Steve Dempsey: German giant's distribution partnership may be bad news for publishers
A slew of distributed platforms have been rolled out by tech companies in recent years. Facebook has Instant Articles, Google has Accelerated Mobile Pages, Snapchat has its Discover channels, while Apple has an updated News app (provided you're in one of the countries where it's available). Publishers, having ceded too much distribution power to these online intermediaries, approached their new platforms with caution.
But one German publishing giant, Axel Springer, decided if you can't beat 'em, join 'em and set up its own app for aggregating and distributing news in February last year.
Upday combines editorial aggregation of stories with a feed of news created by an algorithm based on the users' preferences. It comes pre-installed on Samsung phones in the UK, France, Poland and Germany, and has been downloaded from the Google Play Store somewhere between 100,000 and 500,000 times. Now Springer is springing Upday on the rest of Europe.
"By the end of Q1 we will have launched offices in Madrid and Milan, covering Spain and Italy respectively," says Robin Hough Upday's managing director in the UK. "By the end of Q2 we will have launched in 10 additional countries - Belgium, Switzerland, Austria, the Netherlands, Finland, Norway, Sweden, Denmark, Portugal and, of course, Ireland."
So what makes Upday different from the distributed news platforms created by its frenemies from Silicon Valley?
"We understand first-hand how publishers work and the pressures they are under," says Hough. "We want commercial success, of course, but it has to be something that works for the wider industry at the same time. We are a 'for us, by us' platform and the close partnerships that we have forged with publishers, built and fostered by our journalists, our publishing teams and, ultimately, the fundamentals of our model, underlines that. Those relationships are based on us being a utility, a source of valuable traffic."
Springer claims Upday pumps more than two million visits per day to publishers' websites. In some cases it's providing as much as 10pc of the total mobile traffic to a publisher's website. But does Upday offer publishers anything other than traffic? Facebook Instant Articles, for example, promises unparalleled speed, and a cut of all ad revenue that the social network sells against the stories. What carrot is Upday dangling? "Our model is a simple one - we provide referral traffic, pure and simple," says Hough. "There is no commercial arrangement on either side. It keeps things simple and effective for both sides of the partnership."
You could say, it also means it's not much of a partnership at all. At best, Upday is a source of traffic. At worst, it's a competitor to publishers' own native apps.
But media outlets' 'partnerships' with other distributors aren't particularly fruitful either. A recent study from Digital Content Next, found that publishers are only making 14pc of their digital revenues from distributing their content on third-party platforms. It also found that new promises and platforms have failed to generate meaningful revenue streams. For example, the report says Snapchat is the hardest platform for publishers to work with; its channels are invitation only, require a real commitment and offer limited revenues. In relation to Facebook, the report states that publishers "express deep ambivalence about the platform's commitment to their success monetising on the platform". Some 85pc of the revenues generated in the first half of 2016 from third parties related to video content, with YouTube proving to be the most lucrative social-media platform for publishers. Although YouTube Red, the paid subscription service, wasn't generating any significant revenue for any media outlet using it.
So perhaps Upday is the best (or least worst) distribution partner currently available to publishers, and perhaps it's onto something by keeping the relationship simple and offering eyeballs in return for an RSS feed of stories. But Upday wants to have its cake and eat it too - the app will also generate its own revenues as well. It's pitching itself as a mass-market platform, offering data-rich mobile advertising, sold directly and programmatically. Surely that means it will tempt money away from the publishers in the markets where it's running - especially smaller ones like Ireland? That doesn't sound like a partnership. That sounds like competition to me.
Sunday Indo Business