Journalism 2019: A year of hard graft

Nic Newman was one of the three people who interviewed me for the role of the BBC News Online’s first overseas journalist based in Washington (a few liftetimes ago), and we have stayed in touch. I am one of the hundreds of digital leaders he reaches out to every year to inform his annual predictions. This is what I wrote to him in full albeit slightly edited for his 2019 edition of a look ahead to the year.

1.     What was the most significant development in 2018 in terms of digital media?

I think we’ve reached an end to this round of the innovation cycle with respect to digital media, the Rise of the Platforms. Let me explain. Gartner has its Hype Cycle, but over the years, I’ve begun to see an Innovation Cycle in terms of digital media. We see a period where a new idea or usually group of ideas emerges. It is tested, and then we see wider adoption until we start to explore the limits of that idea. After that adoption, we usually a lull before we see another flowering of ideas. Sometimes, the lull is down to an economic trough such as following the crash after the dot.com boom, and sometimes it is simply the playing out of an idea, such I think we’re seeing with platform-focused strategies in media, well as well as the strategies of the social media platforms themselves.

It’s more cost effective for Google and Facebook to reach billions than it is for news content companies to reach millions…

As an example, think about the metered paywall by the New York Times. Yes, it was pioneered by others, namely the Financial Times, but the New York Times won over sceptics who thought it only worked for financial publications. Then we saw wider adoption of the idea: The pivot to reader revenue.

Let me lay out a few epochs that I have seen:

• The dot.com boom. – Digital Media emerges

• The Web 2.0 era. – Networked Media emerges.

• The Rise of the Duopoly – Consolidation.  (I originally wrote The Rise of the Platforms, but it really is more about the rise of Facebook and Google.)

We’re coming to the end of the Rise of the Duopoly and what that means for media. Google and Facebook are globally dominant – apart from the Russo and Sino-spheres – when it comes to digital advertising, and I think pretty much everyone understands it. Everything that has happened is in some way a response to that. Of course, during this particular epoch, other things happened, but they have been driven by the rise of these platforms. Yes, print has declined or, in some countries – such at the US – one could say is in the process of collapse, but one of the challenges that they face in their efforts to transition to digital business models is down to the dominance of the Duopoly.

There has been a lot of focus on the consolidation in the VC-funded digital media start-up space, but that was bound to happen sometime. And that consolidation has been going on for two years, and again, that has been driven by the Rise of the Duopoly. VCs want growth. They demand scale. But those pursuing scale don’t understand that it’s more cost effective for Google and Facebook to reach billions than it is for news content companies to reach millions, and that’s just on the editorial side. On the advertising side, Google and Facebook have built technologies that are more efficient at reaching their billions than news content companies’ technology to reach millions.

I hope that the humbling of companies like Mic and Mashable, which sold for a fraction of their worth as reflected in their funding rounds, is a wake up call that the scale strategies that were fundamental to mass media in the 20th Century operate differently for original content companies in the 21st Century due to the differences in economics between platforms and content companies.

And this collapse of the scale strategies isn’t limited to startups but should be clear in the failed consolidation strategies in the US and UK for legacy publishers. These roll-ups haven’t delivering long-term sustainability but have only bought a little time to figure out a longer term strategy at best, or in the case of Alden Global been a way for a handful of hedge fund managers to enrich themselves at the cost of staff, communities and society. Legacy scale strategies are based on the idea that economies of scale wring out cost in a business, but if that new combined business cannot reverse revenue declines, that business will still fail. How many times have seen these combined businesses deliver and enterprise that is less than the sum of its parts, whether that was AOL-Time Warner or the large newspaper chains?

We know some strategies that work, largely around reader revenue, focusing on a small but lucrative niche – Skift focused on the business of travel or Penny Hoarder focused on millennials making less than $50,000 – or businesses focused on affiliate marketing, Penny Hoarder again or the Wirecutter.

In my idea of an innovation cycle, we will see companies fine tune their strategies and get their heads down on executing them. At some point in 2019, we’ll enter an economic downturn, and that is never a good time for media businesses. For those who have built out solid reader revenue strategies, they will have some insulation from the ravages of the economic cycle, but for others, there isn’t a lot of good news. You look at the Gannetts of the world, and they saw their profits dwindle this year even in arguably the best economy the US has seen since 1969. If they can’t grow aggressively in an up cycle, then it is sobering to think of what happens as the cycle reverses. We’re already seeing it as a majors in media and advertising – WPP, Reuters and others – are cutting staff now. That to me is the canary in the coal mine. The media business cycle is turning even before as many media companies struggle to right their businesses. 

2.     Any thoughts on one key development in 2019

2019 will be a year of optimising these business models and building out businesses. As we saw after the dot.com boom, there will be innovation, but it will be quiet as attention turns to survival for some of the big beasts.

We begin 2019 with a scepticism about social media that will open up opportunities for new spaces in media. Messaging has been and will be an interesting space to watch as more people turn away from open social networks to quieter, more closed spaces.

Just as with the beginning of the Web 2.0 era, the changes will initially fly under the radar, but when they come into the mainstream, they will drive the next round of innovation.

If I were watching one development, I would say it is around the development of the video market. Facebook continues to try to go after the multi-billion TV advertising market with video strategies. As I write this, they are again pulling back support for news on their Watch platform, and there are reports that they are in talks with HBO. Are they trying to recreate a cable network? I shake my head at the increasing desperation Facebook has with their video strategies.

But beyond Facebook and its flailing attempts to crack the video market, I think it will be interesting to watch what happens in the pay TV market in the US. What does this have to do with journalism? Most cities and towns in the US have three or four local TV stations, and as local newspapers continue to cut, more local news coverage falls on these local TV stations. The local TV stations or more to the point, the groups that own them, are flush with political advertising cash.

Journalism 2019: Don’t stop at hello

Hello … by Iain Farrell

A few years ago I spoke about Peak Content, the distortions that I saw in the Attention Economy. As I wrote then:

The democratisation of production brought by digital technology has made it easier than ever for people to create content, but it has also made it more difficult than ever to get paid to create it, both for individual creators and many companies. This cannot last.

When I wrote that two years ago, venture-capital funded digital media companies were ascendent, and with money flowing from VCs and the funds of legacy media companies, it seemed like we were set to see a new wave of truly digital native media companies unbound by legacy concerns.

Unfortunately, even at that time, it was clear that a digital shake-out was beginning, and it only accelerated in 2018. And sadly, for all of the money poured into these start-ups, I don’t think we’ve really moved the dial much. I mean, Buzzfeed has gone from native advertising pioneer to flogging tote bags in a half-baked membership scheme.

Where does that leave us?

I recently spoke with Emily Lowes with the Online Journalism Blog about the daily newsletter that I’ve been writing for the last six months or so. Refining what I said to Emily, my newsletter is grounded in my view that one of the things that is broken in the Attention Economy is the glut of content.

One of a journalist’s roles is to help people understand what to pay attention to. And in a world where there are so many things – many of them good, some of them excellent – to pay attention to, a trusted guide is invaluable.

Like the Nieman Lab piece which talks about blending algorithms and AI with traditional journalism skills (“growing hooves” as the author calls it) I have always sought ways to use technology to help me filter information, find patterns and, to be honest, cut out repetitive tasks. I’d rather robots do the robotic work so I can focus on the human part.

That’s why I use Nuzzel for my personal newsletter. It is the latest tool to use social media networks to filter content and pick out what’s relevant to my professional interests.

But no matter how sophisticated the technology, I have always found that I need to periodically retune my filters. At the moment I have to wade through more content than I would like because of all the noise generated out of 1600 Pennsylvania Avenue that journalists share on Twitter. If I were starting from scratch with Nuzzel, I would create a very finely curated Twitter list with media business professionals who mostly tweeted about strategy and who did little media criticism.

Suw also tells me that Nuzzel has proven less effective for niche subjects, such as the women in STEM content that she’s looking for. She’s actually been having to search elsewhere for content to put into a daily Nuzzel newsletter but, with only 60 subscribers, she’s moving to a weekly schedule to cut down the time demands.

Learning How to Earn Attention

But the biggest challenge is that there are so many things vying for our attention that building an audience is one of the key challenges in the 21st Century for a content maker. A newsletter is a good place to learn lessons on how to earn attention and build that audience.

You can learn not only curation and reporting, but also how to build a voice and a brand. I didn’t learn this at journalism school, but I have learned them throughout my career not only as a journalist but also as a business owner.

Constantly Learning

The other point I was trying to make in my interview with Emily is that newsletters are also a good format for journalists to learn how to use data to learn how to better serve audiences. Nuzzel emails me every week to let me know the stories that my subscribers read, and it gives me subtle cues on what they are most interested in. As much as this might sound like a cliche, my readers seem to respond most to actionable intelligence, strategies that they can apply, and developments with respect to the social platforms.

Throughout my career, I have always been challenged by people who say that by taking the pulse of my audience like this that I’m pandering to the audience or veering towards producing clickbait.

It all depends on what you’re using the data to optimise for. I never lose sight of my public service mission. And for those who say using data to maximise impact I would say this: If you create a piece of journalism that no one watches, listens to or reads, have you actually committed an act of public service?

From Platforms to Personal Commitment

And that brings me to my final point. For the last few years, there was such an obsessive focus on platforms that we mistook ‘Hello’ for ‘I love you’. What I mean by that is that there were strategies that thought the platforms were the end goal. Instead, platforms should be considered the top of the conversion funnel – the hello, the introduction to our journalism and to our brands.

What we need to do is cement that relationship with our audience, our customers, our public, and newsletters are a good next step after the platform. For some businesses like The Skimm, the newsletters are so well done, the engagement strategies so effective, that they are a standalone product unto themselves.

For many other brands, like The New Yorker, newsletters are integral on the journey from hello to I love you, from casual consumer to subscriber. As the data scientists at The New Yorker found out, the single strongest predictor of whether someone will subscribe to The New Yorker is whether they first subscribe to one their newsletters.

Success depends upon developing strategies that invite a deeper connection to your journalism, from the casual user via social or search to a newsletter subscriber to an app user to a paying subscriber or a member. It takes determination, focus and patience. Here’s to beginning that journey.