Industry Insight: What the News Business Needs from Google and Facebook

By: Matt DeRienzo

Google and Facebook say, often, that they want to help news organizations. They’re holding listening sessions, running pilot projects, rolling out new tools, stepping up those kind of overtures since fake news distributed on their platforms and propaganda targeted using their technology helped flip the 2016 presidential election.

AMP and Instant Articles were introduced to speed up mobile web page loads, in theory helping news organizations extend their mobile audience—AMP on the open web and Facebook within its walled garden. But Facebook offered a somewhat generous revenue share (100 percent of revenue on ads sold by the publisher, and 70 percent of revenue on ads sold by Facebook).

More recently, both companies have worked on features that would help publishers sign up new subscribers as a big push has been made away from reliance on advertising and toward reader revenue. These moves are coming without much apparent direct self-interest by or benefit to Google and Facebook, other than staving off the drumbeat of criticism about what they’ve done to the economics of the news business.

And that brings us to the heart of the issue— the thing that most of the “duopoly’s” efforts to help journalists so far have barely nibbled at.

Even more than Google and Facebook have upended, and now control, publishers’ relationship with and access to readers, they have destroyed the ability to sustainably fund journalism through advertising.

In 2017, they will capture an estimated 63 percent of the digital advertising market in the U.S., with Google taking in $35 billion, up 18.9 percent, and Facebook $17.37 billion, up 40.4 percent.

They have captured an astonishing 92.7 percent of the growth in digital advertising in the U.S. And as Joshua Benton of Nieman Lab has pointed out, add in growth from Amazon and Snapchat, and digital advertising for everyone else combined has actually dropped, not increased at all.

Meanwhile, publicly traded newspaper companies are reporting quarterly print revenue declines of as much as 17 percent as digital stagnates.

If Google and Facebook really want to help save journalism, bolder moves are necessary. Certainly arguments have been made about their broader self-interest in doing this, as discovery and sharing of content and information produced by journalists fuel their traffic and revenue.

Can they do it? Well, Facebook’s most recent quarterly profit was nearly $4 billion. Google’s was more than $5 billion. In one quarter.

Each could write a check for charitable support of journalism surpassing the existing total budget of every local newsroom in America, without putting much of a blip on earnings. They could fund the ambitious new “Report for America” proposal conceived by Steve Waldman and the Ground Truth Project, which aims to place 1,000 new reporter positions across America in a Peace Corps-like program.

They should.

But we should also be talking about ways to end the serfdom.

Helping publishers sign up new subscribers is fine, but how about we get at the Google- and Facebook-created advertising problem that is forcing news organizations to go there?

That doesn’t have to mean less advertising revenue for the duopoly, more for publishers.

In addition to competition with Facebook and Google’s targeting and self-service abilities, the commodification of digital advertising is the big problem for news publishers. Google and Facebook could help fix this, and solve a growing problem for advertisers in the process.

Fake news during the 2016 election, and growing hate speech since, has brands questioning the cheap programmatic ad technology that can’t tell the difference between advertising inventory on a white supremacist website or YouTube video and an investigative news story by professional journalists at a local news organization.

This issue will be exacerbated as programmatic adoption of native advertising and sponsored content grows. If a brand thinks a banner ad next to offensive or non-credible content looks bad, think about the damage created by a native advertising piece designed to blend in with that content.

So why don’t Google and Facebook adjust their technology to offer brands the ability to advertise only in proximity to real news content, published by trusted, verified sources, and get those publishers a $5 CPM rate for advertising instead of 80 cents?

Yes, national advertising networks exist and have been attempted in the past by newspaper associations, but not with the targeting technology that programmatic can provide. Google has helped them get access to reselling of cheap programmatic networks, but that doesn’t address the basic economics of the situation.

Before Google and Facebook can help save journalism, we need a much more serious and intensive look at how advertising works.

Matt DeRienzoMatt DeRienzo is executive director of LION Publishers, an organization that supports local independent online news publishers from across the country. He is a longtime former newspaper reporter, editor, publisher and corporate director of news.

Like & Share E&P:
RSS
Follow by Email
Facebook
Facebook
Google+
http://www.editorandpublisher.com/columns/industry-insight-what-the-news-business-needs-from-google-and-facebook/
LinkedIn
Published: November 27, 2017

2 thoughts on “Industry Insight: What the News Business Needs from Google and Facebook

  • November 27, 2017 at 11:17 am
    Permalink

    Great column, Matt. We are on the same page. I write the “Business of News” column for E&P and you will like my column next month.
    It is entirely inappropriate for newspapers to be making partnerships with the FANG giants. They do not have our best interests at heart.

    Reply
  • November 27, 2017 at 2:06 pm
    Permalink

    Heaven help the USA if it loses real news.
    Newspapers had a tremendous number of advantages as we entered the digital age, but squandered them all.
    It was once said that ‘You’re gonna miss us when we’re gone’ is not much of a business model.”
    So true.

    Reply

Comments:

Your email address will not be published. Required fields are marked *