The New York Times made the call that the sky over publishing had officially started falling. (“Media Websites Battle Faltering Ad Revenue and Traffic.”) The article speaks in a somewhat surprised tone about the rapid consolidation of viewership and spending with Facebook and Google, and that niche publishers like Gawker, Mashable and the late Gigaom are financially starving as a result. Three reactions:
- Can anyone have been so cloistered that they didn’t anticipate consolidation?
- Publishing isn’t being consolidated with Google and Facebook: distribution is being consolidated, and that’s a different thing.
- Publishers have for too long doubled down on a bad hand, relying on page views, ad calls, standard ad units and a cynical, increasingly-automated planning process to feed them.
A Morgan Stanley analyst is quoted saying “…85 cents of every new dollar spent in online advertising will go to Google or Facebook,” which sounds really awful. But then you realize that 80% of magazine budgets used to go to three companies and a similar – or higher — share of dollars went to network TV. It has always been thus. Those giants are just better distributors and it’s up to the rest of us to adapt.
But the theme I really want to pick up is publishers’ stubborn unwillingness to challenge the system and assumptions that diminish their control and relevance more with each passing day. Some diversification is happening, but the protein in most publishers’ meals is made up of standard ad units and pre-roll videos served in response to bigger and bigger numbers of ad calls. And financing this system is an agency-driven media planning process that is getting thinner and more opaque.
This is not the end of publishing. But it must be the end of advertising – or at least the end of publishers’ flawed assumptions about it. Advertising will not save the situation. The Times article addressed one potential peril of publisher diversification: “Other companies are looking to focus more on branded content like videos, sponsored stories and full-fledged campaigns. But publishers have quickly learned that those efforts are labor-intensive and put them in direct competition with advertising agencies.” And what is the problem? This is now a wide open marketplace where the publisher has as much right as anyone to create the value that will sustain and feed his business. Staying in your certitude because of political consideration is a terrible idea.
A paradigm shift is a terrible thing to waste. The world has changed radically. So must publishing business.