From What'sNewInPublishing:
I can’t be the only person who was genuinely perplexed by the interview BuzzFeed CEO Jonah Peretti gave to The New York Times last week. In it, he floated the idea of a sort of mega-merger between several of the biggest digitally native news organizations, including Vice, Vox Media, Group Nine, and Refinery.
The motivation behind such a hypothetical merger? A combined entity, with all the scale that comes with it, would be able to negotiate better rates for the content it supplies to major platforms like Google and Facebook. “If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti said.
Peretti’s statements were pretty bizarre. First of all, why make a proposal like this in such a public forum? While I’m sure he’s not the first CEO to ever muse in an interview about a merger, this was a hypothetical scenario that contained such specificity and intent that it seemed like he was using The New York Times as some kind of go-between for these publishing entities to start negotiations.
Second, I’m not really sure that such a scheme would actually result in the desired outcome. As a venture backed company, BuzzFeed has had just about all the access to capital and talent it needs to reach massive levels of scale. Its media advertising kit brags that it reaches 650+ million people. It’s difficult to see how simply adding more pageviews would improve its negotiating position with Facebook to such an extent that it would make a merger worth it.All these companies raised so much money and that is part of the problem.
But while Peretti’s proposal is bewildering and came seemingly from left field, this isn’t the first time he’s expressed frustration at the amount of money his company has been able to extract from the tech platforms. In October 2017, he appeared at a Wall Street Journal tech conference and made the argument that Facebook and Google should be sharing more revenue. “The business model of news is changing, and if Google and Facebook take all the revenue but don’t want to pay for the fact checking, the reporting, the more-intensive investigations, who does that work for?” he said. “I think Google and Facebook are going to have to fix that.”
Five months later, he elaborated on these thoughts in an interview with Digiday, arguing that, while BuzzFeed did receive revenue for content produced for Facebook Watch and Facebook Instant Articles, those places aren’t where Facebook extracts most of its value from BuzzFeed:
My big criticism of the strategy so far is all their revenue is generated in the news feed, and they only share revenue for new surfaces — Instant Articles or Watch — but don’t share any of the revenue from their main source of revenue, the news feed…Speaking as someone who’s read a lot of interviews with Jonah Peretti over the years, I was struck by how cynical and pessimistic he’s become about the role the tech platforms are playing in our media ecosystem. In fact, you don’t have to travel that far back in time to find quotes from Peretti where he’s expressed unbounded optimism about the rise of social media and how it has allowed companies like his to thrive....MUCH MORE
…it’s in Facebook’s interest to share news feed revenue, not because it’s good for the world, but it allows Facebook to have some control of what’s showing up in the news feed. If they say they want local or trusted news, they say that will get more distribution and more revenue, so companies can produce more of it. It doesn’t need to be some carriage fee or a thing where the amount of traffic is directly related to the revenue. It could be that they have a metric for time well-spent, and you’re paid 2 cents per minute of time well-spent.
Two of the most cogent expositions of the challenges facing new media came from Talking Points Memo, in November 2017 and April 2018:
Is Venture Capital Destroying Online Journalism?
I don't know but having spent some time trying to front run Sand Hill Road and understand things like Uber I have to say this is an interesting insight.
From Talking Points Memo, November 17:
There’s a Digital Media Crash. But No One Will Say It
Yesterday I appeared on a panel about digital publishers who are ‘pivoting to video’. I’ve written about this before. But in case you’re new to it, there have been numerous cases over the last six months to a year in which digital publishers have announced either major job cuts or in some cases literally fired their entire editorial teams in order to ‘pivot to video.’ The phrase has almost become a punchline since, as I’ve argued, there is basically no publisher in existence involved in any sort of news or political news coverage who says to themselves, my readers are demanding more of their news on video as opposed to text. Not a single one. The move to video is driven entirely by advertiser demand.
What crystallized for me from this and other discussions I had yesterday is that we’re actually in the midst of a digital news media crash, only no one is willing to say it. I’ve noted before that digital news media in the midst of a monetization crisis. But it’s more than that. It’s a full blown crash.
Here’s why.
You have three different factors coming together at once: two primary ones and one secondary but critical one....MORE
Followed by:
Media—"Data Lords: The Real Story of Big Data, Facebook and the Future of News"
This afternoon I saw a friend on Twitter say that he doesn’t buy the idea that if people just paid Facebook some sort of fee the data and privacy issue would go away. Because he subscribes to the Times, the Post and the WSJ and they each track his readership habits and sell that data to advertisers or make it available to them for targeting. This is at least partly true – I’ll discuss the ins and outs of that point in a moment. But this is a good opportunity to discuss the real relationship between publishers and big data. It’s actually very different than it looks.
First, what my friend says is true. These publications are all in the data collection and sale business. Indeed, TPM is too – not directly at all but because of the ad networks (like Google and others) we have no choice but to work with. The key on the main claim is that the issue is one of diversity of revenue streams. Each of those big publications mentioned has at least three big revenue sources that are relevant to this conversation. They have premium advertisers for which the kind of data we’re talking about has limited importance. They also have subscriptions. The final bucket is made up of advertising that is heavily reliant on data and targeting.
The difference is that Facebook is almost 100% reliant on advertising which is not only reliant on data and targeting but reliant on the most aggressive kinds of data collection, tracking and targeting. That is Facebook’s entire business. Anything that cuts deeply into that model and advantage represents an existential threat.
But here’s the really salient point. Almost every publication participates in the data economy. But the data economy is almost universally a bad thing for publications, especially ones that have real audiences.
Allow me to explain....MORE
