Monday 19 March 2018

Steve Dempsey: Publisher protectionism isn't the right way to fight off the digital duopoly

(stock image)
(stock image)
Steve Dempsey

Steve Dempsey

The news industry has been grumbling about the power of Google and Facebook for some time. And with good reason. Not only does the Google/Facebook duopoly now play a vital role in the distribution and discovery of publishers' content, but it's also sucking up all the cash.

According to PwC's latest Entertainment and Media Global Outlook, the duopoly now accounts for around 50pc of total global ad revenues. Google's ad revenue alone is roughly equal to all global print ad revenues.

So what's a once-powerful news publisher to do? Well, joining forces with other news brands to take on a common enemy seems like a good idea. And right now on either side of the Atlantic, two very different approaches to finding safety in numbers are under way.

In France Le Monde and Le Figaro have just announced that they'll be pooling their digital ad inventory to provide reach in the French market that rivals Facebook and Google. Together, they will offer advertisers access to 35 million monthly unique users. How does that stack up against Google and Facebook? Well, it's good, but it ain't great. The duopoly has a reach of 84 million unique users per month according to Médiamétrie.

But alliances like this seem like a no-brainer. Concerns around fake news and brand safety mean publishers should be pushing an open door when pitching their sites as trusted platforms through which to reach consumers - especially if they can work together. But it's been tried before. There's the Pangaea Alliance, set up in 2015 by the Guardian, the Financial Times, Reuters, the Economist, and CNN International. There's also Concert, a private marketplace for ads on the sites of Condé Nast, Vox Media and NBCUniversal. And in the broadcasting space there's Open AP, a combined targeting platform from Viacom, Turner and Fox Networks, which pools data, but not inventory. Are these alliances working? Well they're certainly not hampering the growth of Facebook and Google. But perhaps their value lies in protecting participants from further decline, rather than clawing back revenues from the digital duopoly.

A host of publishers in the US are taking a different tack. The News Media Alliance, a newspaper trade group that represents around 2,000 news brands including The New York Times and The Washington Post, is looking for an exemption to antitrust law so it can negotiate collectively with Facebook and Google.

Writing in the Wall Street Journal, the NMA's David Chavern argued that Facebook and Google are distorting the flow of economic value derived from journalism.

"The two digital giants don't employ reporters: They don't dig through public records to uncover corruption, send correspondents into war zones, or attend last night's game to get the highlights," he wrote.

"They expect an economically-squeezed news industry to do that costly work for them."

What could Chavern and company be looking for following a regulatory fillip? Probably a greater slice of ad revenue, increased control over distribution access to data, and maybe support for efforts to drive subscriptions.

The NMA maintains that news is a social good, vital to a healthy democracy. And who could argue with that! But the problem is that news has never been a standalone business. The success of the traditional news model was dependent upon bundling news with ads and classifieds that were relevant in a particular target market.

Ever since the arrival of the internet, legacy publishers have sat on their hands while digital intermediaries pulled this model apart. Google and Facebook built user-friendly services - not to mention online ad solutions - that use intent and data to allow businesses to target potential customers. Undoubtedly, these new businesses require a new form of regulation that recognises the nature of surveillance capitalism and global scale.

But it's a bit rich for publishers to go running to regulators because they lacked the foresight to safeguard their businesses for the digital age.

So while alliances based on pooling ad inventory make some economic sense, regulatory approaches - like that being taken by the NMA, or even the battle for neighbouring rights in the EU - smack of protectionism. That's not to say that the duopoly doesn't have a role to play in supporting journalism - it does. And its efforts to date have been tokenistic. These companies now exercise great power over our societies, and with great power comes great responsibility. They may need to be strong-armed into accepting this responsibility, but they shouldn't be forced to prop up a business model they've disrupted.

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