Editor’s note: This blog is the second of a two-part discussion on digital disruption. Read part 1 of this post, regarding how disruption has affected other industries.
Disruptive innovation is a double-edged sword. For incumbents in industries affected by the phenomenon, it often results in “the bigger they are, the harder they fall” finales. But every fatality also leads to new entrepreneur success stories.
Such is the case with the publishing industry.
Racing to the bottom
Today’s media landscape is vastly different than what it was 15 years ago, but at its core, the industry itself has changed very little, starting at the top. Sticking to traditional business models, beliefs, and values, publishing executives are blind to the realities radical change – in technology, society, and markets.
Some have called it hubris and others blame 400 years of print mentality baggage. Whatever it is, publishers’ digital strategies and tactics are propelling them to the bottom and they need to stop the madness before the bottom falls out.
On your mark …
Seeing syndication as sinful, publishers rejected the content aggregation readers wanted and gave birth to Google News, Yahoo News, AOL, etc. The result: In 2015, Google led the pack of search engines, becoming the most trusted source of news globally and the world’s largest media owner.
Meanwhile, trust in traditional media continued to head in the wrong direction.
Get set …
Not willing to budge on budgets, publishers created a pricing stand-off that has driven hundreds of millions of readers to free news sources and spawned a new generation of digital-only news sites like Huffington Post, BuzzFeed, Vice, etc.
Publishers’ refusal to give readers a voice in the news is probably the most bizarre and myopic move I’ve seen in years.
Blaming trolls and claiming brand protection as reasons for muzzling their readers and not allowing them to add their comments and opinions to articles is not only unwarranted, it’s crazy.
By unjustly punishing the masses for the sins of a few, some publishers have turned social media communities into news networks, pushing Facebook into the No. 1 spot for frictionless news discovery and content curation by the crowd.
It is unfathomable that such smart people can’t see beyond their paywalls and printers to recognise that engagement is the secret sauce to advertising sales. How can they be so blind to the billions those conversations are bringing in to the new kids on the block?
Digital advertising revenues rose 18% to US$50.7 billion in 2014 with Facebook increasing its digital ad revenue 52% to approximately US$5 billion. That’s more than the digital ad revenue from all U.S. newspapers combined!
On a global scale, things look even scarier. Ad spend on social networks grew 41% in 2014 totaling more than US$15.3 billion. Facebook accounted for 75% of that windfall; 8% went to Twitter. In 2015, global ad spend on social is forecasted to grow by 29%, totaling US$19.8 billion.
The social media gap will continue to widen as revenues reach US$8.2 billion by 2018 in the U.S. alone, at which time print advertising will have plummeted to US$20.3 billion, less than one-third of what it was in 2007.
Bottom line: Social media came out of nowhere less than a decade ago and is now kicking publishers’ butts in terms of news discovery and curation, audience growth and engagement with content, and advertising dollars.
This is all because publishers couldn’t, or wouldn’t, think outside the broadsheet and innovate fast enough to capitalise on a massive digital audience hungry for media.
Instead of looking for new ways to engage with readers within their own digital destinations — or, better yet, partnering with others in the industry to create a socially engaging “network for news” and share the wealth — media companies are now giving away their high-value content for free to Facebook, the filter-happy, brand-unfriendly content curator and controller.
Facebook may be responsible for 27% of all traffic to most news sites (up to 70% for some), but what happens to all that traffic when a publisher’s full-content articles are hosted in the social titan’s territory? Why should readers ever visit the publishers’ sites again if they can get the content and conversation they want on Facebook? Bye-bye Web site, digital-edition traffic, and related advertising dollars!
Facebook: friend or foe?
Just like publishers’ parade to paywalls, The New York Times’ decision to strike a deal with Facebook probably has many newspaper executives contemplating a similar engagement. The deal may look tempting, but don’t be surprised when it turns out to be just another one of Facebook’s famous “bait-and-switch” scenarios.
NYT and other “selected” early adopters of Instant Articles are the bait to draw unsuspecting lemmings into the lair. Don’t think for a minute that all publishers will receive the same preferential treatment as the NYTs of the world. And never forget how much of a brand bully Facebook can be, and how it has treated publishers in the past.
Last year it arbitrarily adjusted its organic reach algorithm to drastically decrease the distribution of companies’ content to less than 5% of fans who took the time to LIKE their pages. Suddenly brand marketing for businesses on Facebook took a major hit and the subliminal message from the Black Widow of the Social Web was easy to read between the silk: “Pay to play or don’t play at all.”
Overnight, Facebook gave deep-pocket publishers an unfair advantage over smaller outlets. And this kind of duplicity isn’t new:
- In 2009, users were told that their personal information was being kept private, when in fact, Facebook was sharing it with others on numerous occasions. The company finally settled the charges with the Federal Trade Commission (FTC) in 2012, which required Facebook to agree to a “consent order.”
- Two years later, in response to complaints that Facebook manipulated the newsfeeds of close to 700,000 unsuspecting users, the Electronic Privacy Information Center (EPIC) filed a motion with the FTC accusing Facebook of deceptive trade practices and violation of that 2012 consent order.
The social giant is forever “tweaking” its newsfeed, often at the expense of publishers. The most recent change, which de-prioritises publishers’ content even further, makes one wonder if the move was designed to make publishers believe they have no other choice but to follow in the footsteps of NYT to reach the 88% of Millennials who “regularly” get their news from Facebook.
And speaking of those Millennial readers, who will be given access to their personal data? Will it be shared with publishers based on their content being read, or will users be asked to enable/disable access every time they access a new publishers’ content (akin to in-app purchases on Apple)?
Given today’s promiscuous readers’ preference for content from multiple sources, this could turn into an opt-in/out nightmare for many. Don’t be surprised if Facebook suddenly gives users a universal switch to turn off data sharing with all publishers – in the best interest of users, of course!
Mathew Ingram summed it up well: “[Facebook] tries to portray the algorithm as just a harmless extension of its users’ interests, when in fact it is anything but. It is Facebook’s most powerful weapon, and a blade that cuts both ways when it comes to the media industry.”
Facebook is no one’s “friend.” It will never stop manipulating newsfeeds, users, publishers, and advertisers to serve one understandable, fundamental need – to bolster its bottom line. So before publishers jump into bed with this very formidable competitor they need to remember what Facebook has done in the past and what it is capable of doing in the future with the fortune it will be making off publishers’ content.
Terms might look rosy for some publishers right now, but Facebook is a game-changer in more ways than one. You know what they say: “Buyer beware! If something looks too good to be true, it probably is.”
The race is still on – may the slowest publisher win!
For hundreds of years, publishers held a monopoly on content and protected it like it was the Crown Jewels. And although technology has changed how people consume and interact with content, what hasn’t changed is their insatiable appetite for quality news and media. There’s still hope!
However, with the proliferation of content from almost everyone with an Internet connection, news is becoming a commodity product. It hurts, I know. What makes content compelling to consumers now is how it is packaged, presented, integrated, distributed, and priced.
Just like music and movie fans, today’s readers want news “their way” or “no way,” which translates to:
- Frictionless all-access to relevant, shareable content.
- Easy engagement in peer-to-peer conversations.
- Convenience at the right price.
Facebook gave them two out of three (engagement and price), but now with publishers jumping over each other to sleep with the unfriendly social giant, soon Facebook will have it all!
Stop the insanity
Music and video needed to reinvent themselves to survive. It’s time for publishers to stop the insanity of racing to the bottom and transform themselves into something beautiful in the eyes of their beholding readers. They need to:
It’s not the richest, oldest, smartest, or strongest that will survive the next decade of disruption, but those most adaptable to it. Publishers need to shed the baggage of the past and innovate unfettered to realise a new vision of going where no one has gone before.
But time is of the essence. Ray Wang, author of Disrupting Digital Business, probably said it best: “Digital Darwinism is unkind to [dinosaurs] who wait.”