On New Models, Journalism, and Digital Advertising

It was encouraging to see our most prominent millennial Member of Congress, Rep. Ocasio-Cortez (D-NY) recognize the link between a healthy democracy a professional class of journalists. On Friday, presumably in response to the startling number of layoffs at BuzzFeed, @AOC tweeted this:

True to form, Mike Masnick of Techdirt replied:

It is ironically quaint at this point to see anyone, even Masnick, still using the “buggy whip” metaphor.  I mean could the term beat a dead horse be any more appropriate?  The buggy whip was always a stupid reference because horse-drawn vehicles are, in fact, obsolete, while the content that big tech companies exploit and devalue (like journalism) is clearly still very useful and in demand.  

Several years ago, the “adapt to new models” narrative was just dumb magical thinking.  But today, we have ample evidence to call this talking point a demonstrably failed proposition.  I guess it’s good that Masnick did not suggest journalists should tour, sell merch, or find new ways to connect with their fans; but still, Mike should go lie down by his dish and think about what he’s done.  

There may be new models in the sense that we enjoy new ways to access and experience content—be it news or entertainment—but there are no truly novel economic models to support the production of content in a free market.  The revenue needed to pay reporters, writers, etc. comes from consumers or it comes from advertisers.  Everything else is alchemy.  And while there are certainly many other factors external to Facebook and Google that have changed the nature of journalism and our relationship to it, the market reality for news and other content creators is that the major internet companies systematically poisoned both revenue streams.

First, the industry laid siege to the principles of copyright and promoted a faux-populist (frankly childish) message that all content must be free.  Then, they helped fulfill the promise of free by erecting giant tollbooths that siphoned off the lion’s share of the available ad revenue, which would otherwise go directly to content creators like journalists.  It’s funny that the free-content, anti-copyright crowd tend to mock as anachronistic any news organization that would presume to put up a paywall, but that’s exactly what Facebook is—a paywall.  No, we don’t pay to use it, but the content creators pay with the lost revenue they rightly earned.

It is especially funny (or sad) that Masnick would bring out a variation on the adapt message in context to BuzzFeed, which IS a new model.  It was built as an online-only platform that would be free to consumers, and it was designed with social media in mind.  Yet, as the New York Times reports, founder Jonah Peretti believes the solution to the Facebook/Google problem may be a merger of several digital news networks into a group that can negotiate better terms for ad-revenue sharing.

But, again, notice how there’s no “new model” there.  It’s just an old model called advertising now dominated by two massive companies.  And the fact is that news media companies have adapted, although in the ever-changing landscape of platforms like Facebook, it is probably more accurate to say that they have reacted in ways that are of little value—economic or social—to the purpose of journalism.

In October of 2018, Alexis C. Madrigal and Robinson Meyer, writing for The Atlantic, reported that several news companies laid off dozens of reporters, mostly writers, to make room for video production resources in an effort to capitalize on Facebook’s new video initiative.  Citing a lawsuit pursuant to Facebook’s allegedly misrepresenting the data on video impressions for advertisers, the authors write…

During the period of purported wrongdoing, from July 2015 to June 2016, journalists and newsroom leaders across the country worked to cover an unprecedented presidential campaign in an information landscape that Facebook was constantly, and erratically, transforming. Even if, as Facebook argues, it did not knowingly inflate metrics, it set up new and fast-changing incentives for video that altered the online ad market as a whole. 

So, even if adapting to video had proven remunerative for news companies, this is still not a good environment for journalists, or for the public that relies on their work.  News organizations should focus on doing the best job of reporting the news, not figuring out how to navigate the opaque and erratic landscape of Facebook.  As I say, that’s not adapting, it’s reacting; and that same Atlantic article cites one example that makes this point.

There is something seriously flawed in the narrative that BuzzFeed potentially broke an important story this month about Michael Cohen’s testimony and then had to decimate its national news team last week–but that, in 2016, they spent resources making a viral video featuring two employees exploding a watermelon.  That is adapting to new models? Hard-news supported by an old Gallagher joke?  And it didn’t even work.  “BuzzFeed never repeated its success,” write Madrigal and Meyer. “But that didn’t stop reporters from being taken off the line of duty, while a promotional video of water being poured on permeable concrete racked up 100 million views.”

Meanwhile, as intermediaries collect the ad revenue that content creators like journalists generate, the advertisers themselves may be getting a raw deal themselves.  Facebook’s allegedly fraudulent reporting of video-view metrics is consistent with other evidence suggesting that trouble in the digital advertising market may be far from over.  As cited in a recent post, Max Read of New York Magazine tells us that a staggering amount of the internet, at any given moment, may be fake.  Read writes …

Studies generally suggest that, year after year, less than 60 percent of web traffic is human; some years, according to some researchers, a healthy majority of it is bot. For a period of time in 2013, the Times reported this year, a full half of YouTube traffic was “bots masquerading as people,” a portion so high that employees feared an inflection point after which YouTube’s systems for detecting fraudulent traffic would begin to regard bot traffic as real and human traffic as fake.

What all that means for advertisers, of course, is that they’re not getting the impressions they’re paying for, let alone the quality impressions digital ad sellers continue to promote. If this is the case, it implies that another reckoning may be at hand between the major advertisers and Facebook and Google.  Wouldn’t it be interesting if the solution for both advertisers and news organizations is that the brands return to buying more media from the news sites themselves rather than the intermediaries?  Yeah, I know.  It’s an old model.  But it worked pretty damn well.

Robot image by frescomovie

David Newhoff
David is an author, communications professional, and copyright advocate. After more than 20 years providing creative services and consulting in corporate communications, he shifted his attention to law and policy, beginning with advocacy of copyright and the value of creative professionals to America’s economy, core principles, and culture.

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