The more things change the more they stay the same

The Insider - - OPINION -

Two years ago, I put for­ward seven 2016 pre­dic­tions for the pub­lish­ing in­dus­try. In look­ing back now, I see that many of them came true (or were on their way to be so), but not all in a good way. Here’s a snap­shot of those fore­casts and what ac­tu­ally hap­pened.

1. The double-edge sword of ad­ver­tis­ing au­to­ma­tion will con­tinue to be wielded by pub­lish­ers as they look to har­ness its huge po­ten­tial, but all they’ll end up do­ing is fur­ther alien­at­ing their au­di­ences.

In early 2016, the au­to­mated buy­ing and sell­ing of ad­ver­tis­ing in main­stream me­dia was still some­what in its in­fancy (espe­cially on mo­bile). To­day it’s fully main­stream with a 2017 global dis­play ad­ver­tis­ing value of ~US$100B. Un­for­tu­nately ~US$40B of that was lost due to ad block­ing.

Ad­ver­tis­ing au­to­ma­tion is fraught with prob­lems, not the least of which is the alien­ation of au­di­ences tired of the bar­rage of dis­rup­tive ads, poor on­line ex­pe­ri­ences, and of­ten seen as creepy be­hav­ioral re­tar­get­ing. The ris­ing tide of pro­gram­matic is lift­ing many boats, and that in­cludes ad­block us­age by dis­con­tented con­sumers.

A num­ber of pub­lish­ers have in­stalled ad block­ing walls to per­suade vis­i­tors to whitelist their sites, but only 26% of peo­ple are will­ing to dis­able their block­ers when asked; 74% just walk away.

Ad­ver­tis­ing au­to­ma­tion truly is a double-edge sword. On the one hand, you can only reach a large au­di­ence ef­fi­ciently with pro­gram­matic, but on the other, the true costs of au­to­ma­tion (e.g. loss of rev­enue due to ad block­ing and aban­doned web­sites) are, in my opin­ion, be­yond what most pub­lish­ers can af­ford.

Speak­ing as a user, who ap­pre­ci­ates an en­gag­ing user ex­pe­ri­ence and beau­ti­ful de­sign, and a judge of Cana­dian web­sites’ UI/UX for the past five years, I be­lieve solv­ing the ad block­ing prob­lem re­ally comes down to build­ing a bet­ter on­line and mo­bile ex­pe­ri­ence for vis­i­tors. Peo­ple are far more likely to trust you with their time and at­ten­tion if you pro­vide them with an at­trac­tive and en­joy­able dig­i­tal ex­pe­ri­ence. And as we have learned the hard way over the past two years, trust is what mon­e­tizes the at­ten­tion econ­omy.

Bot­tom line is…we still have a long way to go to make dig­i­tal ad­ver­tis­ing a vi­able rev­enue stream for pub­lish­ers, if that is even pos­si­ble.

2. Big Data and Ar­ti­fi­cial In­tel­li­gence will blur into Smarter Data to ex­ploit be­hav­ioral an­a­lyt­ics so pub­lish­ers can bet­ter pre­dict how peo­ple will dis­cover, con­sume and en­gage with con­tent. It won’t solve the prob­lems of pre­dic­tion #1 this year, but it’s a good start.

We are, as an in­dus­try, talk­ing more and more about al­go­rithms and Big Data. I re­mem­ber in­ter­view­ing Ken Doc­tor back in Oc­to­ber 2015 and his ad­vice for pub­lish­ers was to in­vest in busi­ness in­tel­li­gence/ an­a­lyt­ics. Two years later, he gave the ex­act same ad­vice.

The new start-ups that are pop­ping up and the es­tab­lished pioneers have been fo­cus­ing on an­a­lyt­ics a lot and us­ing Smart Data (a com­bi­na­tion of data and ma­chine learn­ing) to an­a­lyze user be­hav­ior at a very gran­u­lar level. Not only does Smart Data pro­vide in­sights into in­di­vid­u­als’ con­tent pref­er­ences, it also helps pub­lish­ers un­der­stand what elic­its spe­cific re­ac­tions by users (e.g. read, reg­is­ter, sub­scribe).

Big me­dia com­pa­nies (The New York Times, The Washington Post, The Globe and Mail, The Guardian, Fi­nan­cial Times, Schib­sted, etc.) in­vested early in Smart Data and are see­ing promis­ing re­sults.

The Globe and Mail alone has over 30 data sci­en­tists work­ing on pre­dic­tive an­a­lyt­ics to un­der­stand what trig­gers a user to reg­is­ter, a reg­is­tered user to sub­scribe, and a sub­scriber to up­grade.

Schib­sted is able to pre­dict gen­der, age, lo­ca­tion, in­ter­est, and in­tent to look for a job. They also use

ma­chine learn­ing to de­tect users’ con­tent pref­er­ences so they can bet­ter de­liver rel­e­vant rec­om­men­da­tions to them.

But we’ve also seen the op­po­site with some pub­lish­ers who seem to ig­nore what the data is telling them. One ex­am­ple is the er­ro­neous mis­sile alert in Hawaii in Jan­uary. The story was spread far and wide across me­dia and al­though no one had any­thing ex­clu­sive to re­port, one pub­lisher (who shall re­main name­less) put that com­modi­tized con­tent be­hind a pay­wall when they saw that the story started get­ting a lot of traf­fic. Per­son­ally I would have used that op­por­tu­nity to drive even more traf­fic and en­cour­age read­ers to share the con­tent.

Some pub­lish­ers col­lect ter­abytes of data, but strug­gle an­a­lyz­ing it, re­vert­ing back to what they un­der­stand — page views, clicks, likes and shares. They group peo­ple into de­mo­graphic si­los which can’t help them un­der­stand their au­di­ence as in­di­vid­u­als. How can pub­lish­ers de­liver a per­son the con­tent they want, when they want it, how they want it, and where they want it, if pub­lish­ers don’t know that per­son in­ti­mately?

So de­spite all the hype and en­cour­age­ment, the rate of adop­tion and use of Smart Data to serve au­di­ences’ needs has been much slower than we hoped. I can’t stress the im­por­tance of this; we must “col­lect to con­nect” with in­di­vid­u­als if we ever ex­pect them to con­nect with us.

3. To adapt to a world that is mov­ing from a knowl­edge-based econ­omy to a pas­sion-based one, more pub­lish­ers will look to seg­ment­ing their con­tent based on peo­ple’s pas­sions.

The mag­a­zine in­dus­try has been ahead of the curve when it comes to serv­ing the pas­sions of its read­ers through con­tent seg­men­ta­tion (e.g. Fu­ture plc, Tan­gi­ble Me­dia, Hearst, etc.).

But we’ve also started to see more and more news­pa­pers (e.g. The New York Times, Bos­ton Globe) and dig­i­tal-first pure­plays, that started out as a brand for all (e.g. Buz­zFeed), em­brac­ing more di­ver­si­fi­ca­tion of con­tent and it’s pay­ing off.

I ex­pect we’ll see more of the same go­ing for­ward as other pub­lish­ers see the po­ten­tial and em­brace Smart Data to help them to zero in on what in­di­vid­ual read­ers want to con­sume — when, where, and how. But we’ve still got a long way to go.

4. More pub­lish­ers, par­tic­u­larly in the mag­a­zine in­dus­try, will di­ver­sify their busi­nesses to try and at­tract and en­gage with au­di­ences be­tween page flips.

In ad­di­tion to con­tent seg­men­ta­tion, many pub­lish­ers are also look­ing to fur­ther di­ver­sify their rev­enue streams through a va­ri­ety of ex­pe­ri­ences (pod­casts, com­mu­ni­ties, branded con­tent, de­sign agen­cies, ecom­merce, stores, cafes, etc.) — the most pop­u­lar, and stick­i­est, be­ing live events.

Events come in all sizes, forms, and costs; some are just out of this world. By un­der­stand­ing the pas­sions and in­ter­ests of its au­di­ence, The Globe and Mail se­lec­tively tar­geted a small seg­ment of their most en­gaged read­ers and in­vited them to an ex­clu­sive river cruise in Europe that would cost each of the 151 trav­el­ers sev­eral thou­sand dol­lars. In just a mat­ter of days, the cruise was sold out with­out the need for any fur­ther pro­mo­tion or en­tice­ment. For­get the mil­lions the pub­lisher made from the event and just think about the real gold they un­earthed — the in­tel­li­gence data col­lected from pas­sen­gers as they lis­tened to spe­cial speak­ers and in­ter­acted with jour­nal­ists and ed­i­tors for a whole week.

To be fair, the Globe has a very en­vi­able de­mo­graphic. Would most pub­lish­ers be able to do the same thing? Prob­a­bly not. But with some cre­ative thought (and Smart Data) ev­ery pub­lisher should be able to find ways to of­fer unique ex­pe­ri­ences that peo­ple are will­ing to pay for — ex­pe­ri­ences that will fur­ther en­gage them and grow their trust and loy­alty.

With cir­cu­la­tion de­creas­ing and dig­i­tal ad­ver­tis­ing not com­pen­sat­ing for lost print ad rev­enues, it’s no longer enough for pub­lish­ers to stick just to their knit­ting (i.e. con­tent cre­ation).

They must start mon­e­tiz­ing the whole re­la­tion­ship with their au­di­ences through di­ver­si­fi­ca­tion — find­ing new ways to en­gage with them at more per­sonal level.

5. Af­ter dab­bling in gam­i­fy­ing news for a few years, larger pub­lish­ers will look to in­te­grat­ing unique con­tent with im­mer­sive en­ter­tain­ment, in­clud­ing Vir­tual Re­al­ity (VR) and Es­cape Games.

This is a pre­dic­tion that has not come close to what I ex­pected to see by now. The big play­ers from 2016 con­tinue to dab­ble in VR, but be­yond that, I haven’t seen much in the way of me­dia gam­i­fi­ca­tion. There have been a few flick­ers of in­ge­nu­ity like Al Jazeera’s #Hacked game on the Syr­ian cy­ber­war and its use of gam­i­fi­ca­tion to con­duct au­di­ence re­search, but lit­tle else is hap­pen­ing in main­stream me­dia.

The gam­i­fi­ca­tion mar­ket is pro­ject­ing hockey stick growth. Health­care, ed­u­ca­tion, HR, and other in­dus­tries are al­ready em­ploy­ing gam­i­fi­ca­tion tech­niques to drive user en­gage­ment.

Look­ing at this data, I was not sur­prised to see its ap­pli­ca­tion within mar­ket­ing be­ing so large and grow­ing so fast. Build­ing trust and loy­alty with con­sumers is more chal­leng­ing to­day than ever be­fore, espe­cially with to­day’s younger gen­er­a­tions. I can def­i­nitely see gam­i­fi­ca­tion be­ing a use­ful tac­tic to draw them in and keep them en­gaged with brands, in­clud­ing me­dia brands.

So hope­fully, now that the cost of the tech­nol­ogy has be­come more af­ford­able, 2018 will be a year where more pub­lish­ers start to ex­per­i­ment with gam­i­fi­ca­tion. But given the re­sults of my next pre­dic­tion, I ex­pect it might be more wish­ful think­ing on my part.

6. More ex­per­i­men­ta­tion will emerge, but the gap be­tween those pub­lish­ers will­ing to ex­per­i­ment and those just rid­ing the wave will widen.

There is an emer­gence of “lead­ers” in the in­dus­try that go af­ter op­por­tu­ni­ties rather than wait­ing for them to come to them — typ­i­cally larger pub­lish­ers with deeper pock­ets. The level of ex­per­i­men­ta­tion de­pends on the cul­ture of the pub­lish­ing house. The in­dus­try spans the full spec­trum of that cul­ture, from The Washington Post that runs in a con­stant state of experimenting to the many that run away from it.

In a let­ter to the share­hold­ers of Ama­zon, Jeff Be­zos once said, “To in­vent you have to ex­per­i­ment, and if you know in ad­vance that it’s go­ing to work, it’s not an ex­per­i­ment. Most large or­ga­ni­za­tions em­brace the idea of in­ven­tion, but are not will­ing to suf­fer the string of failed ex­per­i­ments nec­es­sary to get there.”

There is a mid­dle pack that wants to be lead­ers — pub­lish­ers that think their pre­vi­ous brand stature al­most forces them to be lead­ers. But they haven’t the funds, the am­bi­tion, the strat­egy, or the courage to do it. Some­times it’s a com­bi­na­tion of those weak­nesses.

So they end up fol­low­ing oth­ers with­out con­sid­er­ing how it ap­plies to their own busi­ness. Or they dab­ble in new op­por­tu­ni­ties with­out ac­tu­ally com­mit­ting to them. Seth Godin, an Amer­i­can best-sell­ing author, en­tre­pre­neur, and mar­ket­ing expert, would prob­a­bly say they don’t “em­brace the work of do­ing things that might not work.”

Be­cause there are fi­nite re­sources avail­able in th­ese or­ga­ni­za­tions, the num­ber and size of ex­per­i­men­ta­tions tend to be very small. A good ex­am­ple is what hap­pened in 2010 when the iPad hit the mar­ket. The fas­ci­na­tion with the de­vice had pub­lish­ers run­ning off to de­velop apps for iOS, ig­nor­ing ev­ery­thing else, in­clud­ing An­droid de­vices which were predicted to own a large share of the mar­ket, and which ended up owning 85% of the global smart­phone seg­ment in 2017.

They banked on one small project to man­age scale in a des­per­ate at­tempt to get lucky and win big. That’s a high stakes gam­ble des­tined to fail.

In both the news­pa­per and mag­a­zine worlds, we saw some ex­per­i­men­ta­tion over the past 2 years in the launch­ing new apps and new prod­ucts (e.g. The New Euro­pean), lo­cal com­mu­nity en­gage­ment, piv­ot­ing to video, mo­bile jour­nal­ism, cit­i­zen jour­nal­ism, new forms of sto­ry­telling (e.g. pod­cast­ing), di­ver­si­fi­ca­tion, new busi­ness mod­els, crowd­fund­ing, cor­po­rate ac­cel­er­a­tors (e.g. Plug and Play by Axel Springer), me­dia ac­cel­er­a­tors (e.g. Mat­ter), chat­bots, ar­ti­fi­cial in­tel­li­gence, vir­tual re­al­ity and more.

Some ex­per­i­ments have shown prom­ise, but most have not had the re­sults pub­lish­ers hoped for. But I still ap­plaud their ef­forts for tak­ing risks for a bet­ter fu­ture.

Af­ter Face­book pulled the plug on news, the CEO of Cy­cle Me­dia, Ja­son Stein, predicted “a drawn-out pe­riod of ex­per­i­men­ta­tion.” Un­for­tu­nately it’s more out of des­per­a­tion than a move mo­ti­vated by a cul­ture of in­no­va­tion.

The gap is still too large be­tween those that truly em­brace ex­per­i­men­ta­tion and those that see it as a last re­sort when the easy road gets too rocky.

7. Pub­lish­ing will con­tinue to make for strange bed­fel­lows as more transna­tional and cross-in­dus­try con­sol­i­da­tions oc­cur, fur­ther dis­rupt­ing the pub­lisher-jour­nal­ist value equa­tion, mostly for the bet­ter.

In terms of con­sol­i­da­tion we’ve seen a cou­ple of things. One, a num­ber of very lat­eral con­sol­i­da­tions like what hap­pened at tronc, Gan­nett, Mered­ith and Time Inc., and the re­cent Post­media and Torstar ti­tle swap.

Then you have ver­ti­cal con­sol­i­da­tions. But apart from Jeff Be­zos buy­ing The Washington Post, most of the ver­ti­cal con­sol­i­da­tion has tak­ing place from the pub­lisher side, such as The New York Times buy­ing The Wire­cut­ter. So that’s been in­ter­est­ing and a good thing — that’s di­ver­si­fi­ca­tion.

Now, my point back in 2016 was that this con­sol­i­da­tion would be mostly for the bet­ter. There are legacy in­ef­fi­cien­cies that con­sol­i­da­tion can help re­solve. Does the city of Van­cou­ver need two paid-for ti­tles and two or three freesheets? No. It is in­ef­fi­cient and none of them can get the economies of scale they need.

The ben­e­fit of ver­ti­cal con­sol­i­da­tion is that there is cross seg­men­ta­tion of con­tent. I men­tioned in Mas­ter­ing the three pil­lars of a suc­cess­ful mon­e­ti­za­tion strat­egy how Hearst saw an op­por­tu­nity to re­de­fine the lo­cal ex­pe­ri­ence for read­ers in Rus­sia by cre­at­ing a net­work of in­de­pen­dent ur­ban por­tals. This ver­ti­cal con­sol­i­da­tion com­bined with di­ver­si­fi­ca­tion has al­lowed them to plug in their con­tent into var­i­ous sec­tions on those por­tals and drive the traf­fic back to their other sites.

De­spite the value in con­sol­i­da­tion, there is a fear as­so­ci­ated with how re­dun­dan­cies can be re­solved with­out af­fect­ing the qual­ity of ed­i­to­rial. The other fear is that the pow­er­ful are becoming even more pow­er­ful and con­trol­ling the flow of in­for­ma­tion on a much larger scale.

But let’s face it. We do need a new wave of in­vestors in the in­dus­try — a new gen­er­a­tion of Buf­fets.

Un­for­tu­nately what we’re see­ing is growth in pri­vate eq­uity and hedge fund ac­qui­si­tions that are tak­ing out value in­stead of putting it in. Over the past three years, 200 news­pa­pers sold for over US$1.3B, with 2017 be­ing the busiest year for trans­ac­tions in al­most two decades.

Th­ese in­vestors typ­i­cally pay lit­tle at­ten­tion to the me­dia com­pa­nies they own ex­cept for buy­ing up user data and us­ing it across their other in­vest­ment port­fo­lios. They also ex­tract tens of mil­lions of dol­lars in man­age­ment and in­cen­tive com­pen­sa­tion fees, con­firm­ing their lack of in­ter­est in in­vest­ing in the in­dus­try and qual­ity jour­nal­ism.

Is Face­book al­ready a pub­lisher or about to be­come one?

With the re­cent news­feed changes from Face­book, I still have this feel­ing that Face­book may be­come a pub­lisher in its own right — buy­ing out sev­eral big me­dia houses, and ba­si­cally say­ing to the rest, “This is all the con­tent that we need, thank you very much!” Part of me is sur­prised that it hasn’t done it al­ready.

But why did Face­book ad­dress its is­sues with the news­feed by re­duc­ing its re­liance on con­tent in gen­eral? Can it sur­vive purely on pic­tures of friends and fam­ily or com­ments on how they spent their day? I don’t think so.

That may be how the so­cial gi­ant started, but Zucker­berg quickly learned that he needed more con­tent to re­tain the in­ter­est of mem­bers. So, start­ing in May 2015, with the in­tro­duc­tion of In­stant Ar­ti­cles, he started se­ri­ously woo­ing pub­lish­ers onto the plat­form. Shortly there­after, he in­tro­duced Face­book Live, the Face­book Jour­nal­ism Project, and the prom­ise of paid sub­scrip­tions (which are fi­nally sup­ported across iOS) — temp­ta­tions me­dia couldn’t re­sist. The re­sults for pub­lish­ers have been less than stel­lar, but the strat­egy made Face­book the No. 1 dis­cov­ery source for news.

Face­book has to come back to news in one way or an­other. It cer­tainly has the cash to in­ject into con­tent cre­ation if it were so in­clined. But who knows what the so­cial me­dia mogul will do.

Given its long his­tory of reneg­ing

on prom­ises, news­feed flip-flops, abus­ing user pri­vacy, and, of course the con­stant car­rot and stick game played with me­dia, we can only spec­u­late if a move to con­tent cre­ation would be at the level of Jeff Be­zos and The Washington Post or just an­other self-serv­ing Face­book ex­per­i­ment.

If Face­book were to pur­sue this course, what type of con­tent would it pro­duce and what would the qual­ity of that con­tent be? Be­cause if its sole pur­pose is to en­hance the user ex­pe­ri­ence within Face­book to lengthen a per­son’s time on the site to grow ad rev­enues, with­out fur­ther­ing the mis­sion of jour­nal­ism, then that’s a prob­lem.

I’ve of­ten crit­i­cized pub­lish­ers for con­struct­ing one-way com­mu­ni­ca­tion streets and lit­tle has changed in the past two years. We’re still not see­ing, at least not in ac­tion, pub­lish­ers re­vers­ing the course and turn­ing con­ver­sa­tions into two-way boule­vards. And I’m not just talk­ing about with read­ers, but with ex­perts in other in­dus­tries, or play­ers work­ing in me­dia be­yond just other (legacy) pub­lish­ers.

Too many pub­lish­ers con­tinue to demon­strate a com­plete lack of en­gage­ment with any­body but them­selves. And that's a very dan­ger­ous slope. Just look at their re­ac­tion to the re­cent Face­book changes (Se­ri­ously, jump­ing to LinkedIn?). This just un­der­scores the in­dus­try’s habit of knee-jerk re­ac­tions and rash de­ci­sions, char­ac­ter­ized by what Fred­eric Fil­loux de­scribes as, “a deep sense of en­ti­tle­ment (“We are the news, you owe this and that to us”), a lack of tech­ni­cal com­pe­tence (they ex­pect FB to come up with ready-to-use prod­ucts), and, in Europe, a propen­sity to call on Daddy (the [na­tional] gov­ern­ment) and Mommy (Brus­sels) when things go awry.”

Well, Face­book just showed them the door and said, "You're ac­tu­ally mean­ing­less." Now, I’m not con­don­ing what Face­book has done, is do­ing, or may do, but I do rec­og­nize that Zucker­berg knows how to grow a busi­ness us­ing other peo­ple’s money. And he’s not done yet.

I’m not go­ing to make any pre­dic­tions for 2018 be­cause too much of what I predicted in 2016 isn’t fin­ished yet.

But I will tell you what I wish. I wish that we, as an in­dus­try, would start­ing work­ing bet­ter to­gether and stop treat­ing each other as the en­emy. I still want to be­lieve that all of us are com­mit­ted to qual­ity jour­nal­ism, but not all are com­mit­ted to cus­tomer ser­vice and col­lab­o­ra­tion. If we could get those last two in our mis­sion state­ments I think we just might see a much brighter fu­ture for all of us .

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