“The Sell Sider” is a column written by the sell side of the digital media community.
Today's column is written by Michael Weaver, senior vice president of business growth and development at Al Jazeera Media Network.
Today we are living through the public costs of having a free press purpose-built to satisfy the short-term financial incentives of contemporary capital, which reward scale and reach over depth and substance.
These incentives – exacerbated by, if not originating with, the advent of digital publishing – present an existential crisis for mission-driven media organizations. Even the most lauded names in publishing today struggle with the viability of their business models.
Many publishers – Facebook and Google excluded – just wrapped up a panicky Q4.
Wired rolled out a paywall in what its editor-in-chief calls a “hedge against the future.” BuzzFeed, which is expected to miss 2017 revenue targets by as much as 20% and put its IPO on hold as a result, laid off about 100 employees as it shifts from direct-sold advertising toward a more diverse revenue model. The Gothamist network was summarily shut down by its new owner, Joe Ricketts. LA Weekly employees were laid off by a new ownership group that was, at the time, totally anonymous.
That all took place just in November in a sign that the gradual erosion in the business model of journalism has dangerously accelerated.
Digital and traditional news organizations are under pressure to adapt to models that serve the short-term interests of investors rather than the public interest. The result is that, from a business point of view, today’s dominant publishers are, in my opinion, Google and Facebook, two companies that don’t produce any content and resist the editorial responsibility at the heart of journalism. The sheer asymmetry in today’s publishing duopoly, where Google and Facebook take 80% of every new dollar spent, is a symptom – not a cause – of these outmoded priorities.
No silver bullet can fix the problems facing publishers today, and I don’t intend to propose one here. What I am proposing is a shift in thinking, a crucial pivot in our approach away from extreme scale and short-term gains and toward a valorization of the role publishers play in the health and functioning of a democratic society.
How we got here
While it's important to recognize that not all industries can exist in perpetuity – some industries will inevitably get disrupted to make way for something better and more sustainable – we're not talking about coal mining here.
We're talking about the news: the factual accounts of our world, governments and participatory democracy. Few would dispute the importance of an objective news media to a functioning society. Yet both pre- and post-IPO publishers are pressured to scale and monetize their audiences to deliver immediately on valuations set by VCs and earnings estimates set by bankers. Build a big audience, monetize it fast, then monetize it more. The role the publisher plays in society is an afterthought.
New business models have emerged, only to be wracked with their own conundrums and internal contradictions. Paywalls help with digital monetization but only modestly in a culture that expects advertisers to underwrite its content consumption. Native advertising offers promising revenue, but it also threatens to compromise the sanctity of the editorial when clear lines are not drawn.
While the rise of programmatic advertising has presented new monetization opportunities for publishers, it has also forced difficult technological adaptations and spawned an entirely new digital supply chain that siphons somewhere between 60-80% of every dollar spent on advertising. Programmatic advertising also automated multiple important processes once overseen by humans, providing fertile ground for fraud and abuse.
Amid these changes, the broader transition to digital has resulted in a drastic drop in CPMs, prompting publishers to disrupt the audience experience with ad overstuffing, in turn prompting audiences to turn off ads altogether. Mission-driven editorial priorities get lost amid all of these corrections and overcorrections.
Distribution, engagement, monetization
To ensure the viability of journalism in the public interest, we must bring three forces back into alignment: distribution, experience and monetization.
The audience experience must sit at the center of this balanced equation. But at present, the other two pillars – distribution and monetization – don’t support a quality editorial experience and, worse, threaten to undermine it. Monetization is driven by volume rather than quality. Meanwhile, distribution is largely in the hands of large platforms that disseminate content at no cost to themselves, with little value back to publishers, while flattening the impact of high-quality content by virtue of its adjacency to fake news and social media rubbish.
Once again, these disconnects are the product of a broader underlying flaw: the financial machine's singular obsession with short-term results. The industry must find a way to take the longer view and build a distribution and monetization infrastructure that supports quality journalism without eroding its value. Distribution, experience and monetization, at their core, are not at odds. They don’t need to be.
When publishers separate themselves from the quarterly, if not daily, burden to monetize every audience engagement and can focus on building editorial experiences with long-term value, distribution and monetization will fall in line. By focusing on and curating content with an eye toward context and distribution, publishers can have long-term audience growth while retaining journalistic integrity.
Today’s short-term gains are long-term suicide for any publisher intent on maintaining its integrity. Until publishers appreciate the complete interdependency of experience, distribution and monetization and have a strategy that approaches all three in a measured way, they cannot be successful in the long game.
We still do not know what the specifics of such a strategy would entail. No publisher has been able to resist the short-termism brought on by constant technological upheaval. But 20 years into the digital experiment, every publisher is looking beyond the next widget or algorithm change and re-centering on its long-term value proposition.
Of course, some publishers benefit from longer runways, sometimes because of state sponsorship, such as in the case of Al Jazeera or the BBC, while others have the luxury of deep-pocketed owners, including The Washington Post, The Atlantic, Los Angeles Times and others. These financial supports provide a longer runway, but that in itself is not a solution to the ills of short-termism. One still has to use the longer runway to build for the long term, and eschewing the demands of quarterly or annual performance is not easy, even for these publishers.
Publishers can't be a slave to short-termism. We must align distribution, engagement and monetization in a way that is sustainable. Truth only wins in the long run.