user.
How come the New York Times attract people directly while a diverse platform like Quora has to depend on search engines?
The reason is focus. On the internet, it is best to be an aggregator. That's why Google's parent company is worth nearly a trillion dollars and has gross margins of around 60%. But Google already exists and it'll be hard to replicate and unseat it. And so, the second best thing is to do the opposite of an aggregator: to focus on a narrow niche and cater to a small but passionate audience.
Seen in this light, the New York Times's decision to limit the breadth of acceptable opinions on its pages is not an error. It is good business. (I am avoiding any other political or legal implications as they are not relevant to my point!). As Thompson points out:
This isn’t the pre-Internet era, when only a few publications had the reach to plausibly claim they had a duty to show both sides, and more importantly, when that reach defined their competitive advantage. Today all opinions from all people are available everywhere, and the New York Times‘s ultimate responsibility is to its audience and its reporters.
To sum it up, in a world of abundance, destinations have an incentive to become more focused and less diverse. We saw what this means online. Now, let's see what it might mean offline.
As I pointed out in my book, technological innovations are undermining the natural scarcity of real estate assets by providing people with a choice of where to live, work, and access a variety of services and goods.
This means that cities, buildings, and other physical destinations have an incentive to become more focused on the needs and interests of a specific group of customers.
At first blush, this sounds like good news: Finally, the built world will stop taking its customers for granted. And indeed, there are many positive implications for the loosening constraints of geography.
But there are also sinister consequences, especially if we follow simple economic incentives. Over the past few weeks, I wrote at length about the negative effects of urban patterns that limit the diversity of residents, housing typologies, and employment opportunities. I also wrote about how the automation of many urban services breaks up the interdependence of wealthy urban residence on less-affluent service employees.
The confluence of these trends and incentives point towards a future in which physical locations become more focused on the needs of certain groups. To attract affluent residents, tenants, and tax payers, cities and buildings will have to double down on their best "customers" and ignore everyone else.
Would you want to live in a city that looks and sounds like the New York Times? Can you afford to? What happens to those who can't?
In the following weeks, we'll explore ways to counter these incentives and build more inclusive communities.
Thank you for reading. If you enjoyed this article, please share it with your colleagues and friends.
🎤 On Thursday, I spoke at Urban-X's event about the historical impact of zoning and housing policy on inequality and racial tensions (video here).
📹 Last week, I spoke at the University of Zurich's event about whether people will stay in cities or move to the country side, and participated in a discussion with Professors Richard Florida, Karin Moser, and Kay Axhausen (video here; my presentation starts at -35:30).
🚀 Next week, I am giving a virtual keynote at Relevation, an event that brings together European Proptech startups and global investors. My talk will focus on how innovation in the built environment can be a positive force in reshaping society and the environment.
Cover image: C.C. Baxter (Jack Lemmon) walking out of the office in The Apartment (1960)