Tow Center

Platforms, publishers, and the end of scale

November 22, 2019
Scales. | Photo: Adobe Stock

Only three years ago, the power that technology platforms would gain over news publishing was unimaginable in depth and breadth. Now platforms both increasingly act as publishers and support the entire publishing ecosystem. This dual role marks the beginning of a new phase in the platform-publisher relationship, and a new step in the way platform companies wield their power. The Tow Center’s third report in our Platforms and Publishers project, Platforms and Publishers: The End of an Era, published today, examines publishers’ experiences in tandem with this shift, and what it means for the future of publishing.

Many publishers won’t make it far into this new moment. News organizations have come to learn that the promise of on-platform ad revenue at scale is broken; the outlets most dependent on ad revenue face an especially treacherous transition to financial sustainability. The question publishers face is cruelly simple: How do you get subscriptions, memberships, and other revenue streams flowing before advertising effectively dries up? No platform product can answer it.

The relationship between platforms and publishers has changed rapidly since the Tow Center began researching its implications in 2016. The question of whether platforms act as publishers is no longer widely debated: in March, Google erased that distinction when the company announced that it would create local newsrooms. The first is in Youngstown, Ohio, where the last remaining daily newspaper, the Vindicator, recently went out of business. Google’s newsrooms will be owned and managed by venerable publishing companies McClatchy (in the US) and Archant (in the UK), but they will be funded by Google’s Local Experiments Project. This decision to establish new newsrooms, a first among platforms, is a significant departure from these firms’ efforts to bolster existing outlets; as of last year, Google and Facebook already promised a combined $600 million to journalism, placing the pair among the industry’s top patrons.

Not only are platforms creating and supporting newsrooms externally, they are also forming them internally. With the rollout of Facebook News last month, every major platform—including Facebook, Google, Apple, and Twitter—now defines and curates news. With the exception of Google Discover, which relies solely on an algorithm to promote news in its feed, curation is done by humans who are often former journalists and editors, and who are aided by algorithms. The LinkedIn Newsroom actually produces reported stories. Facebook’s News team, like Apple’s, accepts pitches from publishers hoping to be featured as a top story—the contemporary “above the fold.”

Publishers interviewed by the Tow Center this year often spoke of the end of a platform “era.” This era was defined by scale, the platforms’ long-standing promise: audiences of hundreds of millions and billions would bring publishers enough advertising revenue to make it worthwhile for them to forfeit direct editorial control and audience relationships. In order to get in front of those audiences, publishers had to distribute their work through, or create new work exclusively for, these platforms’ publishing products.

Publishers now understand that such control and relationships with readers are essential to their success. This era, it turns out, was a “bubble” and a “distraction,” publishers told the Tow Center. After years without meaningful or consistent revenue, publishers finally believe that “the scale game is over.”

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“A reckoning” is next, they said. Publishers regret undervaluing their own audiences in favor of brand-diluting social-first content. While interviews for our earlier reports revealed a willingness to shift strategies and fall in line with platform maneuvers, publishers now believe that they must regain control of their revenue streams and put their own audience interests above platform demands. This means a renewed focus on owned-and-operated properties, where publishers control audience experience, data, and revenue.

Publishers now require far more compelling evidence that platform products will be fruitful for their businesses before agreeing to devote time and staff to them. “A year ago [our attitude was], ‘Hey, why not? Let’s give it a shot. [It’s a] fifty-fifty call,’ ” said one local publisher about participating in new platform-product rollouts. “Now somebody would have to show me pretty clearly that the benefit was likely, rather than fifty-fifty, for me to make the change.”

One person from a membership-funded outlet said, “It’s much clearer to everyone that the endgame has got to be sustainable readership. If you don’t have a revenue plan—beyond ad impressions and display ads—that is trying to move all of that reach into something more substantive in terms of readers giving [money] to you, whether it’s subscription or through donations, then what’s the point?”

Interviewees increasingly saw platforms not as destinations where content could be monetized, but as the top of a “marketing funnel” where users can be engaged and eventually converted into paying readers. Publishers are also learning how to better understand and retain readers who can be lured to their sites. The shift is from scale to loyalty.

Sensing a change in approach from publishers—and unwilling to lose the ability to host popular posts from news organizations—platforms have adapted as well. Google and Facebook have both changed their pitch to publishers, particularly local ones, and made reader revenue a priority since last year. The Google News Initiative site claims its products can not only “expand reach,” but also “drive conversions” and “engage subscribers and members.” And Facebook published a blog post on its Journalism Project page titled “Supporting Subscriptions-Based News Publishers,” in which it claimed that its products are “focused on helping publishers build closer relationships with their readers” and “designed for local and niche publishers interested in using a Facebook-based membership model.” Of the hundreds of millions of dollars both platforms have promised to journalism, tens of millions have already gone toward “boot camp” programs and other trainings for newsrooms, which often come with grants and other financial and technical support—and, of course, the marketing of these products.

The latest platform-product rollout, Facebook News, offers another hint at the shape of the “post-scale world.” News stories, which are housed in a dedicated news section, are chosen by human editors as well as by an algorithm—a total departure from Facebook’s first major publisher product, Instant Articles, which relied on algorithms to surface publisher posts alongside those from friends and family, and required those stories to be read on the platform. Unlike News, publisher profits from Instant Articles were entirely based on ads on Facebook.

Publishers will choose whether users read entire stories in Facebook’s News tab or are redirected from a preview post to their own sites. Whether or not they let Facebook directly host their work, some publishers will be paid for their participation. Payments vary from outlet to outlet, but so far they’ve been reported as high as seven figures. Participating publishers include the Chicago Tribune, The Atlantic, Fox News, and the New York Times, which was quick to abandon Instant Articles in 2017. The Times described News as evidence of a “truce” between the tech platform and news organizations.

Multiple interviewees have become more clear-eyed on the subject of direct dollars from platforms, such as grants from Facebook or Google to smaller newsrooms, or seven-figure deals with larger newsrooms to use products such as Facebook News. The typical interviewee characterized the infusions of cash as welcome but unreliable bonuses. One interviewee’s organization had recently accepted a large sum. “This is fantastic,” the interviewee recalled thinking. “But also, this is not going to save our business. And I can’t count on this to renew.”

New platform products and initiatives are advertised to publishers as a way to foster independence and sustainability. In practice, they bring platforms deeper into the news industry and broaden their power. The homepage of the Google News Initiative puts it in stark terms: “The future of journalism depends on all of us working together.”

It is tempting to frame recent developments as empowering for publishers, but the power dynamics still do not bode well for a prosperous future for the online media industry. Publishers’ abilities to resist the demands of tech platforms depend on their business models and the health of their publications to provide them the necessary leeway. Some say they have higher CPMs (costs per “mille,” or one thousand impressions) on Instant Articles or larger audiences on Apple News than they command on their own mobile apps or websites.

Platform initiatives are a bridge for some publishers; for others, however, they’ve become a lifeline. One social media director told the Tow Center, “We absolutely need the money that they’re giving us to innovate, or have a shot at growing our audience, or even [figure] out a path to a subscription strategy. So I am thankful for the money, but I think there’s also some resentment…like, I’m just tired of being at your beck and call.”

Read the full report here

Nushin Rashidian is the research lead on the Platforms and Publishers project at the Tow Center for Digital Journalism. She also teaches at the Columbia Journalism School. @nushinrashidian