Knowledge Bridge

Global Intelligence for the Digital Transition

//Peter Whitehead /july 15 / 2015

Are Facebook’s Instant Articles and Apple’s News app another nail in the coffin for news publishers?

When Facebook announced the launch of Instant Articles, a feature that will distribute content from select news publishers directly on the social media giant’s platform, it provoked another existential crisis for news media. Media commentators fell over themselves to weigh up the impact of Facebook’s move coinciding, as it did, with Apple’s unveiling of its own News app that will be built into the updated iOS 9, and similar moves by Snapchat and – likely to be announced soon – Google. Many pundits saw this as another nail in the coffin of the news industry, rather than the seeds of a brighter future.

For Michael Wolff, writing in MIT Technology Review, the acceptance of Instant Articles by major players who have signed up to provide content through the feature provided yet another example of bad decision-making by the news industry. As he points out: “Netflix will pay approximately $3 billion in licensing and production fees this year to the television and film industry; Hulu is paying $192 million to license South Park; Spotify pays out 70 percent of its gross revenues to the music labels that hold the underlying rights to Spotify’s catalogue. Now here’s what Facebook is guaranteeing a variety of publishers, including the New York Times, BuzzFeed, and the Atlantic, which are posting articles in its new “instant articles” feature: $0.”

He accuses news publishers of giving away their content for free, while at the same time losing control of their branding and valuable usage data. In the Facebook deal, publishers can sell ads on their articles and keep all of the revenue, or have Facebook sell ads in exchange for 30 percent.

“In the case of these new platform distribution deals—while they all involve slightly different plays—they each mimic a standard publishing business model: syndication. That is, a publisher with access to a different audience redistributes the content of another publisher—of course paying the content owner a fair fee. In some sense, this is the basis of the media business … Content is valuable–otherwise why distribute it?”

This leads Wolff to wonder whether “republishing initiatives are digging a deeper hole for publishers or helping them get out of the one they are already in”. He sees no reason to think things will turn out well: “…publishers have largely found themselves in this dismal situation because of their past bad decisions—accepting the general free ethos, bowing to a vast catchall of casual and formal sharing and re-posting agreements, and failing to challenge an ever-expanding interpretation of fair use. It seems only logical to doubt the business acumen of people who have been singularly inept when it comes to protecting their interests in the world of digital distribution.”

Facebook’s rationale for publishers to support Instant Articles is that it will provide a better user experience and deliver bigger audiences. While true, Wolff says that publishers will lose sustainable brand-building opportunities; it’s a model that better suits content that maximizes revenue potential, in particular ‘native content’, and will further push down digital ad prices.

According to Wolff, this type of syndication arrangement represents “another step closer toward what Ken Doctor, an analyst and journalist who has closely covered the demise of the news business, calls “off news site” reading. In this, publishers effectively give up their own channels and become suppliers of content to more efficient distribution channels … In effect, the New York Times becomes a wire service–the AP, except where the AP gets paid huge licensing fees, the Times does not.”

With the collapse of traditional ad revenues, publishers have justified pushing forward with digital experimentation because others were and because they couldn’t afford not to, even though they don’t fully understand the technology. “The ultimate result was a disastrous, sheep-to-slaughter endgame scenario, in which the new, digitally focused publishers are a fraction of their analog size. And now, in the prevalent view, there is simply no turning back.”

Meanwhile, dollars are flowing into the coffers of TV, movie and sports content creators. Even music, is fighting to win back control of – or at least payment for – its product. Wolff concludes that while there are differences between entertainment and news publishing that may explain why the old rules don’t apply in the new world, “perhaps publishers are just shamefully bad businessmen”.

In Mobile Marketing Daily, Steve Smith reviews the Apple News app and what it means for the news business. He concludes that in user experience terms it’s similar to Flipboard and Zeit – aggregating content from news sites and blogs in an attractive, easy-to-use way – but his diagnosis for the publishing industry makes for grim reading: “The legitimate worry of course is that media brands further lose control of their audience, data, context – and potentially, of their advertisers. I would say “Alert the media,” but in this scenario the media are already dead men walking.”

Writing for Fast Company, Joel Johnson points out that Apple and Facebook are just giving users what they want: a faster, less cluttered experience, compared to the slow load times and multitude of ad forms assaulting users on the sites of news publishers, who are forced into maximizing revenue by any means possible. Aggregators may provide a better – though banal – experience, “but it is unclear if most publications will be able to survive on only the revenue granted by these platform companies alone.” Apple’s attitude that “advertising is always unwelcome, unless it happens to be advertising that Apple itself lords over” is also a serious concern. “With small-to-midsize publishers already dropping like flies, things are looking perilous for readers and writers alike.”

Article by Peter Whitehead

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