The tectonic plates of the internet advertising economy shifted last week as Apple began to push out iOS 14.5 to over one billion devices worldwide. We’re also feeling frequent tremors as various proposals to address Google’s unilateral decision to ban all third-party cookies bubble-up in the industry lava. As we react to this industry tumult, it is important to keep one thing in mind: Pervasive user “tracking” has eroded the advertising opportunities of publishers large and small.
Tech inventory takeover
Just over six years ago, nearly half of the impressions across DCN members’ websites and apps, including both video and display, were sold directly by the publisher. When we receive final 2020 numbers next month, we expect that number will have dipped below 20% for the first time. The driving force here is data.
Third-party adtech firms have a competitive data advantage because they are able to track users without their knowledge across the web and apps. This pervasive audience-targeting, combined with the scale and ease of buying through these large third parties, has significantly shifted sales channels away from publishers and into the arms of data aggregators.
Tech financial takeover
Shifting to a reliance on third parties to sell 80% of publisher impressions didn’t need to be bad. Unfortunately, it is. Very bad indeed.
A majority of these ads are purchased based on microtargeted audiences — often using Apple’s IDFA or third-party cookies as a proxy for real people. In this process, publishers’ apps and websites are treated as interchangeable commodities. These third parties, Google being the largest, extract data and detach it from the inventory. This allows audiences to be targeted elsewhere on the web at the cheapest price available. That’s why advertising purchased directly from a publisher is sold at 5x the rate of inventory purchased through these third-party channels. Publishers are able to monetize the value of their brand, content and user relationships when selling the ads rather than being repackaged into a nameless audience bundle.
Two big winners: the two biggest “trackers”
In the two largest sales channels (Facebook and Google), premium publishers’ inventory must also compete against the two firms’ own inventory, and an insurmountable data advantage.
Between 2015 and 2019, this data advantage allowed the “duopoly” to capture 86% of the incremental U.S. digital advertising growth. Last year, the trend continued with the two taking 87% of the digital advertising market growth in the U.S.
Industry, regulators and, most importantly, the public, have grown to understand the core of the two companies’ business models relies on unbridled data collection. The numbers below clearly back this up. The bar chart on the left shows the change in sales channels of U.S. digital advertising from 2015 to 2019 and the percentage of the growth (right pie chart) captured by only two companies in 2020.
The privacy and data protection scale is tipping
There is little debate that users overwhelmingly choose privacy over tracking when they are asked which they prefer. The most famous privacy law to date, Europe’s General Data Protection Regulation (GDPR), has yet to fully bare its teeth. However, it is grounded in clear purpose limitations that minimize tracking and other uses of data that fall outside consumer expectations without very specific consent.
This inspired the most significant privacy law in, not coincidentally, the most populous U.S. state: California. Its latest incarnation (CPRA), which allows users to opt-out of tracking, is set to go into effect next year. It has even spawned the Global Privacy Control (GPC) to make this a simpler process which the Attorney General has recently endorsed as legally enforceable.
Meanwhile, Apple’s restricted use of its universal identifier IDFA, which has long been used for tracking, in the latest push of its iOS. Apple now mandates, for the first time, that apps ask their users to make a choice: They need to either ask the app not to track them or give explicit consent to track them. Unfortunately, this can create collateral damage even when an identifier is only being used by a service provider to the publisher that the user values and trusts.
Early reads on the data are that well over 90% of the users choose not to be tracked. So, Facebook had good reason to predict an earthquake coming its way since it’s not a service provider — but is the poster child of distrust. I can’t endorse a podcast more highly to distill the implications of this battle between Apple and Facebook than NYT The Daily. They elegantly illustrate that this is a high-stakes global war. And it’s patently obvious you wouldn’t want to line up on the side of Facebook in a battle over privacy.
But won’t this hurt ad prices and only make Google and Facebook stronger?
The two key arguments against data protection like Apple’s update are that 1) it will hurt ad prices and 2) make the duopoly even stronger. Indeed, third-party inventory is worth a lot more when it is coupled with third-party data. Unsurprisingly, adtech-funded research likes to tout this.
However, that perspective only looks at prices for a narrow type of targeting. There are very few empirical studies that examine the full marketplace. And these tend to show only modest benefit to publishers from unbridled third-party data. Publishers that have leaned into their first-party data ahead of the market are in a position of strength going forward. And, as the bar gets raised across the industry, they should see the increase in value from other more acceptable forms of targeting. Blunt technical solutions that fail to understand the nuance and trust of the publisher pose a risk to this opportunity.
In terms of Google and Facebook getting stronger, remember that they already have an insurmountable data advantage and their business results back it up. Clearly, Facebook wouldn’t have run national ad campaigns against Apple (even — ironically — threatening an antitrust lawsuit), if Apple shutting down IDFA tracking would have actually helped Facebook.
And no one actually believes that the Facebook behemoth is the champion of small business. They claim that personalized ads are the lifeblood of small business advertising and that offering consumers the option to forgo tracking would limit these businesses’ ability to effectively reach customers. Apple, however, points out that users are welcome to opt-in to data collection, thereby enabling personalized advertising. And let’s face it: In a privacy first digital advertising environment, those with first party data and trusted relationships with audiences will still reach them.
However, Facebook’s data dominance isn’t based upon a clear exchange of data for services. In fact, U.K. regulators issued a report (figure 2.3, page 50) showing that more than 50% of Google and Facebook’s data is collected when people aren’t actually intending to use a Google or Facebook service. This is the very definition of the kind of unbridled “tracking” that is so damaging to trust and the digital advertising business. That’s a critical data point — and one these companies aren’t crowing about in national ad campaigns.
Ok, yes, both companies have a significant amount of first-party data. However, shifts towards privacy pose a significant challenge to keeping this data fresh and enriching their interest profiles. This is spelled out in their 10Ks every time they file. Additionally, antitrust lawsuits focused on their data practices, along with new regulations like the Digital Markets Act in Europe, are squarely directed at them. Soon, they will appropriately put heightened data limitations on these powerful “gatekeepers.”
What to do if you’re a premium publisher
These changes are happening with or without us. The timeline, like all tectonic shifts, is unpredictable but the aftermath will be significant. However, publishers who understand the possibilities, see the emerging white space, invest in their direct consumer relationships, and are forthright about user expectations will have an advantage. Risks lie in allowing large tech platforms and lawmakers to define the terms and conversations impacting premium publishers.
I encourage publishers to lean into DCN to make sure we’re properly informed on your plans. We’re here to help you evaluate the risks and face unexpected challenges. DCN has technology supporters that are paving the way for publishers who need help. No doubt, there are elements of Apple’s move which can break core, and expected, functionality as they limit tracking.
Apple has used the definition of “tracking” developed years ago by a multistakeholder group, which included DCN and all sides of the industry. However, blunt technical enforcement always creates unintended consequences. We need to understand these issues so that we can help guide tech firms, lawmakers, and regulators to address consumer interests and the publishers who serve them day in and day out.
We feel the digital advertising landscape shifting. Yes, things will get broken. Some of those will not be missed, however. And, when the dust settles and we take stock of the reshaped landscape, we will see that the crumbling cookie and the fall of pervasive and invasive “tracking” will clear the way for our industry to build better solutions. These will be based upon quality experiences and transparent and in-context data collection. And this, in turn, will build a strong foundation for effective marketing and revenue that rewards companies that truly value their customers.
Last Friday marked 100 days since Donald Trump officially left the White House as U.S. president. His departure ended a chapter crammed with chaos and controversy for hundreds of millions of Americans, and many more around the world.
As the pandemic enters a second year, a deafening lack of Trump has been coupled with a general public malaise from too much news. As a result, the historic ratings bump enjoyed during the Trump administration quickly turned into a slump. Few outlets have been spared.
The Washington Post reported that of the three largest cable news networks, only Fox News has held relatively steady. Its three prime-time opinion shows fell just 6% in viewership since the first weeks of the year. MSNBC and CNN, meanwhile, declined 26% and 45% in the 8-10 p.m. ET time slot, respectively.
But it’s not just cable networks that have been affected. The Washington Post itself saw a 26% fall in the number of unique visitors to its website from January to February. The New York Times experienced a 17% decline in the same period.
A slump by any other name
While the “Trump Slump” is a legitimate reason for the downward trend, it’s not the only cause. Nor is it a universal experience.
At The Atlantic, SVP of growth Sam Rosen says that, “We’ve found even in just the past five or six months, what has really changed is that the motivation to understand this historic moment has decreased and the desire for personal intellectual growth has increased.”
As he points out, “It’s been an exhausting five years for many people and especially the past year. So, it kind of makes sense that the core desire to just understand what’s happening in the world still exists. But people want to invest in their own growth.” And the company is banking on that willingness to invest.
After a decade of open access, The Atlantic relaunched its paywall 20 months ago. The 163-year-old organization now boasts more than 750,000 subscribers. It is well on its way to eclipsing one million paying members by the end of 2022. Rosen says that ensuring the outlet’s retention and acquisition efforts are equally strong is critical for achieving this goal.
Fundamentals and experimentation
On the retention side, The Atlantic focuses on the fundamentals. For example they’re migrating as many subscribers to auto-renew as possible. Targeted email campaigns are also reawakening dormant subscribers.
Acquiring new subscribers has been more colorful. For example, experimenting with new slogans such as “Read. Think. Grow.,” which are a change from more newsier lines of messaging in the past. Rosen said The Atlantic thinks of its audience in terms of psychographics: people that are curious, interested in the world, willing to consider multiple perspectives, and open to new ideas.
“Looking at the vanguard of marketing technology is one of our biggest priorities right now,” Rosen said. “We’re evaluating a slew of technology partners that do customer journey orchestration, dynamic paywalls, personalization, and content recommendations. So that is where we’re doubling down.”
Not content with the content
Another newsroom building value not reliant on Trump’s hoopla is Axios, which was launched in January 2017. The well positioned itself strategically for a post-Trump world. Though the fall in traffic is unmistakable, Axios’ director of audience and growth, Neal Rothschild, believes this could actually be a good thing.
“I think if you were going to ask the founders of the company [Axios] whether that’s a good thing or a bad thing, they would say it’s 100 percent a good thing,” Rothschild said. “Jim VandeHei, our CEO, has maintained that people needed to wean themselves off of politics during the Trump years. It was like fast food and it became very unhealthy. So, we’re starting to see the news landscape kind of clear out and make way for the topics that were core to the founding of Axios. Though it may not have seemed like it just because Trump sucked up so much oxygen.”
Those other topics include the rise of China, climate change, and the gaming industry. For the latter, Axios hired Stephen Totilo and Megan Farokhmanesh from Kotaku and The Verge, respectively, to write Axios Gaming. Their newsletter launched this week and will focus on the multi-billion dollar gaming industry. Rothschild added that the company isn’t limiting its expansion to specific topics. Its strategy of hiring experts to build readership extends to local journalism in news deserts, where just a single outlet currently operates, or where no community newspaper exists at all.
Perspectives and connections
Centralized business units have been crucial for Axios. It’s technology, sales, audience, and marketing teams have allowed it to fill local voids without the vast capital needed to build startups from scratch, like The Texas Tribune in Austin and Seattle’s InvestigateWest. Axios currently has five local newsletters. It also recently announced plans for a sixth in Northwest Arkansas.
“To stand up a newsletter in each city, we try to hire two experts that can helm that newsletter so that we can speak to the city and have it growing quickly. I think that’s a departure from previous models for supporting local news. Usually, you need more of a physical presence in that city or at least need to invest more on the ground,” Rothschild said. “That’s not a huge site traffic audience strategy. But it is a pretty good growth and revenue strategy. And it is increasing our footprint around the country.”
Global ambitions
As important as local news has been to CBS, Trump was an international story. Significantly, the international audience it gained over the past four years remains. While many U.S. outlets have cut their international presence in recent years, CBSN — CBS’ 24/7 streaming news service — last year expanded to almost 100 countries. That global presence was critical in CBSN delivering 291 million streams in the first quarter of 2021, up 30% from the same period a year ago.
Christy Tanner, EVP and general manager of CBS News Digital said her team has only just scratched the surface of its global potential. Through Network 10 in Australia, which ViacomCBS owns, its partner the BBC and its own international bureaus, it’s creating even more international programming.
“With streaming audiences, we do not see what was at one point conventional wisdom in the news business: Allegedly, U.S. audiences are not interested in international news. That’s simply not true from our perspective.” In fact, Tanner said, “We think it’s an important differentiator. It’s important to tell the stories. We at CBS News digital have been extremely fortunate that CBS has continued to invest in international coverage.”
The local news
That said, Trump was as much a local story as he was a national and international one. So, CBS is also taking advantage of the dearth of local newsrooms. It now offers 14 total live streams including 10 in local markets such as the Bay Area, Pittsburgh, and Minnesota.
One new feature Tanner is especially excited about are video push alerts. Launched last fall, the proactive alerts nudge CBSN viewers whenever news is breaking across the U.S. Instead of only watching that day’s White House news conference on the national live stream, viewers could easily toggle over to CBSN Minnesota to watch Minneapolis’ police chief providing an update to the George Floyd case.
Tanner says her team sends out alerts dozens of times a day. This means that viewers are engaged in numerous stories, as opposed to any one story such as Trump or Covid-19.
Fail to prepare, prepare to fail
The past four years certainly provided newsrooms across the country with a welcome surge in readership. However, the smartest strategists were planning for Trump’s inevitable departure well in advance. As a result, the fall in traffic hasn’t been enough to hurt their bottom lines too much.
For Tanner, who entered journalism as an editor at the AP in 1991, the Trump presidency was just another wild cycle. And she’s experienced many. Tanner says to work in digital media, one always has to be ready for what’s next, and make intelligent fact-based decisions.
“Things are constantly changing and those who don’t adapt fall by the wayside.”
Launching a new product during a global pandemic could be classed as a bold move. However, given its customer-centric approach, The Economist Intelligence Unit (EIU) team knew the time was right. “The feedback from our clients was they didn’t want things at EIU to change. But they wanted to navigate our products more easily, so that they can compare information at speed,” EIU’s Chief Digital Officer, Sharon Cooper told DCN.
Launched this month, EIU Viewpoint integrates EIU’s subscription-based services into a unified digital platform. It combines the EIU’s expert insights and analysis with forecasts and proprietary data to offer clients a 360-degree view of the world, encompassing politics, policy, and economics. “Before, these were separated, so clients might only have one aspect,” says Cooper. Now EIU has integrated them under one umbrella product. This allows them to provide “a more nuanced perspective of the world and the forces shaping it.”
However, EIU Viewpoint wasn’t launched in response to Covid-19. It launched in spite of it. “We had to deliver Viewpoint remotely, with every single person working for home. We didn’t miss a beat.” She says that “It’s testament to the global nature of our business, as we have over 650 analysts in 130 countries. It was also our ability to pivot quickly, but not lose sight of the thing we needed to deliver for the client. We stayed focused on our end goal. But were flexible to the changes brought about by Covid.”
Customer-focused approach
A customer-focused approach is at the heart of EIU, which was created back in 1946, in response to the needs of The Economist’s readers. They wanted to know how to better run their business in a challenging and changing post-war environment. Today its team of economists, industry specialists, policy analysts, and consultants help businesses, financial firms, academics, and governments understand the shifting global landscape.
It’s a business model that clearly works. EIU revenue increased by 1% for the six months ending 30 March 2020. And The Economist’s circulation revenues rose by 6%. EIU Viewpoint hopes to build on these figures by combining EIU’s award-winning political insights, policy analysis and economic outlooks, with curated forecasts and proprietary data.
Critical analysis
This global view includes forecasts for the global economy, daily insights, and country economics. It also incorporates political analysis, medium- and long-term forecasts, macroeconomic datasets, and proprietary ratings and rankings. But what makes Viewpoint’s offering unique is the editorial team.
“Anyone can access the data we produce. But our key differentiator is our analysis. It’s a critical part of what we do” says Cooper. “EIU Viewpoint isn’t a news business, it’s a forecasting business. We are saying what will happen as a result of the news. EIU Viewpoint allows clients access to our editorial team’s thinking. We try and contextualize the news for each of our clients.”
Creating a platform that offers such a tailored user experience had it challenges, as their clients range from industry experts to total amateurs. “Bringing this context to life and making it simple to navigate was the toughest part of the build,” says Cooper. “We had to ensure lots of different types of users could navigate the same system and get all their questions answered in a consistent way.”
Preparing for opportunities
The product is a great example of how listening to your audience and responding to their needs adds value to a brand. The Economist is a well-respected title that offers news. EIU is a trusted resource that explores the impact of that news. The two go hand in hand to offer an independent and authoritative voice, which has resulted in loyalty and high levels of engagement with some of the biggest brands in business.
“Our content is about looking forward and thinking ‘what does this mean for our clients?’” explains Cooper. “There might be 101 things that happen in a day. Rather than just giving a bunch of facts, we weave them together to make a comprehensive overview of a country and how its changing.”
As a result, EIU has been able to guide their customers during the toughest times over the past 12 months. This includes providing a “huge amount” of additional data, to help with risk management and forecasting. The EIU also built its own Covid tracker, which looks at when the global economy will get back to pre-pandemic levels. It also reports on vaccine rollouts and how they impact the economy.
“It’s all about preparing for opportunities and helping our clients understand the whole market” says Cooper. “There are different models for different countries. We think about each one, in terms of what is happening today, what this will look like tomorrow, and what this means for our clients.”
EIU Viewpoint manages to hit that sweet spot that all media are trying to achieve: identifying opportunities for customers that translate into revenue opportunities for their own business. By working closely with their clients, EIU has become an integral part of their business. Thus, its clients have a “strong commitment” to the brand.
“If you look at most big banks, NGO organizations and governments around the world, you will find EIU at the heart of them,” Cooper says. “We believe Viewpoint will consolidate this relationship. It will help both our clients and the Economist Group plan for the future in order to operate effectively and profitably.”
BBC News presenter Ros Atkins and I often talk about “pinch yourself moments” when it comes to 50:50 The Equality Project – a grassroots initiative he started at the heart of the BBC’s London newsroom four years ago.
He wanted to increase female representation on his program Outside Source by monitoring the contributors his team could control. Now, more than 100 organizations in 26 countries are using the data-driven core principles he came up to improve the gender balance on the content they produce.
Real results
That in itself could constitute a moment – reaching 100 partners. For me, however, a moment of truth has come. We can see how the global network is preforming. For the first time, the BBC invited 50:50 partners to join our annual challenge to see how many of us could feature at least 50% women contributors on our output.
The BBC Director-General Tim Davie found the results encouraging. He called on others to take up the next challenge. As he said, “We are now also seeing a real impact beyond the BBC on a global scale.”
This time around, 41 partners took up the challenge. So how did they fare? As a collective, 50% of the content reached gender balance. That’s up from 31% compared to when those organizations first joined the project.
Our 50:50 Impact Report 2021 details how even those organizations that did not reach gender balance showed signs of improvement. Over three-quarters (77%) of content-makers featured more than 40% women contributors on their output. That’s compared only 58% when they first joined the project.
BBC upward trend continues
Now, the 50:50 partners network has set itself a benchmark. So, next year’s challenge will be a real test of the progress 50:50 is making collectively. However, it is achievable, particularly if the BBC’s performance is anything to go by.
This was the BBC’s third challenge. For third consecutive year, there has been an improvement in the number of teams reaching gender balance. In fact, 70% of content reached 50:50 compared to 36% in the first month of monitoring. Plus, no team monitoring for three years or more featured less than 40% women contributors. That is a big first.
Audience appreciation
Audiences are noticing these equity advancements. A survey of more than 2,100 BBC online users found that 62% felt there were more women contributors on output. Meanwhile 58% of women aged 16-34 said they consumed more services as a result of greater female representation. That’s a 12 percentage point increase on comparable data from last year.
There are now 670 teams committed to 50:50 in the BBC. 50:50 Project Lead Lara Joannides is proud of the teams that took part in this year’s challenge. She said: “This is an incredible achievement, especially considering the extra demands teams have faced as a result of the coronavirus pandemic. The results prove that ensuring fair representation of all audiences across our content remains a priority for 50:50 teams, no matter what.”
The Australian way
ABC News in Australia was one of the very first partners to join the BBC in implementing 50:50. Together, the two organizations are creating real impact at opposite ends of the globe. In March, the Australian broadcaster saw 75% of their participating teams reach 50:50. That’s a big jump from 29%, when they first joined the project.
The scale of implementation of 50:50 at ABC means they have a core team to drive the change across the organization. Their 50:50 Equality Project Leads keep themselves attuned to the evolving news landscape so that they can provide support to ensure women’s voices are heard.
The changing working practices for journalists due to coronavirus is a good example of that. The ABC team gently reminded content-makers of the role 50:50 had in ensuring different voices were heard at such as crucial time.
“We also asked them to consider how the pandemic was specifically impacting Australian women, to tell the story of the health crisis in a way that surfaced women’s perspectives and gave voice to those on the frontline – nurses, doctors, care workers and teachers,” explained Emma Pearce and Rhiannon Hobbins in the report.
They added that there were unexpected benefits emerging from the pandemic too: “Some teams found it easier to reach and engage female talent, particularly in our afternoon and evening timeslots, as working from home became the norm and school pick-ups and commuter runs no longer affected their availability to do a quick Zoom, Skype or Slack interview.”
Covid-19 was not the only story the team had its eye on. At the start of 2021 there was a series of headline grabbing stories concerning the treatment of women in politics and the culture faced by women working in Canberra Parliament House.
ABC’s 50:50 Leads said: “Our 50:50 work fed into and enhanced our journalism on these issues. Our coverage incorporates female perspectives and the specific impacts on women. And our teams are alert to the need to empower and respect the agency of women at the centre of the stories.”
From Australia to Austria
In Europe, the Austrian public broadcaster ORF had 90 teams taking part in the March challenge. Overall, 52% of teams taking part featured at least 50% women.
ORF equal opportunities commissioner Katia Rössner said ORF is seeing improvement beyond the March snapshot. Over half of teams (55%) taking part for six months or more reached 50:50 by the end of March. That marks a 3% increase on the overall ORF performance. She said: “This confirms the fact, that the longer the teams are part of the challenge, the more likely they reach a quota of 50% in their programs.”
Rössner acknowledges in her submission to the 50:50 Impact Report that there was some trepidation when ORF started to implement 50:50’s core principles. She wrote about an observation by a regional news editor who told her: “At first there was some skepticism regarding ‘token women.’ But the team started focusing on interviewing a female intensive care doctor instead of a man. We found a great doctor who has the potential to become a new coronavirus expert on our show.”
For Rössner the “competitive and sporting spirit of the 50:50 Challenge” appealed to many ORF program-makers. She said: “Honest engagement and even small steps towards 50:50, no matter where you start, makes you a winner.”
Building a 50:50 future
One promising sign for the future is that 50:50 has a growing network of universities and journalism schools. Lecturers use it to get their students to think about the diversity of contributors during their News Days or Weeks.
Nottingham Trent University is one of 19 academic institutions taking part. In the report, BA Journalism student Emilia Roman said implementing 50:50 was “an eye-opening experience” for her.
During the first week, the students were asked to monitor their content but not change their way of working. In that week, Emilia said they recorded 29% women contributors across their website. Week two, the students focused on equal representation.
“The challenge of incorporating the principals of 50:50 into our work came down to one crucial element of story development – research,” said Roman. “Accepting the first reply and focusing on ‘getting the story up’ was not enough to help us drive a significant change in our coverage.”
By the last day of production, the students’ content featured 49% women contributors. Emilia said that “It’s pretty clear to us that recognizing the need for equal representation can significantly change the way your content looks.”
Spreading the 50:50 word
As evidenced by the universities, the 50:50 network now spans outside of media, with 50 partners coming from a range of sectors – public relations to legal to corporate. They use 50:50 to monitor their websites, social media, spokespeople, and event speakers. They seek to understand whether they are reflecting in their content the gender balance of their organizations.
Richard Purnell is communications manager at the Construction Industry Training Board (CITB) and he said 50:50 “has helped draw attention to the issue of diversity in our organization, and given us the tools to do something about it.”
He said, “While it’s clear we have some way to go, 50:50 has triggered a whole series of conversations about equality which weren’t really happening before. As a result, we are now planning to train and develop a new set of media spokespeople. That should improve the breadth and depth of insight we can provide.”
An everyday movement
What the 50:50 partners have demonstrated is that we can all make small changes that are in our control and they can have a much wider impact.
The BBC’s Director of Creative Diversity June Sarpong reminds us in the 50:50 Impact Report a quote from American feminist Gloria Steinem: “The future depends entirely on what each of us does every day; a movement is only people moving.”
She goes on to say she believe 50:50 is creating that movement. I leave you with her words: “Every day, thousands of people are counting the 50:50 way. A small action for one individual, but a powerful tool of change – a movement. I would urge as many people and organizations as possible to join us so we can work together to reach a common goal – creating content that better reflects our world.”
About the Author
Nina Goswami is the BBC’s Creative Diversity Lead and is spearheading initiatives to support the Corporation’s aspiration that its on-air representation reflects society. Nina is also a journalist and, before her current post, was a BBC News senior producer. She has worked in media her whole professional career including The Sunday Times and The Sunday Telegraph.
Earlier this year, VIX was acquired by Spanish-language content leader Univision. It was the culmination of a six-year journey, which started out as my effort to disrupt, well, Univision.
Around 2015, I stumbled upon the statistic that Latinos would soon represent 20% of the United States’ population. It spoke to me because my Texas roots meant that Hispanic media had always been a part of my world. Pretty soon, I had decided that my next media venture would be creating a mobile-focused streaming service for what appeared to be a drastically underserved U.S. Latino digital media audience.
By the time that our Pongalo service launched as a $5.99 per month subscription offering for U.S. Latinos, I had rounded-up digital rights to thousands of hours of Spanish-language content. I’d also assembled a group of shareholders and mentors who included some of the smartest people in media. That meant that the Pongalo team could tap into a deep bench of expertise from folks like former MTV Networks Vice Chairman, who has Puerto Rican roots, Herb Scannell, and former Univision digital chief Kevin Conroy.
Like all good success stories, we promptly fell on our face. But we learned. We learned that building a video streaming technology platform is not for the faint of heart. We learned to license not only U.S. content rights, but also long-term international rights. That’s because our eventual expansion across Latin America presented a massive opportunity. And we learned that we absolutely did not want to compete with deep-pocketed players like Apple, who were making noises about coming into the subscription streaming space.
We eventually added Discovery Communications veteran Rick Rodriguez to our team. And, after borrowing a bit from the early playbooks of TubiTV and Pluto, Pongalo quickly evolved into the free, ad-supported streaming space. When it did, every metric went through the roof. Despite our early stumbles, we had clearly found the right model.
The race to scale
By 2019, scale had become the name of the game in media. In a world where Disney needed to buy Fox to gain scale, even a dominant spot atop AVOD in the still-unproven Latino digital media market wasn’t part of the conversation. If Pongalo was ever to be acquired by a larger media organization (and I believed it should be), we needed scale.
So, about a year ago, we combined Pongalo’s streaming service with Rafael Urbina’s VIX. Rafael had built a powerful social media megaphone of almost 100 million Latino Facebook followers. He’d also put together a potent ad sales team of over 50 people stretched across two continents. By the time VIX was acquired by Univision in 2021, our streaming service offered more than 20,000 hours of content that entertained millions upon millions of Latinos each month.
Today, the VIX team, now under the leadership of new Univision CEO Wade Davis, also helps to manage PrendeTV, Univision’s recently launched free, premium ad-supported streaming service. And the results have been spectacular. Early indicators tell us that PrendeTV and VIX are finding eager, content-hungry audiences across platforms.
The still-untapped opportunities
Our success (so far) does beg the question, however, of why no major media company had previously built a standalone service that focused on the free streaming opportunity for U.S. Latinos.
To be fair, Latinos have traditionally been easy to overlook in favor of general population audiences, who have always seemed to capture all the oxygen in the front-page streaming stories. But in a day and age of always-improving data, we now know that that was foolish.
According to the 2020 LDC U.S. Latino GDP Report, if the economic contribution of U.S. Latinos was its own country, it would be the eighth largest in the world. That would exceed even Italy, Brazil, and South Korea. In fact, between 2017 and 2018, the U.S. Latino GDP’s growth exceeded that of non-Latinos in the U.S. by more than 4.5x. Yes, 4.5x! That would make it the single fastest-growing GDP in the world during that period.
With this immense opportunity in mind, media companies need to be thinking about how they can capture a share of these vast U.S. Latino revenues.
Keep moving
Mobile is one of those places. Latinos drastically over-index for having mobile devices, and those devices tend to be their primary connections to the internet. But many media companies seem solely focused on delivering connected TV experiences. And despite PrendeTV and VIX’s many successes, Latinos still remain underserved on mobile. And they will likely continue to be so until the industry can create media products that play by the unique rules of a mobile-first experience – mainly simplicity.
For instance, at one point, most major media companies continued to push TV Everywhere apps that required an engineering degree to authenticate. We were the first to remove registration entirely from the VIX app. That meant that we had to innovate clever ways to build data around our audience. But if the premise of AVOD is to show ads to as many people as possible, why put up barriers?
The payoff for media companies in targeting Latinos is data. The genius of Amazon comes down to, “Since you bought this, you might also like this.” And the opportunity around underserved Latinos and mobile is similar. It’s a treasure trove of data just waiting for companies that are willing to lean in – in-language and in-culture. That data translates into revenues.
Over my six years navigating Pongalo, then VIX, and now Univision, I have heard countless voices encouraging media companies to target Latinos because it creates more diversity in our audiences. Undoubtedly, that’s a true and powerful reason in and of itself. But, with that, you will also make more money. That’s a reason media companies can not only understand, but it’s one that they need to capitalize on.
Abut the Author
Rich Hull is Senior Vice President of Univision, and President of VIX, Univision’s recently acquired digital media subsidiary. As a digital and traditional media company founder, operator and investor, Rich has constantly led the innovation of new ways for delivering content and empowering diverse voices. Rich previously collaborated with DCN Editorial Director, Michelle Manafy, on their multi-award-winning book, Dancing With Digital Natives: Staying in Step With the Generation That’s Transforming the Way Business Is Done.
Relationships matter. As humans, we diverge from acting out of self-interest to accommodate the people with whom we have relationships. This might mean little things like saying “thank you” or holding the door open for the person behind you. It could be bigger things like buying a birthday gift for a friend or helping a neighbor in need.
People make sacrifices every day for those they care about. And, in any kind of relationship, there is some level of accountability. If I am jerk to a grocery store clerk, the five minutes during checkout could be really awkward or that person might decide to double-charge me for an item. Being rude to my server is not likely to speed up my dinner order. If I’m inconsiderate of my wife, I will probably be miserable until I make amends. These sorts of simple relationship dynamics play out hundreds of times every day.
The relationship business
Commercial relationships have similar dynamics. From my perch at DCN, I see premium publishers working hard every day to earn the trust and loyalty of consumers. News organizations employ journalists, who investigate and check facts, and editors, who vet content and ensure rigorous standards are followed. If they mislead, they can be held accountable by under libel laws. If they fail to engage and inform, they lose traffic and advertisers or subscribers.
Movie companies hire directors and actors to create humor, drama, or horror to entertain consumers. If they don’t do so, their movies fail to draw at the box office, they command lower fees for other distribution channels. They lose money.
Whether it’s weather, health, sports, or financial information, publishers in every vertical and across every medium work hard to create quality, compelling consumer experiences. In all of these cases, the publisher’s brand is closely tied to the content because the publisher is trying to build a relationship. And, as with any successful relationship, trust and accountability are key to developing a deeper commercial relationship with people as well.
Responsibility issues
Some of the currently pressing public policy issues have arisen in areas where there is little accountability to consumers. One big example is Section 230. It was enacted into law in 1996, as part of the Communications Decency Act, when the burgeoning tech industry was a darling of all politicians. Things have changed dramatically since those halcyon days with multiple members on both sides of the aisle introducing legislation to overhaul or eliminate Section 230.
Ironically, Section 230 was intended to empower platform companies to take responsibility. Instead, this liability shield tends to be used mostly by companies who can’t or won’t take full responsibility for their services. Tech companies tend to use Section 230 to avoid taking action. Backpage was one of the highest profile examples. However, Facebook regularly invokes the legal protections to avoid responsibility for the toxic content flowing across its services.
It’s not a coincidence that news organizations are far less reliant on Section 230 than platforms, because they stand behind their content. Content is their calling card and if customers reject it, that relationship is over.
Accountability issues
Consumer privacy is a hot topic these days because there are big tech companies building profiles about consumers behind the scenes with little transparency or accountability. From hyper-targeted advertising to potential discriminatory offerings, consumers are increasingly aware that they are being manipulated and their data is being used for myriad unexpected purposes.
Consumers have generally felt fine about their data being used within the context of a relationship with a company – e.g. ensuring the site or app loads properly on their device, remembering log-in information, or recommending new content. However, when data is used outside of that relationship, consumers react negatively. Hence, the blowback for Facebook around Cambridge Analytica. These public policy spats underscore a key difference between companies that have direct relationships with consumers versus those that are intermediaries. Direct relationships create accountability.
Building business with relationships
Accountability is an inherent part of direct relationships. That said, solid relationships provide opportunity as well.
The most visible sign of the power of direct consumer relationship is the growth of subscriptions. The New York Times and Netflix are notable success stories. However, hundreds of other media brands are finding loyal audiences that are more than willing to pay for premium content.
In addition, publishers with trusted brands are well-positioned to thrive in a world where privacy laws and tech controls increasingly restrict web-wide data surveillance. Whether it’s GDPR in Europe, CCPA and CPRA in California, or the handful of other states that are actively considering privacy laws, policymakers are trying to give consumers greater control. They seek to prevent the kind of unexpected data harvesting that happens outside of a consumer’s relationship with a company.
At the same time, key companies are rolling out privacy-friendly features. Apple built Intelligent Tracking Prevention (ITP) into Safari and is preparing to unveil App Tracking Transparency (ATT). Both are designed to crack down on companies following consumers everywhere they go online. However, they do allow for tracking within a consumer’s direct relationship with a company.
Google announced that Chrome would follow the lead of every other major browser in blocking third-party cookies. To be clear, there are a lot of suspicions about whether Google might try to give itself preferential treatment here. But, at its core, it looks like a positive move toward consumer privacy.
Real relationships
Companies with direct, trusted relationships have an opportunity. This window of opportunity, especially for news providers, could not come at a more important time for publishers — and for our society. The news industry has taken a beating in the last decade or so as intermediaries aggregated publishers’ content and retargeted audiences. Big tech platforms incentivized scale over trust. On top of that, there has been a raging debate about the impact of platform-driven disinformation and algorithmic bias on our democracy.
Well-paid lobbyists for some big tech companies are actively working to deflect accountability. However, publishers are embracing the direct, trusted relationships (and the ensuing accountability) they enjoy with consumers. News organizations continue to produce and stand behind quality journalism – researched, fact-checked and vetted. Local news publishers are leaning into what has always made them unique – critical context and deep understanding – to serve their communities.
Strong relationships are built on open, honest, accountability. They are built on trust. For quality media brands, this is nothing but good news.
The demise of identifiers such as third-party cookies or Apple’s IDFA presents both challenges and opportunities for publishers. Some complain performance marketing will take a hit. This would force marketing teams to refocus on delivering product excellence and ditch bait-and-switch schemes that promised audiences better experiences than they delivered.
Others praise the advance of a more privacy-oriented approach to targeting that will finally prioritize consumer preference. They point to a “golden opportunity for a re-imagining of digital advertising.” Companies would reap the benefits of an ecosystem that isn’t tied to tracking a user’s every move, nor beholden to GAFA. Publishers who wisely embrace this worldview are also taking impressive steps to leverage their valuable direct relationships with audiences.
For some, including Vox Media, Condé Nast and, most recently, Penske Media, this means offering up their own first-party data directly to advertisers. For others, it means leaning further into digital subscriptions. Subscriptions offer publishers a proven monetization model in a post-pandemic environment that has seen digital advertising collapse and revenues driven by paid content rise through the roof.
But winning with a subscription model is hardly a walk in the park. This is more keenly felt at at time when marketing departments may need to spend more resources to collect and leverage customer data to clinch the sale
Driving conversions and convincing consumers to commit to a recurring cost for content demands publishers do their homework and innovate. They must build the capabilities to understand their audience, identify valuable users likely to take the plunge and define clear pricing (at the level subscribers are willing to pay). What’s more, they should muster the resources and resolve to develop, deliver and continually improve a great product that meets customer expectations.
Continuing with our series of video interviews, I talk to Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company. Bachstein has overseen a wildly successful pivot to paid as part of a larger move to diversify revenue at the IBM-owned property. Since launching a premium subscription offering just 18 months ago, The Weather Company counts nearly one million paid subscribers, a figure Bachstein says is seeing double-digit growth every quarter.
Bachstein shares her step-by-step journey to subscription success, including insights on tailoring the product to the consumer, targeting potential subscribers and building a winning customer service team. She also reveals her take on the future of advertising and a call to action for the media industry at large.
WATCH OR LISTEN TO THE FULL INTERVIEW
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove, interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company.
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company:
Peggy Anne Salz: Does it pay to pivot from an ad-supported model to subscriptions? Well, my guest gives us the inside track on the strategy that has allowed subscriptions to become the fastest growing line of revenue in the company. It’s impressive. And we’re going to spotlight some of the step’s publishers can follow to diversify their revenue streams. But first, of course, a bit about us. I’m Peggy Anne Salz, mobile analyst, tech consultant, frequent contributor to Digital Content Next, which as you know is a trade association serving the diverse needs of high-quality digital companies globally.
And now to my guest, she is the Global Head of IBM Watson Advertising and The Weather Company. And The Weather Company is an IBM Business. It offers the most accurate actionable weather data insights to millions of consumers via digital products that we’ll be hearing more about from The Weather Channel, weather.com, as well as Weather Underground. And previously, she was the global head of the consumer business there and was responsible for product management and design, content development, and global expansion across the organization on the weather’s owned and operated properties. So Sheri Bachstein, welcome to Digital Content Next. It’s great to have you here.
Sheri Bachstein: Hi, Peggy. How are you?
Salz: Good. And even better because we’re going to zero in on, I think the question of the hour, the pivot. It’s a time of transition, accelerated change, and you’ve made a move. And I think a lot of publishers are thinking about this move, which is diversifying your business model, specifically ad-supported to subscription, as I said. In a nutshell, why the pivot, Sheri?
Bachstein: So we just found that we want to continue diversifying revenue, it’s really just that simple. You know, to have a business and if you have a bulk of your revenue coming from one stream, that’s dangerous, especially in changing times. And so we started on a diversification path, actually several years ago. And really subscriptions was the next thing in that funnel of what we’re trying to do to diversify.
Salz: I said at the top, it has paid off. I know the numbers. Our viewers don’t. So why don’t you share some of those numbers that show just how subscriptions are evolving?
Bachstein: Yeah, so our subscription business launched about 18 months ago. So I think we’re still just starting, I like to say, because I think that’s a short period of time, and we’ve rolled it out on our apps. And actually, just next week, we’ll be rolling it out on our web platform as well. But in a very short time, we are approaching a major milestone with a million users that are subscribers to our business, and you know, it’s taken other publishers twice as long to reach that volume. So we’re really pleased with the number of subscribers that we’re getting. And then if you look like our quarter-to-quarter growth of subscribers, it continues to be in the double digits. So every quarter bringing on more subscribers.
Salz: That is amazing because this is a time where you’re asking someone to commit to a recurring cost. But it must be that way because they’ve gotten the value proposition or rather, they grasp your value proposition. How important is the product in this mix?
Bachstein: It’s extremely important. It’s the foundation of a subscription business, you know, the value exchange you have with the consumer, very important. With subscriptions, I feel that value strengthens. You actually have higher expectations as a subscriber. I know I do in my own personal apps that I subscribe to. You have a higher expectation. So it’s really important that the product live up to that expectation and that your customer service, very important as well, that you’re able to connect with those consumers if they do have a problem and resolve that very quickly. So the value exchange is very important, whether you’re doing a subscription business or you’re actually doing an ad-supported business.
Salz: I do want to get to those steps, step by step so that publishers can benefit or at least think of a roadmap that they can be following as they make this shift from ad-supported to subscription. But let’s take just a step at a different perspective, just zoom out a little bit because another big question is not just how do I get more value out of my customers, my users, my readers, my audience, but also, what are we doing right now? Because pretty soon the way we do this marketing is going to change very drastically. So from your perspective, what are some of the ways that this shift from cookies and identifiers and toward privacy-first might actually represent an opportunity for publishers because you have certainly grasped that?
Bachstein: So I do agree Google does plan to deprecate the cookie, and so that will go away. But really, I think as it relates to identifiers, identifiers is a really broad word because there’s a lot of ways to identify someone. It could be an email, a lot of different data points. I don’t necessarily see identifiers going away. What I do see is how we use those identifiers is what’s changing. So what’s happening is we’re moving from a society where we had consumers opt-out to a society where we’re having them now opt-in. So that gives them more choice, more transparency upfront, and really the decision of how they want to share their data.
Consumers should have control of their data. So again, we’re really moving into an opt-out society as it relates to advertising and targeting and giving consumers that choice.
Salz: What can you share about what has worked for you and what maybe other publishers need to get right? Because one thing you’ve done is, for example, really focused on getting the product, right, as you said, but there are other aspects of it.
Bachstein: So first, we did exhaustive customer research and listening. We asked our customers, one, “Would you pay for a weather app?” That’s first and foremost and what percentage would. And then secondly, “Okay, if you paid for it, what are the features that you would pay for? What is it that you want?” So we really listened to our customers. And that’s the part of the plan, the product plan came from that. Then we did testing, we did learning, and we kept improving. So a lot of testing went into what’s the right price, you know, to charge for a subscription app?
Again, asking the consumers, “How much would you pay for this feature? So when I think about what are three tips I could give to fellow publishers because I think us helping each other is really important to protect the open web. First takeaway for me is get rid of those perceived inconveniences for your customers.
So for my customers, those that start their day with us, end their day with us looking for weather, some of those customers, they just want to get into the app, find out what their weather is and move on to plan their day, mornings are very busy for a lot of people. And so they felt that ads clutter their experience that it was in their way, so we removed them in the premium experience. So that’s one tip.
The second tip, trusted human expertise is highly valuable. So how can you humanize the information that you’re giving? So for us, you see all this weather data, but how do you give context to that? How do you humanize that weather data for those that want more in-depth coverage?
And so we’re working on that, how to humanize that. And really the third thing is really around what you said before, the product.
Salz: That is really interesting, Sheri. I mean, I know it makes sense to ask the users. I wouldn’t say I would ask the user about the price, but that is surprising because I’ve also read a lot of research that we are actually more willing to pay a price that is higher than even, in many cases, the app developers, the companies themselves would charge. So it does make sense.
The humanizing of the information, now that is intriguing. Is that saying that you tap a team of writers, of journalists, of experts and trying to get that into the app? Because I think our publishers would be really interested in this at a time when, yes, we can automate a lot. And we’ll get to that in a moment. But this human part doesn’t seem to be something that you can automate or in any way streamline. This is roll up your sleeves, get down to work. How are you doing it?
Bachstein: Yeah. So for us, obviously, we’re unique in the weather space. But we do have some consumers that they want more information. So they want a meteorologist to explain, why is an outbreak of tornadoes actually happening? We actually are doing a test right now and we’re using Twitter to do the test where we had a meteorologist create a very short video that really explained how we forecast a tornado, what are the three elements that we look for in forecasting a tornado and describe it so people could see better like on a radar map those areas that may be under a tornado threat. And the response has been great. For those people who like to geek out on weather, they love having that extra information.
And news organizations could do it as well because you have journalists like yourself that have amazing expertise. And how do you take that story, just one level deeper, to really dig in with your consumers around more information that they might want? So almost, probably, getting into some debate, I would imagine, in the news world. So I think there’s ways to do that. But I think, for some, it might be easier than others. But you’re right, it’s something that’s unique. It’s not something I would say that can scale to millions. But if it’s a unique offering, someone’s really willing to pay for it, you could probably get a premium for that.
Salz: Exactly. And that’s the point because subscribers are the valuable users. They’re willing to pay. They’re worth customizing to. Interestingly enough, they also leave a very interesting data trail. They’re frequently engaging with the app or service. They show behavior patterns like no other. That’s why they are the valuable users. What are some early signs for you of a high-value user so that we can also help other publishers focus their efforts and investments?
Bachstein: So we are doing a couple things to really help target who are those consumers that want to be subscribers? One of the things that we’re doing is around propensity modeling. So who are those subscribers that really have an interest in a more premium experience? And so we’re looking at that, we’re using machine learning to do that. We didn’t do it in the early days. We kind of had this one blanket promotion that we did. And we learned a lot from it. Again, it’s that test and learn. And then we learned, “Well, we really need to just focus on these consumers that would be interested in this.”
Same thing that you do in advertising, right? The whole premise around understanding the consumer by the data that they share is so a brand can connect with the consumer. And that’s what publishers do, they bring the two together. So that same type of targeting information is important as you do a subscription business.
Salz: And you’ve leveraged AI to create a more compelling product as I understand it. What has actually worked for you? I mean, you’re lucky, you’re sitting on the source with your AI abilities within Watson, but what has worked for you?
Bachstein: So the propensity modeling I just spoke of, we’re just rolling that out so we can better target the right consumers so we’re not burdening people seeing our promotions who aren’t interested. So that improves the experience. But the other thing that we did is on the IBM Watson advertising side, which is the other part of my business, we’ve created ad-tech solutions rooted in Watson AI.
One of those solutions is a predictive real-time dynamic, creative solution. So I actually took that tech and used it on the publishing side, I’ve got to use my own products, to drive subscriptions. So what that really did was it enables you to create a lot of variations of an ad. So you put in a few images, call to action, and then using AI, it’ll target consumers differently based on what we can learn about them with the information that they share or their behaviors.
And it’s been an amazing tool for us. We actually did a test by using that ad tech. We got three times the number of subscribers than when we just did a normal promo doing it manually on our own.
And so it’s really been beneficial to use AI because you can put all of this data in there. It does the work for you and delivers amazing results. And frankly, we offer that ad-tech to everyone. Any publisher can use it, any DSP, SSP. So we are creating open ad-tech solutions that can drive business for a marketer or brand or it can help a publisher increase their subscription business or even their loyalty programs.
Salz: That is really interesting because dynamic. That’s the key here. It needs to adapt to the users. And actually, publishers need to adapt to this as well. So you’ve also called for industry-wide collaboration on privacy initiatives as we move into our cookieless future. Why is it important for publishers to be a part of those conversations?
Bachstein: It’s extremely important for actually everyone in the ad ecosystem, publishers and ad-tech providers, to be part of that conversation. What’s happening right now is you have about…we have two states. We have Virginia, we have California that have come up with their own privacy laws. There’s another 12 that are thinking about doing that by the end of the year. What happens is we get a patchwork of laws, really challenging for publishers. It’s not scalable to have different laws for different states. It’s really, really hard to be able to scale that and to do that.
And so, me along with many other publishers and leaders within this space, including the IAB, DCN, we are pushing for federal legislation so we can all be working from the same laws, the same rules. And then we have to clear up some of those rules as well. There’s a lot of gray areas when it comes to this. So let’s all be working on the same definitions of words. Very important that we’re all working together so we can become our consumer privacy focus. None of us are saying that we shouldn’t do that. We all think it’s a good idea. Let’s do it together in the right way, and let’s build some consistency across publishers so consumers know exactly what to expect.
Salz: Good point. I’m based in Europe where we’re still figuring out.
Bachstein: Yeah. But at least all of your countries got together and put it together, GDPR. There are still some gray areas, no doubt. But at least you guys took that step to do that, which is important.
Salz: What can help publishers better understand and even stop churn before it starts? So it’s about understanding subscriber behavior and reducing churn.
Bachstein: Yeah, so definitely two parts to any subscription business. There’s acquisition. I think consumers will say, “Well, I’ll try something once,” or, “I’m up to try something.” And certainly, you can give free trials. That’s been a technique that’s worked really well for us. But then the retention side, a really big part of the business. We’ve been fortunate to have retention as high as 75%, which is much higher than the industry. But it all comes down to the product. If you are delivering on the expectations that a subscriber has for your product, you will retain them.
And so, again, it’s really having a great strong product. We’re choosing to enhance the features and give them more as subscribers. So are we improving their experience? And so we found that to be really successful with retention. So we definitely pay attention to that. But I also feel customer service is important. When your subscribers have an issue, you have to respond to them. They are paying money out of their pocket and so they deserve to be listened to and to have their problems troubleshooted as quickly as you can. And so we definitely have made a big investment to focus on our subscribers to make sure that if they have issues that we are solving them for them very quickly.
Salz: You really do love a challenge in your job. What’s the hardest part of your job?
Bachstein: Oh, well, how much time do you have, Peggy? No. It’s funny, I think for every leader, you have to have a strong strategy. And it’s got to be a focused strategy. And then you have to stay focused on that strategy. That can be challenging sometimes because the world around you is changing. But if you really believe in that strategy, only working on that. Stop working on things that just don’t align to that. It’s very important, not only my business but all of IBM is doing that as well.
Salz: What do you see overall as the biggest opportunity on the horizon for publishers?
Bachstein: I absolutely think the biggest opportunity is the use of AI, especially in the ad-tech space. Using AI to really bring together the brands and the marketers with the consumers in a way that uses all different types of signals that doesn’t rely on the cookie is just a really big step forward. And one of the reasons I think so is because AI has the ability to predict. So the cookie only tells us what happens in the past. With AI, we can actually go forward, and we can predict, and we can forecast. And so being able to do that with AI is just, I think, a really great tool and it really has a bright future. I really feel it’s a transformational part of the industry. And really is a new tech that we need to embrace.
Salz: And to your point, I mean, advertising…which works, I’m not saying it’s broken, but through using cookies, identifiers, IDFA, we’re looking backward. And with AI, we’re going to be looking more forward, more predictive. So it does make a lot of sense to say that the opportunity is to understand what I may be doing, what I may be wanting, and to target that rather than maybe my past behavior.
Bachstein: That’s right. It’s all about a new technology, a new foundation or backbone to the ad industry, having it be AI instead of what we’ve been using in the past with cookies. It’s a way forward. I mean, advertising is not going away, but it is evolving. And we can be smarter, and we can use better technologies to connect consumers with our brands and marketers.
Salz: And speaking of connecting, Sheri, it was great to connect with you today. Thank you so much for sharing. How can people stay in touch with you if they want to maybe continue the conversation or understand a little bit more about tips, they can follow to move their app from ad-support to subscription?
Bachstein: Yes, reach out to me on LinkedIn. You can find me on LinkedIn. I’m happy to have a chat. And I’d love to just know what other companies are doing as well and how can we collaborate and work together?
Salz: Absolutely. Well, thank you. And thank you for tuning in. More to come of course in the series. And in the meantime, be sure to check out all the great content, including a companion post to this interview at digitalcontentnext.org and join the lively conversation on Twitter at DCNOrg. Until next time, this is Peggy Anne Salz for Digital Content Next.
Many white Americans—and American corporations—were shocked into a recognition of America’s ingrained racism, past and present, by the brutal drama that played out in 2020 on the blacktop of a Minneapolis street and under the knee of a former police officer.
The callous murders of George Floyd, Breonna Taylor, and countless other Black Americans spurred millions to finally take a close, honest look at their communities, schools, and businesses. Eyes turned to newsrooms as we sought to understand why the media’s depiction of these institutions do not reflect the diverse reality of our lives.
History lessons
Echoing uprisings in the streets, we saw similar uprisings within America’s newsrooms. The inequities seen in our communities parallel those long in place in media institutions. And our news coverage and the framing of news stories and issues reflect these biases.
Racial disparities in America are older than the Constitution. They began with America’s original sin of chattel slavery. Tremendous leaps and bounds have been made in the fight to realize the promises in our founding documents for all Americans. Yet those words—that all are created equal—remain aspirational.
The Institute for Journalism Education was born out of this aspiration, of the struggle to ensure all segments of our society are fairly, accurately, and equitably represented. This applies not only to the halls of Congress, but to the pages and screens of our journalistic institutions.
Long before the ubiquity of “DE&I” initiatives and Black Lives Matter marches, Washington Post journalist Robert C. Maynard recognized that white men dominate America’s media organizations. Declaring “We must desegregate this business,” Maynard and eight other journalists founded the institute to train and lift up journalists of color. Robert Maynard’s ineradicable legacy as a true pioneer was solidified when the organization he helped create was posthumously renamed the Robert C. Maynard Institute for Journalism Education.
Amplifying voices
The Institute’s flagship program, the Maynard 200 Fellowship, is about building a new and lasting legacy for entrepreneurs, leaders, and storytellers of color who will shape the future of journalism in America. What we are seeing across journalism right now is a modern-day Civil Rights Movement for journalists of color.
In response, we must foster substantive power, belonging, and agency within the institutions that tell the stories of our society and our world. Through Maynard 200, the institute aspires to empower journalists of color to lead and grow organizations to have cultures of belonging. These leaders will help ensure that media organizations continue to serve our democracy. To do so, they must accurately represent the minds, souls, histories, and perspectives of all Americans.
Like many organizations, we’ve had to pivot following public health protocols due to the ongoing recovery from the global Covid-19 pandemic. That means that, for the first time, Maynard 200 will hold an all-digital training component to serve more than 40 diverse media professionals as fellows across the country. The program provides them with tools to elevate their own digital voices through panels, dialogues, and events.
Diversity and equity
For decades, Maynard has been the standard-bearer of aspiration and expertise in its primary mission of making newsrooms reflect America. It has led the re-envisioning, and advancing, of what it really means to be “diverse.”
In fact, Maynard has flipped the prevalent DE&I convention upside down, by bringing equity to the forefront. Without equity, diversity is only performative. By focusing on equity, Maynard has forged a longstanding record of training and advancing individuals from a varied diaspora of racial and ethnic communities throughout newsrooms and media organizations across the country.
Maynard conceived the “Fault Lines” framework for facilitating honest discussion about highly charged issues, through an understanding of how people with different perspectives can view something in completely different ways. In other words, the way we perceive the world and experience each other is filtered by our own backgrounds and experiences. Thus, diversity of perspectives produces a strength greater than the sum of each individual alone.
We belong
And, as a result of Maynard’s framework, a new narrative has emerged: the necessity and power of belonging. It is not nearly enough for organizations to check a diversity box with new hires. The perspectives and backgrounds and ideas that each individual brings to the table must be fully absorbed into the culture and decision-making of the organization itself. Inclusion alone is surface-level; inclusion can be as empty as toleration. But when you belong, you can feel it. And the implications can be felt in the work you produce.
For the Maynard Institute, pursuing belongingness is about far more than mere integration. Belonging creates the kind of atmosphere where people of color can feel empowered and entitled to bring their full selves into the newsroom, including their history and their perspectives, rather than feeling pressured to contort themselves to fit existing narratives.
Maynard 200 is the institute’s answer to the breakdown in the pipeline of training and jobs for journalists of color. In the wake of the Great Recession, years of progress were decimated in a matter of months. The ongoing public health crisis vis-a-vis the pandemic, America’s widening racial disparities, and the division and hate provoked by the Trump administration have only increased the urgency and salience of Maynard’s cause.
Writing a new story
Repairing all of this damage requires institutions of journalism to be active participants in the dismantling of structures of systemic racism—rather than the enablers of inequity and oppression.
Media organizations can be part of the solution. From the stories they tell, to the sources they use, to the framing of what is news and who is newsworthy, the media is a powerful component in our nations racial reckoning. We believe that strong diverse leadership is critical for this to occur. And so, with this year’s Maynard 200, we renew our commitment to supporting the growth and equity for future media leaders. And it is our belief that these leaders will make an impact that will resonate across all sectors of American journalism and media.
When the Covid-19 pandemic shut down gyms across the United States last year, people were forced to get creative with their workouts. POPSUGAR met the moment by bulking up its fitness content. However, even as gyms open up, the women-focused digital lifestyle brand is betting at-home workouts are here to stay. They’ve also seen that fitness serves as part of an overall content and monetization strategy that is good for audiences, and the brand’s bottom line.
Fitness was a core part of POPSUGAR’s video strategy long before the pandemic upended lives around the world. POPSUGAR got into fitness content in 2006. It launched a signature video franchise, dubbed Class Fitsugar, in 2012, which now sees an average of 1 million views per video.
Fitness content helped propel POPSUGAR’s rapid growth on Facebook in 2015. By January 2020, the brand launched a curated 4 Week Full-Body Fusion program. The collection of 25 workouts, each under 45 minutes, carries a one-time fee of $19.99.
As the Covid-19 pandemic spread in 2020, POPSUGAR released more than 200workouts across social media platforms and its own website. It amassed more than 3 million new subscribers on YouTube in 2020 alone, where its total audience now stands above 5.5 million.
The brand, which is part of Group Nine Media, now hosts live workouts with top trainers on Instagram stories and YouTube. It launches Snapchat popups, and posts on-demand workouts to Facebook, Twitter, and the POPSUGAR website. “This year, we’re continuing to see growth and audience attention on these workouts,” POPSUGAR GM Angelica Marden said.
Bite-sized multiplatform content isn’t just for news
Have just a few minutes to spare? No problem. POPSUGAR created a series of short workouts that require nothing more than a phone.
Unlike going to the gym, working out at home is about fitting fitness into your life wherever you can, according to Jennifer Fields, a new deputy editor hired from WebMD to oversee POPSUGAR’s fitness content. That could mean sliping a 5-minute ab workout in between zoom meetings or a 3-minute BTS cardio workout whenever you can carve out 270 seconds for yourself. Or it could be making a 15-minute HIIT class on YouTube part of your morning routine.
POPSUGAR’s goal is to “meet audiences wherever people spend their time,” Fields said. “So many people are looking for ways to exercise at home. There’s a freedom that comes with at-home workouts.”
The rise of at home fitness over the course of the pandemic has made it possible for friends to workout with one another despite geographic separations and differing time zones. It’s also made it easy for audiences to take classes from the farthest flung of their favorite fitness instructors.
Free is key
In early 2020, the company was exploring audience-supported models, such as it’s flat fee Full-Body Fusion program. In fact, it had plans to release a subscription app with a recurring monthly fee last spring. However, in March 2020, the company shifted gears to better serve their audience in need. They released the app as a free, ad-supported product and – with hundreds of thousands of downloads to date – have opted to keep it free.
POPSUGAR’s free online workouts are far more affordable than even a bargain gym membership and certainly cheaper than a new Peloton. In addition to amassing audiences across platforms, the strategy serves as a bridge between popular fitness experts and people who may not otherwise be able to afford or access their services. And now that audiences are acclimated to the flexibility and cost savings, the company thinks they’ll stick with the POPSUGAR plan in the long term.
The strategy aligns with that of parent company Group Nine Media, which traditionally monetizes video content through sponsorships and advertising on Facebook, Twitter, YouTube, Instagram, Snapchat, and its website. It also licenses content to OTT services including Discovery+ and Xumo and syndicates some content to linear TV. Group Nine also generates revenue through affiliate product sales.
It’s about more than exercise videos
Nowadays, the lines between fitness, wellness, and health are blurring. That’s a theme Fields plans to surface more this year in POPSUGAR’s content. “Fitness isn’t a separate bucket adjacent to your health anymore,” she said. “It is your health.”
Fields takes a broad view of what fitness and health content can be, one that includes mental health, particularly among women of color. That view is one that’s already begun to emerge in POPSUGAR’s content strategy.
In fact, last May, POPSUGAR launched a mental health content hub. At the time, POPSUGAR Founder and President Lisa Sugar described the project as a way “to help readers feel connected and less alone in their daily battle.”
More recently, POPSUGAR launched a Snapchat show aimed at helping Gen Z audiences answer their questions about things like anxiety and depression. The show aims to provide practical, actionable advice to viewers.
“We feel this is really an important conversation for us to be a part of,” Marden said. “Our goal across everything that we create and all of our programming is to offer an inclusive positive safe space for our audience and to help them live their best lives.”
In the constant scramble for sustainable, long-term audience growth, an increasing number of media companies are placing their bets on news products aimed at kids.
Since last April, Lester Holt has been anchoring a weekly kids edition of “NBC Nightly News.” The New York Times is currently developing a digital subscription product based off of its “NYT Kids” print section. And, in August, Group Nine Media’s NowThis launched NowThis Kids, a weekly video series complete with a dedicated newsletter and podcast.
For a news outlet whose audience is largely made up of millennial parents, it was a natural expansion, said NowThis president Athan Stephanopoulos. Moreover, amid a pandemic, an economic recession, and nationwide protests against racial inequality, it fulfilled a pressing need.
“This was a moment where we saw that there was a lot of uncertainty,” said Stephanopoulos. “How do parents communicate these complex issues to their children? It was the right time for us, with what was happening in the world. And quite frankly, we saw a business opportunity to program to this audience and bring in big-brand partners who saw a need for this.”
TIME for Kids has long been a presence in elementary school classrooms. But when the pandemic halted in-person learning, TIME for Kids began offering digital editions of its print magazine free of charge. In September, it transitioned that offering into a digital subscription product marketed to parents.
“I think families understand that if we’ve been in classrooms for 25 years, then we’re a resource that they can trust to handle issues well with their kids,” said TIME for Kids editorial director Andrea Delbanco.
Another, more established, player in the digital area of the children’s news space is Canadian public broadcaster, CBC. That outlet’s kid-focused online vertical debuted in the fall of 2018. However, it was an idea that originated in its Halifax newsroom as early as 2016.
“The whole idea of misinformation and fake news was really surfacing, so it became more and more apparent that CBC, as a news organization, should have a news service for kids,” said Lisa Fender, senior producer at CBC Kids News.
Inspiring a new generation of consumers
In all three cases, the long-term benefits of forming trusting relationships with a rising generations of news consumers are clear. But each outlet’s editorial approach differs based on its respective strengths.
NowThis Kids focuses on highlighting inspirational stories about kids and adults putting kindness into action, says Stephanopoulos. Many of its key topics—equality, climate change, body positivity—reflect those covered by its parent news outlet, which primarily targets liberal-leaning young adults. “It’s an opportunity to cover the core issues specific to NowThis through a lens that’s inspirational [to kids] about what’s happening in the world around them,” Stephanopoulos said.
TIME for Kids approaches its audience as two distinct groups: younger students learning to read, and third- through sixth-grade students who are reading to learn. “Once we make the jump to the reading-to-learn crowd, we’re really focused on making sure that they can recognize authentic journalism and value it and see all the different voices that we use as a magazine of journalists, as opposed to a textbook,” said Delbanco.
Like NowThis Kids, TIME for Kids focuses on inspiring kids to action. It also seeks to give them a sense of agency and hope, she said. And while it leverages TIME’s newsroom as much as possible, creating news for kids requires a different skillset from traditional journalism. A dedicated editorial team is complemented by a curriculum team. They create teaching materials and parent resources to accompany each story the editors produce and provides guidance on which content is appropriate for each age group.
“We have to assume that kids have no context for any story we’re telling them about, which is different,” Delbanco said. “It also takes a really specific focus on what will interest kids, what will be understandable to them, and how we can make sure that we’re not talking down to them.”
Keeping a finger on the pulse is one of the biggest challenges faced by CBC Kids News, according to Fender. Kids under 13 aren’t supposed to have social media accounts. Of course, many of them do. Fender’s team solicits feedback from kids directly when working on stories as well as through regular surveys. Identifying stories of interest to children is paramount, regardless of the topic.
“We never shy away from doing anything because it’s sad or scary or sensitive,” Fender said. “If kids are talking about it, then we want to make sure that we have the information there for them so they’re not getting misinformation from somewhere else.”
Reaching children—and their parents—online
Audience marketing in the platform era is a matter of constant adjustments for news outlets of any kind. When the end users are children—and parents mindful of what their children are exposed to—it opens up an entirely different set of considerations.
While TIME for Kids and CBC Kids News are both ad-free, NowThis Kids has been exclusively sponsored by Cheerios since its launch. Stephanopoulos said the kids edition requires a higher degree of vigilance about how and when a brand is integrated, and identifying the right partner was critical.
“We have a shared ethos around promoting positivity and bringing families together,” he said. “It’s an integration that doesn’t feel disruptive or inserted in a way that’s going to impact parents’ reactions to the content.”
As part of the transition from teachers to parents as the target market, TIME for Kids has leaned into a lot more cross-promotion, such as its partnership with Nickelodeon on a “Kid of the Year” franchise. But Matt Stevenson, TIME’s VP of product marketing, said TIME for Kids has seen “great success” by partnering with Cricket, a long-standing children’s literary magazine that is ostensibly a competitor.
CBC Kids News has no dedicated marketing budget, Fender says, relying mostly on word-of-mouth. However, it does leverage many of the CBC’s existing channels to cross-promote its content.
Context is key
While clearly self-serving, helping kids understand the topics dominating the news cycle and the importance of reliable sources benefits the industry—and by extension, society—as a whole. But Julie Smith, a communications professor at Webster University who specializes in media studies and sits on the board of the National Association for Media Literacy Education (NAMLE), remains skeptical.
“This isn’t a public service; it’s about making money,” Smith said. “I understand it. They’re in business to make money. But we have to consistently remind parents to ask why they’re doing this.”
Parents need to remember that kid-focused news outlets function as a resource for conversations with their children, but not a substitute, she said. The sender of a message, their motive, who is profiting from it, and what information is being left out are all aspects that parents should ask their children about when consuming news. These are terrific topics to discuss with children as a means to improve their media literacy.
Media literacy
“Most kids get their information from YouTube,” she added. “That’s significant. Do kids understand the difference between fact and opinion? Or a reporter and a pundit? I think kids need to understand that if we’re using an app or a website for free, we’re not the customer. We’re the product.”
To that end, news literacy is a “huge area of focus” for TIME for Kids, according to Delbanco. From the minute they learn to read, she reasoned, children should be taught to be critical of what they’re consuming.
“Of course, we are thrilled to be raising generations of people who love TIME. But beyond just the TIME brand, what we’re really hoping to do is help raise a generation of kids who can do better within this information crisis than previous generations have.”
CBC Kids News allows teachers to book virtual “hangouts” in classrooms, taking kids behind the scenes on the production process for a particular story. This provides an opportunity for teachers to deliver lessons on media literacy, as well as another chance to solicit feedback on the topics kids are interested in.
Building for the future
Transparency around how stories are produced is a good first step, said Smith. Rising awareness of the importance of media literacy education, including the growing number of states enacting legislation to that end, has her feeling more optimistic than ever before.
As for the publishers, early returns suggest that it’s good business, too. TIME for Kids generated approximately 75,000 digital subscribers in its first four months, Stevenson said, and TIME has no plans to discontinue it after students are fully back in their classrooms.
“We’re very happy with the early response, both in terms of what we were hoping for and where we can see this going,” added NowThis’s Stephanopoulos. “Video is what we’ve built ourselves around, but we’ve also seen great growth around the newsletter and the podcast.”
The decline of cable TV is not news. Ever since streaming services offered consumers entire seasons of their favorite shows – affordably, on demand, and ad free – cable has been losing subscribers.
The number of pay-TV households fell from its peak of 105 million in 2010, to approximately 77.6 million last year. And this number is predicted to drop to 63.4 million by 2024. Meanwhile, the numbers of subscribers to the largest U.S. streaming platforms went up 50% in 2019 from the previous year.
There is no doubt Covid-19 boosted streaming figures, as millions of viewers spent their lockdown binge-watching the latest Netflix recommendation. However, cable was in decline long before the pandemic, with new, younger audiences favoring a “buffet style” viewing experience. In fact, more than half of 18 to 29 year-olds who pay for a TV bundle say they stream more often than watch cable.
Broadcast news
What is really interesting, amidst all this change, is that cable news continues to make a killing. In January 2021 CNN recorded its highest viewing figures in its 40-year history, beating both Fox News and MSNBC in total viewers. However, Fox News remains the most-watched cable news network in the U.S. And it took in a whopping $12.3 billion in 2020.
“The news environment of the past four years, with Trump in the White House, has given a life extension to cable news,” says Mosheh Oinounou, an Emmy award-winning journalist who went on to launch CBSN, and is now a consultant for media organizations. “More recently, Covid and major political events, such as the storming of the Capitol, have seen record revenue and record ratings for cable.”
On the flipside, news is under-represented in the booming premium OTT arena, particularly that of local markets. Given the habits and preference of younger audiences, it might be time to take another look at the local news.
Streaming news still a rarity
While news is still a rarity in the streaming space, things are starting to change. This month, ViacomCBS launched Paramount Plus, which will incorporate CBSN, as well as livestreams of local CBS affiliates. Fox Entertainment’s streaming service Tubi launched News on Tubi in October 2020. It recently added nearly 80 stations, with 24-hour live news feeds. Amazon Prime is also looking to get in on the news game, adding live and on-demand local news to Fire TV.
ViacomCBS already has a head start in streaming news, as CBSN was the first streaming news service to launch in the United States in 2014. And the company continues to make news part of its OTT strategy. Christy Tanner, EVP and GM at ViacomCBS, believes their “marriage of journalism and technology” differentiates them in the streaming wars.
“It baffles me that news is not a bigger part of streaming services. It’s such an incredible opportunity to reach a highly engaged audience,” says Tanner.
“News has been a really important driver of growth within CBS and now ViacomCBS. And that is the reason it is one of the three pillars of Paramount Plus. We know that news users are loyal. They come back frequently, and they stay for a long time. Now we are expanding on this knowledge to improve our news offering within our streaming services.”
However, creating live news, 24/7, is not without its challenges. There are issues around the nature of news content and the digital development resources required. This could be why few providers offer it as part of their streaming packages.
“Entertainment and news are very different,” says Tanner. “News is a real commitment. And you have to be prepared for what comes with that. Also, providers don’t see the financial opportunities they are missing. They see news as a loss leader or break-even proposition – but what we’ve done is proof.”
Oinounou agrees that some major streaming companies may be reluctant to “get too deep into news game” because of the constant need to feed the news monster with fresh content. “Media companies want evergreen content. But news is ephemeral, it’s only relevant for couple of hours, which is a real challenge,” he says.
Falling off a cliff
However, Oinounou is less convinced by the financial opportunities of streaming news, when compared to the figures cable news commands. Digital news revenue is largely ad-based while cable news relies on subscription and massive advertising income, both of which are hard to replicate online.
“There is revenue there, but not on the same scale as broadcast,” he states. “Streaming services need to ask how they can grow revenue in order to compensate for the cliff they are about to go off, in terms of cable subscriptions. We know that people will pay for sport and entertainment online. But it’s not yet been proven as a revenue source for news.
“We saw this evolution in print. News was free online. But then classified revenue fell through the floor and print subscriptions collapsed, so newspapers realized they had to start charging and put up a paywall.”
It’s only in recent years that news titles have started to generate significant subscription revenue. That said, these tend to be larger national titles or conglomerations of local news brands that have greater resources than most local brands.
However, the trend offers proof that people will pay for a quality product and a good digital experience. Therefore, it seems likely that broadcast news producers are heading in the same direction. But the question is, who goes first? Which company will be brave enough to put digital news behind a paywall?
Fox Nation is one example of how a news subscription model can work. They offer additional content on interesting topics with big names and personalities as a draw. WarnerMedia has also floated the idea of launching a similar streaming channel, with a CNN-based subscription service.
“OTT live streams need to do the same thing, by offering either exclusive content or access, which will add value and persuade customers to pay an extra fee,” says Oinounou. “They also need to make sure content is authentic to the platform. Consumers on new devices have different needs and digital news is more interactive. So content has to be adapted to the streaming space.”
A new business model
Along with great content, creating a successful streaming news channel is also about having the right technology to ensure it’s available on all platforms. This is something Tanner prides herself on. “CBSN’s strength is to enable the viewer to find our news wherever they are,” she says. “The channel is available on more than 20 devices, services and platforms.”
Oinounou agrees if news providers don’t move quickly to adapt to streaming technology and get on all new and emerging platforms “you are going to be left behind”.
Creating a good product is not just about attracting subscribers. It’s also about retaining them. And a key to reducing churn, is to reduce user fatigue and financial outgoings, which are often associated with too many streaming services. One solution is to bundle streaming content, in the same way as cable TV, where consumers pay one fee and have access to all the entertainment, sport, and news they want.
Bundling their own streaming services is a no-brainer for brands. However, given the proliferation of offerings on the market, partnering with other streaming companies could be the service consumers really want. We have already seen this happen with ViacomCBS, who partnered up with Apple TV+ last year.
“There is a lot of experimentation happening right now with all major companies trying to figure out a new business model for news,” said Oinounou. “But media executives are still focused on where the money is, and that’s not in digital.”
However, with the likes of Altice USA CEO Dexter Goei predicting the death of cable TV, the question is not “if” broadcast news will be streamed, it is a matter of how and when. What media executives need to focus on now, is how to make the new model match the traditional pay-TV bundle.
“Don’t worry about the world coming to an end today. It is already tomorrow in Australia.”
—Charles M. Schultz
For those focused on where the future of the internet media economy is headed, all eyes turned to Australia in recent weeks. And, despite a last-minute PR spin campaign filled with half-truths and outright deception by pundits around the world vying to influence the debate, the end result is a new law, the News Media and Digital Platforms Mandatory Bargaining Code, which foreshadows the future for Google and Facebook.
We’ve had enough hot takes. It’s time to kill off, once and for all, the disinformation, misinformation, and talking points of the infamous duopoly, which I’ll try to do here by busting 10 myths. (Happy to talk through any of these further. Just reach out: publicly or privately.)
Myth busting
1. The bargaining code resulted from an arbitrary process.
This couldn’t be further from the truth. The Australian government undertook a thorough, multi-year process to establish this new law. Importantly, its competition regulator (ACCC) spent nearly two years investigating the dominance of Google and Facebook. The result was a 600+ page report that clearly demonstrates the imbalanced bargaining power held by the duopoly. At the same time, the Australian government – with support from all political parties – formulated a public policy decision about how to better fund journalism. The only assumption made was that the press is critically important to democracy. This should not be a controversial assumption.
2. The inventor of the web has called this a “link tax” that will break the internet.
Yes, Tim Berners-Lee wrote a letter rightly expressing his concern that if it was possible to require payment for links throughout the web, it could break the internet. In the letter, he often hedged and clearly wasn’t focused on the specifics of the law, which does not require payment for links. We’ve seen this “link tax” talking point high on Google’s list in the past. And it’s a galvanizing force for defenders of the open web – as it should be. The law does mention linking but only in the context of describing what a digital platform does by publishing, curating, and linking to the news. It’s narrowly focused on the two platforms and in no way does it suggest a platform should be required to compensate for its links to news outlets.
3. Facebook won key concessions at the final hour.
The concessions for Facebook were, in fact, relatively minor. When Facebook pulled news off Australian users’ feeds, their goal was to trigger global outrage, shake up the press cycles, and turn the globe against Australia. Then, by throwing its PR might behind some elegant spinning about a great compromise, Facebook saved face. That’s all they did.
The final concessions included the addition of a couple windows of time (measured in months) in which Facebook will lobby and protest about having to pay for news. The “concessions” also included two changes that clarify the mechanics of the code.
4. This law is a gift to Murdoch and hurts everyone else.
Yes, News Limited has a lot of influence in Australia as its leading news company. In fact, as the ACCC Chairman noted, 80-90% of the journalists in Australia work for one of three companies (News, Nine, ABC). However, the idea that Google or Facebook would negotiate with these three companies and hang the other 10% of the market out to dry seems very unlikely considering the modest amount of additional funds it will take to round out the rest of the industry.
Having spent a significant amount of time on Australia’s 600+ page report, I would suggest that the law is much more clearly in the camp of increasing bargaining power for all journalism. It’s hard to argue that any news publisher with more than $150k in revenue per year isn’t better off with this law in place. Moreover, the law also allows for publishers to collectively bargain if they prefer. That does seem likely if they’re not getting what they need from Facebook and Google.
5. News Corp’s global deal with Google will result in settlements of antitrust lawsuits.
This anti-antitrust argument is the silliest thing I’ve heard. There is no greater fallacy in digital media right now than attributing the global antitrust scrutiny on Google and Facebook to one or even just a few parties. The antitrust lawsuits currently filed have the weight of the U.S. government, in 49 out of 50 states, and both parties in Congress.
The cases are robust, particularly the Texas-led advertising tech case against Google (which mirrors some of the work of the ACCC), Congress. Another is from the CMA, which is the UK’s comparable regulator. It also alleges a Section 1 charge of bid rigging between Facebook and Google. No market regulator walks away from these cases based on the whims of one complainant. The work in Australia has only added weight to these cases.
6. Publishers in Europe should be celebrating.
Globally, there is a lot of positive reaction to the work done in Australia. However, it’s also notable that the European market has been working for even longer on better funding professional content. In successfully passing an updated copyright directive, they’ve taken an approach that establishes additional rights for publishers through a publisher’s “neighboring right.”
Importantly, the European approach is not restricted to just news. It covers all content including snippets offered on Facebook and Google. France was first to bake this new right into law. Google responded by trying to avoid paying for anything that they’ve historically taken for free.
They’ve even invented a new product offering, Google News Showcase, to bury their payments and bundle in all rights needed. This minimizes any increased bargaining power for publishers, which has caused even more scrutiny. This opaque bundling of payment for rights by Google and Facebook keeps popping up wherever they face regulatory threats. If payment for snippets isn’t clearly delineated, and the financial terms aren’t transformative, the EU is likely to view Australia’s new law as a missed opportunity.
7. Government will set an arbitrary price for platforms to pay for news content.
The reality is that Australia has come up with a solution that uses market forces by requiring negotiated deals with publishers ahead of a mandatory bargaining code or an arbitration process. It uses a clever “final offer” process (also known as “baseball arbitration”) to finalize deal terms. In both cases, the government recognizes its weaknesses in over regulating a fast-growing digital marketplace. Instead, it leverages its antitrust enforcement to create a carrot and then a stick to get companies benefiting from a gross imbalance in bargaining power to the table to properly and quickly negotiate.
8. A straight platform tax would be a better solution.
The simple problem with a straight tax is all content would need to be “treated equally.” A click on Breitbart would have the same value as a click on The Wall Street Journal. The government would then divvy up a pot of money between everyone. This creates all sorts of uncomfortable government leverage over news. And one can only imagine how they would choose to split the loot. Think about the market incentives if they divided it up based on monthly uniques or page views. Better to push negotiations back into the market where intangibles such as brand, heritage, trust, consumer perception, and scoops have significant value.
9.This is unique to Australia and won’t translate to other countries.
Every lawmaker in Canada, Europe, the U.K., and U.S. who is focused on these issues will draft off Australia. Arguably, this was the biggest concern for Google and Facebook. They hoped to limit discussion to an island on the other side of the world. Our global market no longer works this way. Everyone learns from each other. Despite Facebook and Google’s ability to leverage their global dominance to protect their fortresses through trade deals, lobbying, and ducking lawmakers, the whole world is catching up to them.
Also, there are major allies in these fights to support the free and plural press. Microsoft, one of the few companies larger than Google or Facebook, has aligned with publishers on the new policies in Australia and Europe. (Forgive me, as Microsoft’s support evokes the classic “That’s not a knife” scene in Crocodile Dundee.)
10. Facebook and Google have pledged $1 billion each to news publishers so we should be happy.
Together, these two companies will easily surpass $250 Billion in global advertising revenues in 2021 without even participating in China. As of now, they’ve pledged $1 billion each towards journalism over three years. Thus, Google and Facebook are pledging barely 0.2% of their global advertising revenues towards journalism. Facebook’s protesting of payments was evidence in itself for Representative Cicilline to state that the company “is no longer compatible with democracy.” (And I tip my hat to the publisher that flatly stated that Facebook’s offer was not enough.)
These are two globally-scrutinized companies which pride themselves on moonshots. Yet they have failed to properly address how their algorithms help spread misinformation, disinformation. This has led to genocide in Myanmar, an insurrection on our Capitol, and health misinformation causing untold illness and death worldwide … to name just a few “unintended consequences.”
The future is now
The simple fact is that Facebook prefers to pay into journalism no more than it does for fake news from Macedonia, while continuing to grow its nearly $100 billion per year business of surveilling and microtargeting citizens with ads against the cheapest engagement available. They’ve devalued context. They’ve devalued facts. And they’ve devalued journalism for profits. In Australia, we see democracy fighting back.
Australia’s law has been endorsed by all major political parties in a representative democracy as a means to better fund journalism. Importantly, though this was rarely discussed, the code has a one-year review period to see how it’s working. If you listened too closely to American pundits the last few weeks, you would have thought this was the end of the open Internet – hypocrisy considering the closed platforms of those who shaped it.
The law prevailed. The world didn’t end. In fact, it’s already tomorrow in Australia. They are ahead on this one, and there is a lot we can learn from it.
