Industry Insights from Mathew Ingram
In planning for our January edition of The Insider, my editorial team wanted to bring perspectives and predictions of some of the most insightful analysts and writers in the industry to the issue.
I’ve been following Mathew Ingram’s work for years and have huge respect for his work.
His in-depth analysis and refreshing “call it as I see it” commentary on the state of the publishing industry made him a must-have addition to the magazine.
I’m delighted Mathew accepted our invitation and strongly urge you to check out his interview. Some of what he says may surprise you, some may even shock you, but I guarantee you, what he says will never bore you. Enjoy!
NIKOLAY MALYAROV Mathew, thanks so much for being with me today. I’m excited to hear your views on some of the most pressing issues facing our industry. Let’s start with the paid versus free content debate. It continues to rage with publishers rushing to post their content on Facebook Instant Articles, Apple News, Snapchat and others in the pursuit of eyeballs and ad revenue. What are your thoughts on this trend?
MATHEW INGRAM Part of what made media powerful in the past was their control over the distribution channels through which people got their content. The printed newspaper, the radio station, the TV channel were somewhat vertically integrated. Publishers produced the content and also controlled the distribution channel through which people discovered and received their content.
Now it’s all becoming unbundled. Media companies control what they create but they no longer control one of the major ways that people get their content, which is through social platforms like Facebook and Twitter and Snapchat and half a dozen others. Facebook has a huge audience and huge reach. It can get your content in front of orders of magnitude more readers than you could ever do yourself. If you are interested in broadening your reach, Facebook is a natural way to do that. It’s free and in some cases it can actually make you money. That part is very appealing.
I think the risk is that you give up so much control over your content and you give up a fundamental relationship with your audience. If you believe, as I do, that the relationship with your audience, with your readers, is your fundamental value then inserting Facebook as an intermediary means that some of that value accrues to Facebook, not to you.
One corollary of that is, because Facebook has an algorithm that determines when specific content is shown to specific users, you’re at Face-
book’s mercy effectively. They can control that algorithm in whatever way they wish. They can make your content easier to find or harder to find. They can show it to more people or fewer people and you have literally zero control over that.
NM What are your thoughts on the paid content models such as paywalls, which seem to be going up and down like yo-yos?
MI My thoughts in general are paywalls around a mass of undifferentiated content will not work to a large extent. You may get some incremental revenue. You see a lot of newspapers doing that. They get incremental revenue but they don’t get large amounts of revenue, unless they’re The New York Times, which of course virtually no one is, except The New York Times.
I think paywalls and subscription models and charging readers directly is a great strategy. The only problem is that you have to plan it very carefully before you do it. You have to think about what impact that’s going to have on your model because that model only works if you are offering something very, very specific and targeted and focused on a specific market. The ones that you see working the best are ones where you can’t get that content anywhere else, so products like the Financial Times and the Economist work well because the information is so valuable.
If you’re a mass-market, general-interest newspaper that
prints largely commoditized news, then a paywall is a really dumb idea. It may get you a little bit of extra revenue but it’s not going to solve the larger problems. As a result, we’ve seen even The Sun in London get rid of its paywalls.
The problem with metered paywalls like The New York Times is that you’re effectively trying to suck and blow at the same time. You have a paywall to generate revenue but you also want lots of people to get your content for free. What you end up doing is actually penalizing your most loyal customers and giving non-loyal readers stuff for free - which is, if you think about it, the opposite of what you should be doing.
NM Very good point. What about some of the paid content aggregators?
MI Let’s look at Blendle, which some call the iTunes for news. I think Blendle is great and I’m a big fan of Alexander Klöpping and his team. They’ve done a great job of building that company. The problem is I don’t think Blendle is going to have the success in Englishspeaking markets as it’s had in the Netherlands and Germany, simply because the Englishspeaking market has oceans of free content. If you are in a geographically and linguistically separate market, paywall strategies often work better because to some extent that content is unique because it’s in a specific language. We’ve seen similar successes in Quebec, in Canada, for the same reason. I don’t think those models translate as well to an Englishspeaking market simply because there’s so much free competition.
Lots of people are willing to pay for Spotify, they’re willing to pay for iTunes and they’re willing to pay for Netflix but the content that newspapers and magazines produce is fundamentally different.
Lots of people will watch the same movie or the same TV shows or listen to the same song over and over. There’s a very different relationship with that type of content than there is with news. News is fundamentally fungible. There’s some unique content with some of media platforms but not enough to make it work.
One of the models I really like is the one De Correspondent uses in the Netherlands. They have a great reader-focused strategy which has resulted in a subscriber base of over 40,000 members.
NM Let’s move on to the changes in news discovery and consumption. Can the so-called “snacking generation” co-exist with serious journalism?
MI With Facebook, Twitter, Snapchat or Instagram the content is so diffused that people encounter it in all kinds of ways while they’re doing other things.
Facebook is a huge source of news for large numbers of people, but they don’t go there to get news. They go there to do other things and they accidentally discover news. That’s a very different kind of content experience than, “I want some news so I will read this thing or watch this program.”
A former boss of mine would say it was like ripping up your newspaper into pieces and then throwing it into the wind. You never know who’s going to see which piece or where and what they’re going to think about it. It won’t be connected to anything else; it’ll just be all by itself.
People glancing-ly run into these news bits that are floating around in the atmosphere and there’s very little context and very little background. They may see a headline, they may see a short video clip, they may read a couple of sentences. There’s a lot more accidental, shallow interaction with news.
NM The serious journalism side of the equation, how do we get this audience to engage more with that?
MI I think lots of serious news outlets are trying to clothe their content in ways that are appealing to that type of user, whether it’s headlines or animated GIFs or things that make it seem more appealing to people who are wandering by. I think in some ways that actually works against you. If you have a long, serious piece of journalism and you’re trying to put lipstick on it and make it look like something it’s not, people can actually feel exploited.
Maybe I’m an optimist, but I do think that people, maybe not lots of people, but still, there are people who want depth and context and analysis and they care about things are serious and possibly even boring. I don’t think everybody wants to just consume a kind of fast food diet of made up celebrity news.
NM Okay, let’s move on to the advertising world a little bit. It seems to be the hottest topic these days with ad blockers, programmatic, native advertising, mobile and video. Are we at an opportunistic point right now or are we sliding down a slippery slope of further reduction of revenue for publishers?
MI Fundamentally what we’re talking about is a disruption of the way that advertising works, period. I think it’s happening everywhere. It’s not just print, although it’s more obvious in print. In a lot of ways, media is going through two fundamental disruptions.
The first one is the disruption in the content itself – that is, the journalism or the news and how it’s produced, how it’s distributed and how it’s consumed.
The second disruption is in the thing that used to pay for that content, which was the advertising. That, like every other form of content, is being disrupted as well.
Media companies are effectively going through two perfect storms at the same time. One in the thing they do and the other in the way they used to pay for that thing.
I think ad-blocking is like a sneeze. It’s not the thing. It’s a symptom of the thing. The larger phenomenon is that advertising is changing. Programmatic advertising, invented by Google and other companies, is driven by algorithms and bots and is almost 50% of the market; human beings are never involved. And now that business effectively functions on its own because it’s so much more efficient, where efficiency in many cases consists of getting rid of human beings.
I think what you’ve seen is advertisers and publishers getting increasingly desperate to squeeze whatever tiny sums of revenue are left from traditional forms of advertising. You see pop-ups and interstitials and videos and every other thing, and fifty or sixty different trackers on a single page and all sorts of fraud and garbage because there’s a lot of desperation out there.
I happen to believe that native advertising or sponsored content is just about the only kind of advertising that has any hope of actually working, apart from what you might call branded awareness-based advertising. If you’ve got a new movie coming out and you want to splash stuff about that movie everywhere, then display advertising might be useful to you. But for the vast majority of marketing/advertising, native advertising is one of the few types of promotion that still hold the promise of actually working because it theoretically relies on turning advertising into content.
I think that’s where you get into some of the ethical debates. If it mimics content well enough then people can forget that it’s advertising.
That’s why it works. You have to be very careful how you do that because of the risk that you will trick someone into believing that it’s editorial content.
NM There’s been a lot talk and controversy about journalists being asked to write sponsored content. The Globe and Mail ended up in almost a lockout situation last year when they told their editorial team that they would be expected to create native ad copy. What are your thoughts on journalists writing sponsored content?
MI I think it’s interesting that if you look at the those who have gotten into trouble over this issue, it’s almost always the traditional media companies. New media companies like BuzzFeed actually have a very firm, so-called Chinese Wall between their businesses. I find it ironic in a way, that the companies that are supposedly the standard-bearers for all those traditional journalistic, ethical principles are the ones that are throwing them out the window in order to get ad revenue, which I think just speaks to the desperation that they’re feeling. I think if you use your regular editorial staff, you’re blurring the line and making it harder for your readers to trust you.
Fundamentally it comes down to trust. Craig Newmark, the founder of Craigslist, said that “Trust is the new black.” If you’re asking your readers to support you in some way, either personally or through a subscription, you’re effectively monetizing their trust. If you play around with that, it’s very easy for people to lose trust and it’s almost impossible to get it back. You can’t say, “You know, we changed our mind and sorry about that. We’re not going to do that anymore so please trust us.” Trust is very easy to lose and very difficult to get back.
NM As a journalist who has lived through the disruption in this industry, what do you think journalists are going to look like in five years?
MI We’re already seeing entrepreneurs either through individual efforts or small groups of like-minded journalists. Jessica Lessin’s The Information is a good example. I don’t know how it’s doing financially, but I think that idea of taking a small team and focusing on a specific type of content and going direct to your reader makes a lot of sense. Andrew Sullivan arguably did that with The Daily Dish. He had forty thousand subscribers by the time he shut it down. Brian Lam has a site called The Wirecutter which has a very lean organization that makes significant sums of money with very targeted content. You’ve got Skift, which is all about travel. Ben Thompson who writes a tech analysis newsletter called
Stratechery is basically a one man operation that runs a subscription newsletter. I’m pretty sure makes he a pretty good living. John Gruber who writes Daring Fireball is a similar type of model.
I think those types of targeted, focused efforts can do very well.
NM Given everything we’ve talked about today and Ross Dawson’s predictions of the death of printed news, are we getting there faster because of some of these disruptions in advertising and monetization models? Or do you think he’s overly aggressive on his predictions?
MI I actually think print is probably going to continue to exist longer than people think, but obviously not all of the print outlets that we’re used to. I think there’s probably going to be people who want print of some form or another for the next, I’d say, twenty years at least. It’s just that there’s going to be fewer and fewer of them. Some publishers won’t be able to make it because they need more scale than their print-focused audience can offer.
My analogy has always been live theater. Live theater used to be a pretty substantial form of entertainment; in fact it was the leading form of entertainment at one point. It was a big business. People still go to
the theater but not that many of them. Today, it’s not a very good business. There aren’t many people who can make a living at it, but it’s not going away.
I think Jeff Bezos compared it to horseback riding. Horses used to be a fundamental mode of transportation. Everybody had one or two. People rode them everywhere. It was a big industry. People still ride horses but it’s a much more niche industry now and it’s much more expensive.
NM Where do you think wearables and the Internet of Things fit into the publishing world going forward over the next five to ten years?
MI I think there’s a huge amount of potential there, maybe not for the watch. I’m not sure that’s the right form factor for a lot of things other than maybe a news alert about a fire or an explosion or someone dying. That’s a very, very small subset of the news. I do think that wearables in general and alternate display technologies are fascinating.
The New York Times lab has a demo of a news display that’s built into your mirror in your bathroom. It pulls up the weather and the news headlines and so on while you’re brushing your teeth and shaving. Those types of things, I think, are a massive untapped area for potential delivery of news or other types of content.
I do think that we’re going to see more experimentation around things like Google Glass. Maybe not glasses per-say, but some type of visual display that shows you information about the world around you.
NM That’s very interesting because in that example you just gave, it’s about the reader, not about the content. As the user moves, the content changes.
MI That’s a really great point. I would argue that media companies that are more likely to be successful are the ones that are going to focus exclu- sively on the user and what they want or need. It will be those that think of what they do as a service to a user or a specific market, not as just a machine that pumps out content that is then consumed in some theoretical way by some theoretical group that will succeed.
NM Every year is the year of something. What do you think 2016 will be the year of for publishing?
MI Continued anxiety? I think we’re going to see more concern about platforms. Even the kind of angst we’ve seen so far is going to pale in comparison as you see Facebook getting deeper in the news, Apple in the news, Snapchat, Instagram and platforms that we probably don’t even know about.
They are continuing to gain power and media companies are continuing to lose it. That’s a fundamental kind of power shift that I think is only going to intensify.