We used to speculate about when the next newspaper might close, now we watch as digital native newsrooms teeter on the brink. How bad is it out there for news brands trying to make a living, let alone a profit?
[This article by Professor Charlie Beckett, director of the LSE Truth, Trust and Technology Commission.]
Josh Marshall, the editor of the pioneering liberal American political analysis and reporting website Talking Points Memo is predicting a digital media crash. His relatively niche publication survives on a blend of advertising and some premium content. It has quality content and a targeted audience built partly on its early mover history.
Others have piled in over recent years seeking similar niches of tech, youth, media and politics. Sometimes, like BuzzFeed, trying for sponsored content as an alternative revenue flow. Or like The Information, trying to build a subscription/membership base going beyond editorial to other services such as events. Some like Medium started as great publishing platforms and are now trying out aggregation and paid content as a mechanism to raise money. All have to balance the desire to add specific value for a particular public with the need for scale to generate the flows of cash.
As Marshall points out, it is different in the US. A niche there is equivalent to a medium-sized media market in Europe. And venture capital, often from Silicon Valley, which has seen such successes in the digital or tech fields outside of journalism, has been prepared to take risks with the news media. It saw opportunities for innovation and ‘disruption’ amidst the upheaval and retrenchment of mainstream legacy news media brands. But as Marshall also observes, there is little evidence of any great commercial success so far.
This doesn’t mean that companies such as BuzzFeed are about to die. It is more that they, like the digital giants such as Twitter, are struggling to meet the unicorn-chasing aspirations of venture capital. Even those failing to generate top line cash profits have valuable data and network influence.
There is a fundamental problem at the core of this – and it’s not (only) Facebook. I was reminded last week by a friend and veteran digital journalism pioneer that back in 2008 I predicted that about 70% of journalists would lose their jobs. [In this 2009 article I say 50%] I based the estimate on the amount of duplication of content. Why should a news consumer pay for news that is out there for free but also why should they pay a particular brand for journalism that was replicated by many others?
What we have seen since then is some mainstream media brands adapting with a combination of innovations. They have become much better at building subscription, paywall or membership models that provides a package of personalised content. They have flexed their muscles to retain market share, albeit in a rapidly shrinking pool of revenue. (Demand for news has never been higher, but the amount people will spend on it has not grown much). They have focused on improving what they do best, cutting back on duplication and even automating the basic stuff. A great example of a clever legacy adopter is the FT which recently hit 900,000 subscribers paying for quality international journalism.
At the same time, many clever start-ups have snuck in to various parts of the production chain (Storyful, The Skimm) or found smart ways to deliver specially-created and targeted content (Ladbible, BuzzFeed News) that is often stylistically innovative and journalistically creative (Quartz, Axios). A few like ProPublica have produced outstanding public service journalism that also attracts foundation funding because of its ethical and social value. We now have a more diverse set of sources, though the crumbs from the much-cut cake are relatively small.
Marshall’s dire warnings are based on three factors:
“The big picture is that Problem #1 (too many publications) and Problem #2 (platform monopolies) have catalyzed together to create Problem #3 (investors realize they were investing in a mirage and don’t want to invest any more). Each is compounding each other and leading to something like the crash effect you see in other bubbles.”
I’d agree with that analysis, but add two more factors. Firstly, the legacy media has started to get its act together and it has the resource, profile and core audiences to sustain both scale and add value (perhaps helped by Trump and Brexit in the US and UK – and generally by the public sense that they need more reliable sources during our informational crisis). Brands like the Washington Post, WSJ, New York Times, Guardian, Telegraph, London Times, CNN, FT, etc are not the cash cows they used to be. But they are changing editorial strategies to focus on their added value to specific users. This is squeezing the niches.
I would also turn around Problem #1 and say that we still have too much duplicated journalism. Or too much journalism full-stop. Yes, there are gaping voids, especially at local level. Yes, you might still have to work hard as a consumer to find the right diet of content to suit your needs. Aggregation or curation is still pretty crude. But that, rather than yet another start-up with a handful of earnest writers seeking to produce more long-form interactive articles about international affairs or identity politics is probably what our information-saturated world needs.
Lurking behind this debate is, of course, the platforms. Google and Facebook are not ‘stealing’ journalism’s advertising. The news media doesn’t own advertising. But the big networks of social sharing and discovery do now create the algorithms and marketing terms upon which content creation, consumption and monetisation largely depends. The news companies, large and small, digital native or legacy, are re-forming themselves. But how they negotiate, often literally, with the platforms and how we as societies govern those negotiations, will be as important as the whims of venture capital or advertisers. As Clay Shirky used to say, with the Internet, things get broken faster than new things emerge to replace them.
That set of issues, for me, will be at the heart of our new LSE Truth, Trust and Technology Commission. We will be consulting widely with various stakeholders in an attempt to come up with an agenda for journalism and the platforms at this critical phase. It is an existential question for journalism. Less so for the platforms who can thrive without hard news. But for the citizen this is vital if they want healthy politics and an informed society. I would welcome your input.
This article by Professor Charlie Beckett, director of the LSE Truth, Trust and Technology Commission.
Digital strategy consultant Ben Thompson has written a long article examining how the news media business model has to change because of the shift away from the advertising supported model. Lots of good context. Like me he saw BuzzFeed as an interesting attempt to develop a different revenue structure which makes its current difficulties reconciling the demands of VC funding crucial.