There is a lot of worry from publishers and writers around ad blockers, which some studies show being employed by around 20% of users and rising. Now that Apple seems to be considering integrating ad blockers into its iOS ecology as well, I’ve little doubt that their use will rise even further. (You can see that the ad industry confirms this trend).
Some see an arms-race between ad-blockers and ad-block blockers. I (and many others) see a business model that is not sustainable. Even the New York Times acknowledges this: On the Wall, the Writing.
I suggest that the current type of ads will approach worthlessness for most publishers, and it’s only a matter of time before advertisers shift to places and models that make sense for them. Subscriptions can and will work for a select few — very, very few — broad interest publications. Even then, they face many challenges.
Structural threats, like those facing the publishing industry’s revenue stream, can be met effectively only through collective and structural efforts. However, attempts by people and institutions to respond as a group are marred by what social scientists call (::drumroll::) “collective action problems.”
Collective action problems are challenges in which single actors have incentives to act selfishly instead of joining forces. Such self-preserving acts allow the stronger to survive a little longer. For a while.
Think of this challenge as people who are fighting to be on the highest deck on the Titanic, instead of staying on a lower deck to collectively help launch lifeboats. Yes, I’m stretching the analogy but only slightly: not all lifeboats on the Titanic were launched because of lack of cooperative action. Historians agree that even if there had been more boats on the doomed ocean liner, they couldn’t have been put to sea in time. There simply weren’t enough people trained and willing to work together to make a rescue happen.
Here’s what I know about ads and the Internet:
- Current ads on the open Internet approach worthlessness in terms of traditional goals of advertisement: awareness or incentive to purchase. Eyetrackers that measure where people look on a screen show that people don’t even see most ads on the Internet (which is why they are becoming more obnoxious) and most of the ads out there aren’t really useful even from the advertisers’ point of view. They are fraught with fraud — armies of bots are clicking on advertisements paid by the click.
- Advertisers will certainly abandon this mode of advertisement. If they haven’t done so already it’s because inertia is a powerful force even among for-profit corporations, and alternatives haven’t really emerged for them yet. Both are changing.
- Internet ads are worth something to the advertisers when they are targeted very finely, and are presented at the moment of need. The first type is going to be Facebook and Twitter and such platforms; the latter is Google search. Advertisement on centralized platforms raises a whole host of other problems, like super-surveillance infrastructure, but that is another piece.
- Current Internet ads are malware vectors.
- On mobile, Internet ads make everything unreadable. I can only read on Pocket or similar programs on mobile. My attempts at scrolling are taken as “clicks” and take me to sites or apps I have no interest in, and make my reading experience impossible. All ads take up too much space on mobile anyway.
- On the open web, Internet ads make reading terribly unpleasant.
- The immense amount of tracking by dozens of unregulated, unscrupulous brokers make them a disaster in the making as they slowly get hacked and leak, and your data is sold to malevolent actors for pennies.
- Ad blockers work. I had decided that I wouldn’t use one because I write on these topics and want to see the unexpurgated state of the Internet, including the ads. But I simply cannot refrain from blocking ads anymore because I can barely browse otherwise. The quality of my Internet experience since starting to use AdBlock plus Ghostery is way way up. Nobody who experiences this will go back. Few people will go through to carefully whitelist the smaller players. Ad blockers are here, and here to stay.
- People will pay for content. Yes, some pundits will tell you they won’t. They are wrong. There has been close to zero substantive innovation at any reasonable scale in this space. People have just been asked to subscribe to digital products, while the same content is given away for free all around them. That’s a donation model, not a business model.
- If people will pay for games, for services like Evernote, for music and books, and even for WhatsApp, they will pay for news and other content. At least some portion will. The existence of piracy does not stop many people from paying if given a choice, a path and reasonable price. We’ve never had one for news and articles on the Internet.
- Currently, there is no sane, easy and smooth path for people to pay for content on the Internet. Individual subscriptions per site won’t work. Nobody is going to enter credit card information for 30 different sites with 30 different passwords and then enter those passwords to all their devices. Especially since publishers are intent on giving away their content for free to Facebook and Twitter, that is where advertisers will go. I don’t understand how anyone thinks this will work long-term in the interests of publishers and writers.
This is the landscape I see. The solution to some seems to be shifting to centralized giant platforms as places to publish. At the moment, Facebook and Google are revenue sharing, and rather generously, with publishers. But the truth is, in this model all the leverage is on the side of the centralized platforms. Maybe they will remain so very nice. But, maybe Facebook has built a nice gingerbread house, and are now fattening up Hensel and Gretel.
In either case, “how nice of Zuck” is not a business model, or the basis of healthy and robust journalism.
Historically, the news pages of newspapers have always been cross-subsidized — profits from one part paid for the civic part. In the past, the profit from classifieds and regular ads paid for reporting. In some countries, the news was subsidized by the government. What people call “unbundling” is the slow but inexorable removal of these cross subsidies. I don’t see any substantial amount of cross-subsidy for news coming back anytime soon. I’d love to be wrong. But, I don’t see it.
Here are some potential futures.
Likely Future: The Slow Sink Continues
In this scenario, ad revenue keeps declining and more newspapers and publishing outlets go bankrupt. Writing, the hobby, survives of course since so many love doing it. News, as citizen journalism, will also survive since there are many people who are civic minded.
I am a big fan of citizen journalism. I’m also from a country (Turkey) in which citizen journalism thrives at large scale, and through some of the most innovative forms I’ve ever seen, but where mainstream traditional press has been gutted (for political reasons). The result is a disaster for the country’s civil society and civic space. Citizen journalism is a much needed addition but a news ecology without journalists and journalism, and without the dedicated time, special ethos and the craft of news gathering and public interest investigation is a catastrophe for civil society.
In this scenario, only two types of outlets will survive in the future: Subsidized ones or those who do advertorials.
First would be those using the Medici model — tech billionaires or other rich people purchasing news outlets. It’s a new form of cross-subsidy. It has some advantages, but also brings together many questions. If the news ecology is mostly owned by tech money, how can it cover technology and society for example? The current founders of giant tech companies are young, and may be more permissive of criticism even of their industry. But, princely grace and noblesse oblige is not a healthy long-term model.
The second model is BuzzFeed, effectively an ad agency that subsidizes news. I had a long argument once with its founder, Jonah Peretti, where he said that being beholden to subscribers has a downside because, like advertisers, they also have preferences and biases. This is true. In his ideal model, he takes the money, and uses it for (pretty solid) newsgathering as well.
But this makes BuzzFeed still part of the Medici model, with the money coming from the ad agency part, and that won’t always hold. There will be more and more pressure to conform to advertiser sensitivities. If Buzzfeed can’t comfortably publish a piece critical of a soap commercial, how can it truly grow big and hold people in power accountable? I like BuzzFeed news a lot these days. But their model is not the future, not at scale and should not be.
So called native advertising can work but only at great threat to the integrity of journalism. There are two paths for native ads: hide the fact that the item is an advertisement, or just turn it into an honest and informative pitch for a product. The former is dangerous and harmful. The latter? Well, to a degree, this can work. But consumers are wise to advertisements, and often seek honest signals of product quality. Those signals are embedded in social networks. I use the Internet to buy a lot of things; but the method that I use is asking my friends or going to places where I know reviews are reliable. Neither of these are strengths of current newspapers nor of publishing outlets. Native ads will shift to centralized platforms as well.
An Alternative Future: Build a Publisher and Writer-Friendly Spotify
Here’s an alternative, and one that has a shot of working if it can survive the collective action problem, the tendency of newspapers and publishing outlets to try to save the next few months of revenue rather than their long-term future: a large consortium of outlets that lets consumers and citizens purchase a subscription, like Spotify, but one formed for the benefit of the producers. (Rather than an intermediary that can wield monopoly power and eat the producer’s lunch). Such an intermediary should have an interface requiring a single password, require one-time entry of payment information, and charge a reasonable (tiny) amount per article.
In short, I want to seamlessly shed pennies as I read on the Internet. I have no way of doing this now.
Here’s what I imagine:
1-Spotify, but for the Titanic. Rather than sinking together, build lifeboats together.
2-Single login, browser extension or app on mobile, login once and forget it per device.
3-Reader sets monthly limit, say $10 per month, to be spent over that month. Only a small amount, say $2 per month, can be carried over (to provide stability to publishers but also to be fair to the readers/consumers).
4-This is key: It has to include almost all major players and a substantial number of high quality publishing outlets. There is no doing this alone, and this is the hardest part. People will sign up for access to an ecology that includes some of their favorites. People are not going to sign up one by one to each outlet, unless you are targeting business interests like the Wall Street Journal or Financial Times or Economist. Business press only is not a healthy ecology by itself.
5-There is a set and low default rate, say a penny, per article. If any outlet wants to charge more, they need (one time) approval from reader (e.g. for the New York Times, click here for 3 cents per article, and you will be charged that amount from here on). I’d suggest a cap as well to stop a race to the top, to higher charges. Major outlets do need and deserve the ability to charge a little more, lest more and more articles become clickbait if everything is paid the same — but there should be caps and disincentives to destroying the ecology. It’s a delicate balance.
6-If you sign up, you get 100 articles per year free. If you sign up for a trial version, $1 per month, you get 100 articles per month free. This creates some basis for universal access for many people, and helps bring readers on board.
7-This is also key: the publishers have to really paywall the rest, with few exceptions. Of course people will cheat the paywall, but publishers should not make it too easy to jump over this wall, just like they shouldn’t make paying too hard and articles too expensive.
I hear cries of “but what about universal access?” Newspapers going bankrupt will also cut “universal access.” They might as well try to survive. There can be some exceptions to paywalls but they should be within real limits. To disincentivize half-ad models, unpaywalled articles of publishers in the consortium should be mandated ad-free so that they are truly public interest exceptions (weather news during hurricanes, etc).
8-This won’t work for commodity news and clickbait pieces. Nope. It won’t. Sorry, commodity news is not a viable long-term strategy for the industry, or for writers, and will become less so as advertisers move to other ecologies.
9-Lots of people will continue to write for free. Yes. But that is the nature of any task that people find satisfaction in, see photography. Guilds can’t hold off other people acts of pleasure. However there is a lot of news reporting, and writing — for which there is demand — and which just cannot be done properly and expertly in people’s spare time.
10-Why not access everything per month à la Spotify? Because that won’t give incentives to high-volume or high-quality publishers to join. Without them, this won’t work. So the model has to be shedding pennies per article, with some inequality in payments built in.
11-This won’t let some small outlets survive. They aren’t going to survive, anyway, then. They will need to appeal to their smaller, hopefully more committed, audience for either voluntary donations (like public television and radio) or offer premium articles they charge extra for, and ask their committed base to please help subsidize. Nothing is going to solve the problem of not enough readership.
I’m not the first or only person to suggest such a model (here’s a smart one from 2009) but I hope that both the thinking on this problem, and the signs for need or change are strong enough now. There is a lot at stake, and publishers and people who value journalism have to realize their common goals, and find allegiances with one another even as writers and outlets continue also to compete among each other.
I’m hopeful that we can solve this, if the method to pay was easy, smooth and applicable to vast collection of high-quality outlets:
Here are objections that I believe aren’t well-founded.
1-People won’t pay for this. Millions of people subscribed to newspapers before, and people pay a lot for games (powered by micropayments). People pay for many other services. In Netherlands, people are starting to pay for Blendle. “People won’t pay for articles” is not a finding, it is a statement of speculative hand-waving in an ecology lacking innovation or options.
2-People only want/will fall for clickbait. Clickbait media per pay will go away only after advertisers finish their shift to networks where they have extensive targeting data, and are harder to block or ignore (i.e. when the centralized platform controls the whole environment: Facebook, Apple, etc.) (Clickbait media may remain as a malware distribution outlet).
3-Publishers will never figure out they need to act together.
Okay, I admit it. This concern is well-founded.
Collective action problems bedevil many challenges where short-term incentives lead to long-term disaster for everyone (Climate Change, unfortunately).
But if publishers and writers don’t get together and try to survive together, they will simply shrink while Facebook, Google, Twitter and Apple and the rest eat their lunch, and gain more and more control and leverage.
What am I missing?