Digital publishers must take their destiny in their own hands with owned-and-operated platforms
This story is a part of a larger series on a playbook for digital publishers
Don’t ever tether your business to the benevolence of a third party.
– Jim VandeHei, Co-Founder of Axios and Politico
As social media (particularly Facebook) exploded in the early to mid 2010s, publishers like Buzzfeed, Vice, and Refinery29 surged in popularity. With their dizzying growth and valuations, distributed publishers (those that relied on platforms to reach users instead of building a direct relationship with them) seemed to be a smarter bet than legacy publishers.
At the height of its dizzying valuation, Jonathan Perelman of Buzzfeed said “Content Is King, But Distribution Is Queen and She Wears the Pants”.
More recently, however, it has become clear that relying on external platforms is a perilous long term strategy. As the Wall Street Journal reported, “Vice Media told employees [in January 2019] it is cutting 10% of its workforce, or 250 jobs, the latest in a string of significant cutbacks in the sector. Last week, BuzzFeed said it, too, was cutting around 250 jobs, or 15% of its workforce, as it tries to get on a path to profitability. Verizon Media Group’s HuffPost and Yahoo News units also suffered deep cuts, as did lifestyle-focused Refinery29”.
Instead, publishers that have strong owned-and-operated properties (apps and websites) continue to do phenomenally well.
It’s the year of loyalty for publishers, and as reverberations from Facebook’s news feed change subside, only those that have created a need for their content will remain unfazed.
The app is everything. It gives us control. … The distributed web is not dead; the partnership models are not dead, but our app is a recognition of a different level of value.
— Howard Mittman, Bleacher Report CEO
Owning the relationship with users
Publishers that have successfully managed the digital transition — including The New York Times, Wall Street Journal, and The Economist — all have one thing in common. A loyal user-base that goes directly to them through their apps and websites. While these publishers still use platforms to attract new audiences, they are as top-of-funnel channel instead of primary distribution sources.
While the benefits of a owned-and-operated properties are obvious, building them is enormously difficult. Nimble upstarts often capture users’ attention far better than traditional companies do — generally by focusing obsessively on great design and optimizing the User Experience. As the New York Times admitted in its 2014 Innovation Report, “Huffington Post and Flipboard often get more traffic from Times journalism than we do”.
Since then, successful Western publishers have improved by leaps and bounds. While the business model of rank-and-file publishers falters, organizations that have managed to own their relationships with the audience continue to thrive. The market-cap of the New York Times has more than doubled in the last 5 years, and The Economist has reversed a worrying trend of declining revenues. While the election of Donald Trump has certainly been a catalyst, digital capabilities made by publishers have been equally — if not more — important.
The plight of (most) Asian publishers
However, Asian publishers continue to struggle. Many give away their content for a pittance to aggregators. It’s no coincidence that the most successful and savvy publishers (like the Times of India) continue to obsess about their owned-and-operated traffic and refuse to give away their content to aggregators. Maintaining a direct relationship with the audience is generally more valuable than the crumbs that aggregators throw at publishers.
This is easier said than done. A lack of deep technical expertise among management, lack of organizational candour, and absence of long-term incentives all push decision-makers to transfer their relationship with audiences to platforms and aggregators. Why would rational employees embark on multi-year projects of building owned-and-operated properties (for which they will be held accountable) when they can simply optimize for short-term revenue growth and have safety in numbers if things go wrong?
Moreover, in organizations that lack candour, high-handed “suggestions” from senior management often end up creating bloated products. In most Asian newsrooms, project managers say “Yes” to every suggestion from senior management — regardless of its merits. This leads to inadequately tested and half-baked features, a product that lacks coherence, and a demoralized workforce that does not take ownership of the product.
As a consequence, attempts at creating owned-and-operated properties by publishers often fail to address the 3 most important components of building great media products — effective personalization, effective automation, and operational excellence. Moreover, short-term concerns (like fitting more ad-units) systemically override longer term concerns (like building and growing a loyal audience).
To counter these challenges, publishers must explicitly make trade-offs between long-term and short-term goals before they revamp their owned-and-operated properties. Are they optimizing for extracting more revenue out of each existing user, or for increasing the number of users? Do they care more about increasing app downloads, or increasing the number of Daily Active Users? And should development be driven by the sales team, or by the product team?
Creating great owned-and-operated properties is difficult. Many publishers have taken the seductive option of simply creating content, and surrendering distribution to platforms and aggregators. But publishers can not take on platforms and digital natives if they continue to take the easy way out. They must choose a deliberate strategy that helps them own their audience, not organizational inertia that cedes even more ground to platforms.
I’m a tech startup founder, human-optimisation junkie, and machine learning enthusiast living in Singapore. Hope you found this post useful. Do leave a note on Twitter (rishdotblog) or email me at firstname.lastname@example.org to give feedback, or just say hi! :)