October 25, 2019

When Will Media Entitlement Go Away

Local media is struggling. It has been for a long time now. Once dependent on print, many local media companies never figured out how to monetize their digital properties and their revenues cratered.

There are a lot of reasons for this. These brands didn’t understand how to build digital first publications, management was afraid to invest the necessary resources, they sacrificed user experience for additional revenue—I’m talking about the chumbox—and so much more.

But rather than discuss their own failings, people like to entirely pass the buck and blame the platforms for all their problems. Google and Facebook, people say, are all the problem. If only we got rid of them, media companies would suddenly be fantastically profitable.

How convenient…

Last week, The New York Times published an op-ed by Matt Stoller, a fellow at the anti-monopoly organization, Open Markets Institute, and the author of an upcoming book all about monopolies. His basic argument was that if we broke up Google and Facebook, everything would be fine.

He starts by talking about these low-quality Facebook pages that publish fake news and make money from advertising. He says:

Advertising revenue that used to go to quality journalism is now captured by big tech intermediaries, and some of that money now goes to dishonest, low-quality and fraudulent content.

This is the first presidential election happening after the business model for journalism collapsed. Advertising revenue for print newspapers has fallen by two-thirds since 2006. From 2008 to 2018, the number of newspaper reporters dropped 47 percent. Two-thirds of counties in America now have no daily newspaper, and 1,300 communities have lost all local coverage. Even outlets native to the web, like BuzzFeed and HuffPost, have laid off reporters. This problem is a global one; for example, in Australia from 2014 to 2018, the number of journalists in traditional print publications fell by 20 percent.

The business model for journalism collapsed during the last Financial Crisis. We’ve already had a few elections since then. Last election, you could argue, was the first one where fake news was as prevalent in the campaigns as ever before, but this is definitely not the first election post the collapse of journalism’s business model.


The above chart shows that. Revenue grew aggressively from the 80s to the mid 2000s, and then the collapse occurred right when the crisis happened.

Not to mention, fake news has always been a thing in this country. In the 1890s, Joseph Pulitzer’s New York World and William Randolph Hearst’s New York Journal were in a circulation war and the term “yellow journalism” came to be known for what they put out. Fake news. Sensationalist headlines with very little research.

But it’s more than just fake news. Before Facebook and Google, advertising was a lazy business. Ask a media sales executive what it was like to sell print advertising. These guys sold a piece of paper, made a boat load of money, and there was no accountability. There was no reporting required. Maybe the advertiser would do a brand study to see if there was any lift in awareness, but by and large, the business was so simple. An advertiser never knew how many people saw their ad.

Facebook and Google changed that. They said to advertisers, “we can tell you how many people saw it.” Google helped advertisers get in front of the person based on their intent to purchase with AdWords. And Facebook helped target to specific people based on hundreds of various data points.

Is it creepy? Yes. But it’s also a better product for marketers.

It doesn’t stop there, though. The way media people talk about this revenue, it’s so possessive. They call it “their” money that Google and Facebook stole. No. Wrong. It’s not their money. It was and always will be the brand’s money. This level of entitlement around a brand’s dollars is insane to me.

He then goes on to explain that all the acquisitions were unfair and made it uncompetitive for newspapers.

Enabled by a loose merger policy, there was a roll-up of the internet space. From 2004 to 2014, Google spent at least $23 billion buying 145 companies, including the advertising giant DoubleClick. And since 2004, Facebook has spent a similar amount buying 66 companies, including key acquisitions allowing it to attain dominance in mobile social networking. None of these acquisitions were blocked as anti-competitive.

Data is now the key input into advertising: If you know who is looking at an ad, that ad space becomes much more valuable. Google and Facebook now know who is looking at every ad, and their competitors for ad dollars — newspapers — do not.

Except, newspapers could have bought the technology if they wanted. DoubleClick was bought in 2007 for $3.1 billion. USA Today was the first national newspaper to go online in 1995. CNN followed soon after that year. If these news organizations wanted to be in a stronger ad business, they could have acted—they had 12 years between their launch and DoubleClick’s acquisition

But they didn’t. Google did. Why? Senior management at these newspapers were old print guys, so they were slow to change. It’s taken decades for those people to move out of senior positions and for digital-first media operators to step in, assess the landscape, and try to make changes.

There is no denying that Google and Facebook have taken an outsized portion of the revenue. They built a better product for marketers. They also built a lot of tools that we use in our businesses.

  • Google Ad Server: Many pubs power their ad business with this
  • Google Analytics: The level of data is incredible and it’s free
  • Facebook Ads: I see The New York Times driving users to sponsored content and reengaging subscribers users all the time with this

And the list goes on…

The entitlement doesn’t stop at revenue, though. It’s also about audience. A classic example of this is what’s going on in France between French publishers and Google. According to copyright law, if Google includes a snippet of the article and an image in the results, French publishers can require payment. Google says it won’t pay. Instead, Google says it’ll remove the snippet and image and simplify what the results look like.

Google shared this possible outcome with Search Engine Land:


I can tell you right now, it is highly unlikely I will click any of those…

Pierre Louette, CEO of Les Echos-Le Parisien media group, accused Google of trying to get around the law. He said:

Google is offering us a choice between amputating our (internet) traffic, which will prevent readers from finding us or accessing our sites via its search engine, and amputating our rights.

The entitlement in that statement is astounding. Our traffic is people who type our sites in directly or subscribe to our newsletters. Our traffic is not the people who exist on the internet that might find their ways to our sites through various channels If a user is on Google, that is Google’s traffic.

If someone shares this article on Twitter and that user clicks over to my site, is that my traffic? I’m borrowing it at best. Until the user subscribes and comes because of my relationship with them, it’s not my traffic.

Google drives free traffic to publishers. All it asks for is an image and a snippet of text to help its users determine if they want to click over. French publishers want to have their cake and eat it too; they want free traffic from Google AND they want Google to pay them for the right to send them that free traffic.

There’s no denying that Google is doing some questionable things around displaying increasing amounts of data to users. As publishers, we should push back on some of that. The knowledge box, for example, is pretty bad. But we have to accept a clear reality:

A user is not ours just because they came to our site once. If the user is coming to us from Google, that is Google’s user.

Why am I writing this today of all days?

Facebook News was officially announced today. None of us are surprised about this launch—and I’ve written a lot about it—but it’s now officially here.

The launch is giving me a little hope that the entitlement might be waning a bit. Digiday wrote a piece about how the same publishers who have been screwed over by Facebook in the past—damn the pivot to video—are part of this once again.

But this time, conversation with five different publishers reveal, publishers are going in with eyes wide open. Nobody is expecting a game changer or a silver bullet. This time, they’ll settle for the symbolic import of a platform paying them for their journalism and the hope that Facebook News can deliver an incremental benefit — provided Facebook sticks with it.

That’s the right way to think about it. If you can get incremental benefit, great. But the users on Facebook are Facebook’s users. If you can convert them, great. That doesn’t mean you’re entitled to them.

The difference now is publishers are really focused on building their businesses to be sustainable. I like that. We’re building OUR audiences through newsletters, registration and ultimately, monetizing with subscriptions. We’re realizing that our product is our great journalism. I’ve talked with many people since launching this newsletter and everyone is hunkering down to build profitable media businesses.

Yes, the arrival of Google and Facebook fundamentally changed how we do business as an industry. But publishers have to get over their entitlement to both the revenue and the audience. It was never ours to own; we were simply the beneficiaries. To think otherwise is entitled. We have to compete again and we can already see that working.

The Washington Post’s software team is introducing an ad network called Zeus that will give marketers brand-safe, high quality “programmatic” advertising. Concert from Vox does that too. These are media companies that are competing. They’re building products that marketers will want to use. They’re still working out the scale issue, but all these acquisitions theoretically help with that.

Facebook may be detrimental to our democracy, but let’s not try to connect that to the plight of legacy media brands. Fake news comes in all shapes and sizes. Today it’s on Facebook. In the 1890s, Pulitzer and Hearst, newspaper owners that we idolize, published so much fake news, it resulted in the Spanish-American War.

Let’s focus on building our businesses and use the platforms where it makes sense, but understand the only way we will survive is if we have our own audience that comes to us without needing the platforms.