The continuing devaluation of advertising by Google, Facebook, and the rest of the web is keeping the media sector in a perpetual round of disruptions -- with layoffs and closures and forcing them into a paywalled subscription business and away from free content paid for by advertising.
Advertising revenues used to prop-up a thriving
media industry that had few problems keeping fake news, hate speech, and
other toxic content away from the public eye. The internet -- with its
low costs of distribution, ability to reach a large audience, plus the
web as a publishing technology -- should have provided a bonanza of
revenues for media companies.
Traditionally, more eyeballs mean
more advertising revenues, and media companies have been getting larger
and larger audiences. But there's something wrong; their advertising
revenues continue to fall. It's because their audience is too slow to
outpace the deflationary effects of the internet.
Whenever something is abundant it has a lower value. The web created a
huge abundance of formerly limited resources: Pages and places to
advertise. A low-cost web page now competes for the same advertisers as a
page on a news site that employees hundreds of professionals.
It's called programmatic advertising, and it is problematic for the
traditional media industry because it means its investments in
high-quality media are not rewarded.
advertising trend affects everyone including Google. The more Google
expands its reach and its audience -- the less revenue it gets from each
Every financial quarter for more than a decade, Google
reports around 15 to 20% less revenue per click (cost-per-click) from
the prior year. Every quarter, year after year, it makes less money per
Google has been able to outrun this steep deflation in
its advertising business because it manages to grow its paid clicks two
to three times faster than what it loses per click.
realistic or sustainable for traditional media to grow at such rates.
It's not sustainable for Google either. How many more ads can it find
places to show especially on tiny mobile screens?
Google's big secret: Its ads are less effective yet it finds more places
to show ads. This means our experience of the internet with Google is
going to be more ads as it tries to outrun the deflation of its click
It's too late for the media industry to reach a more equitable deal
with the internet giants, and with no future in advertising, media
companies have had to develop multiple revenue streams -- a Heinz 57
The ambition of every journalist is the same as
their news organization: To be read by as many people as possible.
Paywalls limit distribution and limit audience size, the very opposite
of what the internet provides!
Google and Facebook are actively
supporting subscriptions for news media and both recently launched
initiatives to help newspapers sign up more subscribers. Mark
Zuckerberg wrote in a recent New York Times editorial that Facebook helps even further by not taking a cut of subscription money (Apple charges 30% commission).
subscriptions save the media industry even without Facebook taking a
commission? No. But in the meantime, it will create a huge digital
divide -- between those who can pay for high-quality news and
information and those who cannot afford them. A New York Times digital subscription is $195 per year and that's just one publication.
The digital divide, which divides society in terms of internet access and computer availability, is about to get far worse.
There will be free news and other information, but will you be able to trust it?
If people won't pay for the content they should be reading, then
special interest groups with hidden agendas will gladly produce the free
content they want people to read.
This digital divide of
paywalls will strand a huge population on the free side of the web --
the bad side. Free content will expose a huge part of our population to
political and other nefarious manipulation.
Those with cash to
pass through the paywalls will live better lives. They will have the
advantage of high-quality information on every aspect of their lives.
They will be better protected from harmful content, from hate speech,
from fake news. And they will be less susceptible to covert
Paywalls may help create a sustainable media
business model, but at the cost of an unsustainable divide in
information, it is harmful.
Bridging the digital divide made
sense when advertising was able to support free access to the type of
information that improves people's lives. Providing everyone with
internet access now means everyone can be exposed to a powerful digital
propaganda machine that tries to manipulate and divide people.
the digital divide without solving the issue of open access to the best
news sources and information means dragging people into a digital world
where they are now more vulnerable to exploitation, fraud, and
manipulation. This digital divide has no easy solutions.