Journalism at its core is an analog business, even when distributed digitally. It is not about algorithms but people, their communities and stories that affect their daily lives.
Facebook has built a global digital business that lets people relate to their families and communities on a platform with two billion users. But it is not an analog business, instead relying on algorithms and big data to target users and advertisers and to tailor news to certain tastes. It has conned traditional news businesses into allowing it to cherry pick their expensive journalism to provide news feeds that ultimately undermine the viability of those same news businesses.
As with so much of the digital revolution, publishers have walked into a dark alley blindfolded and allowed digital behemoths — including Google, Apple, Amazon, Netflix and YouTube — to rob them of their content. That is not to deny these platforms have expanded the footprint of journalism. Even the practice of reporting has been expanded and improved by database journalism, internet research and the rise of the mobile phone as digital witness, especially in the hands of citizen journalists.
It’s just that publishing businesses have been so blinded by technological innovation they have forgotten good journalism is still about talking to people, maintaining sources, cultivating whistleblowers and telling stories that matter. Most big media businesses even seem to have forgotten how to relate to their own customers, despite their constant prattle about the need to be “customer-centric”. You doubt me? Just try ringing any metropolitan media company before 10 any morning or after 5 any afternoon and see if you can get a human to answer the phone.
Even now, after Cambridge Analytica, fake news, Russian meddling in the US election on Facebook and public revulsion at what has become an untrustworthy echo chamber reliant on algorithms to make news judgments, traditional publishers are still approaching these platforms the way supplicants might a despotic medieval ruler. An inquiry by the competition regulator set up by Scott Morrison is giving them the chance to fight back.
A read through the 57 submissions to the Australian Competition & Consumer Commission platform inquiry, including from Facebook and Google, makes at least two things clear: these two behemoths dominating the advertising market worldwide should be considered in law as publishers and be subject to the same legal, defamation, competition and copyright regulations as all publishers. And both platforms must be made to pay for news they run from traditional media.
News publishers in the noughties, not understanding the digital world, decided to give away their best and most valuable content online because they felt they had to be there. So loyal readers paid for their paper every day while disloyal readers were rewarded with the best content for free online.
People bagged News Corp executive chairman Rupert Murdoch in 2009 when he called time on this and said readers should pay for online news. Now even The Guardian is asking readers to help fund its journalism.
At this paper the introduction of a hard paywall in early 2012 (after a three-month free trial starting in October 2011) has created a pile of revenue big enough to replace most of the employment classified ads lost to disruptive start-ups since 2008 and put the paper back into profit. Yet the advertising that theoretically should have followed that highly engaged, paying, online audience has not proven as lucrative as some expected, a real problem for news sites with porous paywalls.
Some of the submissions to the ACCC outline why this is happening and why it should have been obvious a decade ago to thoughtful managements. Barriers to entry in online news are low and advertising inventory (space for ads) is infinite. Anyone can start a news site or blog and attract advertisers.
Under the old model for journalism, publishers needed to spend a fortune to set up printing plants, buy ink and paper, and establish expensive distribution networks. These high barriers to entry created scarcity, underpinning advertising rates. Same with free-to-air TV spectrum.
Most of the publishers’ submissions to the ACCC criticise platforms for stealing content, having excessive market power and opaque use of algorithms to rank publishers’ products in search engines. This paper always opposed giving away premium content, but not because we were Luddites. In fact The Australian volunteered in 2011 to be News Australia’s first paywalled paper. Why? If your business is news, you have to place a high value on news. It’s the same reason we opposed giving Facebook our news for free, but we lost that one.
Now The Wall Street Journal has led the way in abandoning Google’s First Click Free model last year. Of course it faded in search results, but so what? Ad yields online are declining but customer revenue is rising. Publishers with hard paywalls should not die in a ditch for a shrinking pile of money — traffic and ads driven by search — that was tiny to start with. Better to focus on online display and native advertising attracted to specific audiences.
This newspaper’s new marketing campaign will be based on trust, a theme in newspaper ads around the world as fake news scandals make people reassess what they read online and the risks they take with their personal data.
Yet it is not only readers who are reassessing. Advertisers, too, are starting to wonder if they are getting what they pay for. For 2½ years this newspaper’s Media section has been reporting on the failures of new media platforms to measure truthfully the impact and return on investment of their ads, including video. Still, traditional publishers and advertisers feel they have to be represented on new media because that is where reading habits have moved and where news is being consumed and ads seen. And they are right. But not at just any price and not on someone else’s platform, building their business at your expense.
As an industry, publishers have spent billions trying to compete in areas way beyond their expertise. Some executives have spoken openly — with no hint they understand how stupid this is — of the need for journalists and ad sales people to become technologists. Well, no. You can’t order up a new Google by chief executive decree. Publishers are in the content business, not the tech business.
Mark Day wrote last Monday the “reports of print’s death were premature”. Hear, hear!
Most of the revenue publishers make still comes from print products, and some publishers are realising those need to be defended. We have seen recent improvements in editorial quality and story breaking at our rival Fairfax Media’s The Australian Financial Review and The Sydney Morning Herald in the past 12 months.
The Australian, has not only lifted print cover prices, it also has maintained print sales, kept print display revenue, grown almost $30 million digital subscription revenue, raised its presence in luxury advertising and is read by more people than at any time in its history. Looks like a future to me.
Sure, Facebook and Google are good tools for marketing news stories. Every Monday about 9am when this column is tweeted out on The Australian Media account its traffic spikes. That’s good for my ego, and traffic drives revenue, but not the way subscriptions do.
The ACCC inquiry and the credibility problems hitting global platforms are an opportunity for producers of journalism. They need to grab it and insist on fair value for their product. Governments need to apply the same laws and competition policies to the platforms they do to publishers.
But news outlets need to remember they are not in the same business as Google and Facebook. Their best strategy is to refocus on reporting on their communities, wind back the commodification of news in their own products, focus on building consumer revenue in print and digital, and wait for advertisers to realise highly engaged local audiences are valuable and can make the cash register ring.