Just when you thought you had your digital content distribution strategy all figured out …
A recent report from Digital Content Next — a report that was leaked, according to Business Insider — once again shows why publishers of original content have a tenuous relationship with third-party platforms.
The Distributed Content Revenue Benchmark Report is still private and available only to DCN members. However, since there was a leak, DCN has released some of the details publicly.
In short, popular platforms like Snapchat, YouTube, Google, and Facebook offer large audiences but meagre revenues for publishers. Sure, there is a lot of money being spent on digital, but the majority goes to the platform, not to the content producer.
Here are some of the key findings:
- DCN surveyed nearly 20 so-called premium publishers — including The Financial Times, Bloomberg, The New York Times, NBC, and ESPN — and found they earned only 14% of their digital advertising revenue as a result of third-party platforms.
- According to Jason Kint, CEO of DCN, all the growth in digital advertising is being accrued by Google and Facebook. Using back-of-the-envelope math, Kint shows that if you exclude these two tech giants, “the digital ad industry actually shrunk over the first half” of 2016.
- The majority of third-party platform revenue comes via YouTube, though it is no surprise the platform tends to benefit TV and cable companies, not newspapers.
- Facebook Instant Articles is losing its lustre. Content producers feel the social media giant is taking too large a share of the ad revenue generated. Publishers get the audience but not the sales. They “express deep ambivalence about the platform’s commitment to their success monetising on the platform,” according to DCN’s report.
So what’s to be done?
This has been a long and winding road for content creators, particularly for newspapers.
Third-party platforms are key to reaching mass audiences. However, unless you are converting that audience into paid subscribera, it will not be enough to pay the bills. Facebook and Google are an excellent source of audience. They are not an adequate source of advertising revenue. You have to sell subscriptions.
In the coming months, you will see more and more publishers using third-party platforms to reach an audience to pitch pay-for-content offers.
Readers who have grown accustomed to getting premium content for free will have to pull out their credit cards if they want to continue reading.
Otherwise there will be no premium content at all.