I applaud my friend David Chavern, CEO of the News Media Alliance, for taking a stand that other media organizations should join.
Imagine running a hugely popular, digital information source that generates vast amount of advertising revenue by offering and organizing highly desirable content that you don’t have to spend a nickel to create.
These digital media behemoths have spent years trying to pretend they aren’t in the media business and dodging the obligations that implies. In fairness, there are significant other costs in their businesses. But none of that matters without desirable content. What’s their cost to create the actual content that they’re distributing, aggregating, curating and selling? Zero. What’s the revenue that local content creators are receiving in return? The answer: Zero to very little.
So, that is what has prompted the News Media Alliance, which represents many of America’s newspapers and digital products, to confront Google and Facebook.
NMA’s chief exec, David Chavern, threw the gauntlet in a Wall Street Journal column last week, urging Congress to grant an antitrust exemption that would allow newspapers to collectively address the digital duopoly that Google and Facebook have become.
This situation is not hype. Media analyst Ken Doctor cites figures that more than $7 out of every $10 spent in digital advertising goes to Facebook and Google. Only 1 percent of the dollar growth in digital advertising in the third quarter reportedly went to companies other than Facebook and Google.
As if that weren’t difficult enough, digital merchants and online shopping are blowing up the local media business model. Consider Amazon.com, Wayfair.com and others. It’s one thing for newspapers to hustle against broadcast, outdoor, cable and direct mail competitors for shares of the local advertising pie. What happens when the pie disappears? These forces are outside local media’s control, but it underscores why the traditional revenue models for local news must change.
Ask a newspaper or broadcast ad director how many events they must mount or ads they must sell to local pizza shops and other small businesses to make up for the closure of a major department store, which can be a $1 million account in a mid-sized city.
Critics of Chavern and the NMA say this is a fool’s errand. They note that Congress is unlikely to grant an anti-trust exemption – no argument there – and that confrontation isn’t the answer. Other media industry groups, like the Local Media Association, urge cooperation; to keep working with the two digital behemoths to encourage and convince them of the need to show greater respect for local media’s role as news providers for their content machines.
But, after all, what is there to lose at this point? This is not a turn-back-the-clock plea. Nor is it a time to bash newspapers for all sins, real and imagined, that have done internal damage to the business of local news. In a world where major, local advertisers will get scarcer, newspapers need new revenue streams, and digital aggregators should be part of the answer. The LMA’s view and the NMA’s view are not mutually exclusive. Media organizations should close ranks and strongly promote the notion that the value they bring requires serious compensation. A little pressure can do wonders for slow-moving negotiations.
For now, Google and Facebook have every reason to freeload, tossing crumbs to newspapers and expecting thanks for the fine meal that might be coming if they are so inclined. The scary result, if something doesn’t change, will be more news deserts and communities that get most of their news from neighborhood bloggers and social-media curmudgeons.
That not only won’t be good for Google and Facebook. It won’t be good for you.
Helpful links:
- News Media Alliance release on ‘digital duopoly’
- David Chavern’s Wall Street Journal op-ed (may be blocked by paywall)
- Ken Doctor’s “Newsonomics” analysis with many helpful links
- New York Times coverage of NMA initiative
- A Sacramento Bee column on why something has to give
- Local Media Association position statement
Author’s note: This is a revised version of a column originally written for members of the Ohio News Media Association in Columbus, Ohio.