Sense and nonsense about the future of news

June 13, 2019

This has been a busy week for big reports on digital platforms and how the expensive enterprise of doing journalism can find supporting revenue. Here are some short summaries and my report card on the studies.

A painful misfire on Google’s impact. The News Media Alliance, a lobbying group for the newspaper industry, kicked off the week with a consultant’s report, released Sunday night. It estimated that Google is making $4.7 billion a year in revenue on news. The New York Times bought in with a credulous story highlighting the big number.

By Monday morning, knowledgeable commentators like Emily Bell and Bill Grueskin of Columbia University and Josh Benton of Harvard’s Nieman Lab had shredded the claim. Turns out it was based on an ambiguous comment in 2008 by then-Google exec Melissa Mayer that Google News was “worth $100 million” to the company. The NMA and its consultants tried to project that out to the much larger and much changed Google/Alphabet of 2019. Garbage in, garbage out.

So some better work in the study on how significantly news stories figure in guiding traffic to Google’s search function and search advertising got lost in the shuffle.

I spoke to NMA president and CEO David Chavern on Thursday, and he was not exactly sticking by the number.

“We hired some smart people who tried hard and took a shot at it. But yes, it could be more or less,” he said.

Google probably knows the revenue news contributes but doesn’t say, Chavern added, and he would welcome an alternative estimate or an alternative methodology for adding up the damage (offset by proceeds of the traffic Google sends back publishers’ way).

Trouble is that the badly flawed number was a distraction from making the otherwise strong case that giant and lightly regulated platform companies like Google and Facebook monopolize digital advertising, leaving only a little piece of that pie for others, including news outlets.

GRADE: D-

 

A day in Congress. Tuesday the alliance took the lead in a Congressional hearing on the plight of newspapers and how little leverage they have to trying to negotiate with the platform companies.

That went better. A bill to allow the NMA’s 2,000 members an antitrust waiver so they can collectively press their case for compensation has bipartisan support. That is not to say it will easily pass, but it’s a start.

If the alliance gets the bargaining authorization it wants, I do wonder how a negotiation would unfold. When newspaper publishers confronted Google’s then-president Eric Schmidt at their 2009 annual conference in San Diego, he had a ready answer: If you think Google does you more harm than good, stop providing your journalism for the company’s news summaries and search results.

That rationale remains the core of Google’s position  — like us or leave us. But, Chavern argues, “it’s a different environment now. The state of the industry has become an existential crisis.I don’t see it as rational that they (Google and Facebook) would stiffarm the industry and take the blame if it is not sustainable.”

GRADE: B

 

An authoritative worldwide view from Britain. The Reuters Institute at Oxford produces a must-read annual report on the digital arena and news.

The lead in this year’s eighth edition, released Tuesday, is consideration of the prospects for paid digital subscription revenue. To the Reuters team, led by Rasmus Kleis Nielsen and his colleague Nic Newman, the potential may not be nearly as bright as many in the industry thought a year ago.

As I and others have written, “subscription fatigue” is building. If consumers are willing to pay for news at all (and many say they are not), they may pick one news subscription rather than several  — often a national outlet like The New York Times or Wall Street Journal. Or they may choose to pay for the likes of Hulu and Spotify and satisfy their news appetite entirely from sources easily accessible for free.

“A lot of the public is really alienated from a lot of the journalism that they see,” Nielsen said. “They don’t find it particularly trustworthy, they don’t find it particularly relevant and they don’t find it leaves them in a better place.”

My takeaway for local newspapers  — proceed with care when banking on a huge uptake of full-priced digital subscriptions. Building that paying audience shapes up as a partial answer, but not the full answer to replacing continuing losses of advertising revenue.

GRADE: A

 

Mary Meeker and that scary slide. Influential analyst Mary Meeker released her sweeping annual review of tech trends this week, too. It now contains 333 slides, rewarding reading if you have the time. One of those slides has held particular impact through the years for the news business.

Her thesis: The gap is closing but print media still gets a double portion of advertising spending when compared to the now much larger and still growing share of users’ time spent on the internet.

Nieman’s Benton is a fan of her study and has published an update on this year’s edition of Meeker’s “scariest slide.” I have been skeptical about equating attention time to value for advertisers. All the more so now that fake news and other unsafe content come with the territory of time spent on YouTube or Facebook and pollute the atmosphere there for advertisers.

Meeker’s comparison has consistently been about shares of advertising, but now I can also see an echo of the Reuters finding on subscription fatigue. If consumers decide they only have so much of a budget, won’t they tilt to paying for where they spend the most time? And that’s probably not going to be news.

GRADE: C+ (Meeker’s slide on ad spend, not the whole report)

 

On a positive note  — branded content goes local. A more modest study came out this week from the Local Media Consortium (an intermediary for placing digital ads) and the Local Media Association (another trade association).

They identified 40 outlets where sponsored content is taking root  — returns in the $500,000 to $1,000,000 or more  — and has good prospects to continue to grow quickly.

Conventional wisdom has held that sponsored content works for big national players like The New York Times or The Atlantic, who have created studios to help create the paid-for stories, but that it doesn’t scale locally. Not necessarily so, the study found  — and this could materialize as one of many emerging sources of revenue urgently needed by newspapers and other local news ventures.

GRADE: B+

 

That is more than enough industry intelligence to consume in just one week, but also a touchstone for the thorny issue, as Reuters put it, of “who will pay for news,” assuming, as nearly every reader of this site would agree, that it is worth saving.