A Second Bite at a Poison Apple
Publishers apparently haven't learned much from history. By saying yes to the latest content distribution come-on from Cupertino, they have essentially handed their futures to a company that acts in its own best interest. That's what tech companies do.
Executive director, Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship, Illinois Institute of Technology
Fool me once, shame on you; fool me twice, shame on me. Apple is making another run at making fools of some of the biggest media companies in the U.S. The company announced a service called Apple News + that will allow subscribers to access more than 300 publications, with Apple getting up to 50% of the revenue. Which means the prospects for everyone not named Apple look just as grim and unappetizing as they did when Facebook, Google and Snap previously tried to muscle their way into the digital media space.
Remember Facebook's Instant Articles way back in 2015 or GOOGLE's AMP? These may have looked good for a minute to businesses that couldn't fund or face the problems of trying to build their own digital distribution strategies. But then Facebook abruptly changed the game by focusing on wholly-owned ad revenues from its News Feed and not the prospect of shared revenues through the Facebook Audience Network. The publishers were left high and dry as the Zuck decided to prioritize friends and revenues over facts and quality content. There's not much you can say or do when someone else is driving the bus.
But the poor publishers never seem to learn. Calling Apple the Messiah for media is like calling Colonel Sanders the champion of chickens. But folks from the Wall Street Journal to the Lake Wobegon News are signing up for the slaughter. In fairness, given its leverage as the only one of the 3 big brands willing to say "yes" to Apple, it's highly likely that the team from the Journal (owned by Rupert Murdoch's News Corp.) cut a much better and more attractive deal for the inclusion of its name and content than the rest of the peasants.
The pitch to the smaller publishers is always superficially seductive and almost always exactly the same: We've got all the eyeballs you want and massive traffic as well. This is where your prospective readers live their online lives. You don't have squat and - even if you have the beginnings of a for-pay web strategy for your content - you'll never scale and get big enough to pay your bills and make a business out of the venture.
Yes, the New York Times and the Washington Post are making some headway: digital ad revenue for the Times surpassed its print ad revenues for the first time toward the end of 2018. But these two cases are fairly extreme exceptions. Very few other publications have their connections, clout and even "status" in terms of the audiences that still read anything. For the rest of the publishers, joining Apple News + is like a turkey accepting an invitation to a Thanksgiving dinner.
I've been saying for a while now that, as the major primary platforms continue to extend their dominance and attract larger and larger user populations to fewer and fewer destinations, more and more businesses will sadly come to learn that they no longer control their own front door. The only way they will survive is to figure out how to establish a persistent presence on someone else's platform and get paid for being there and offering your products and services as well. You can expect to see maybe half a dozen major platforms -- finance, e-commerce, social, business messaging and documentation, and maybe health-- and a few also-rans in each space, but that's going to be the whole story. It's their world and you're a temporary tenant.
Given where the world and the action is today, as a smaller player in any space, you don't really have much choice, and you've got to be there when your buyer is ready to buy. If you're not where your target customers are, you're nowhere. However, be warned that once you jump into this undifferentiated and basically uncurated pool, not only do you give up control over the placement and presentation of your material, you also lose the ability to leave because, in so doing, you'll be leaving your readers behind. You'll discover that you've put yourself in a position where not only don't you own the connection and relationship with the end user, you don't even know who the end users are and, while you can eventually decide to take your ball and go home, you'll find - much to your chagrin - that your readers don't have any real incentive to follow you. There's plenty left for them to read and little or no reason to break the habits you helped to build for them.
Apple isn't the only player in the platform business (although the iTunes music model is certainly a roadmap for where this ugly journey is likely to end for magazines) and frankly Amazon is even better at it than Apple. Fulfilled by Amazon (FBA) is a huge part of Amazon's business and it's basically Amazon inventorying and delivering third party merchandise to millions of customers every day. These buyers think of themselves as Amazon's customers and not customers of the particular producer or provider of whatever it is that they have just purchased. And, in case the message was lost on anyone, Amazon's terms of service make it very clear that the end seller has basically no right to directly contact or market to the end customer, except through Amazon.
Worse yet, as noted above, once you get in bed with these folks, and hand them the keys to your kingdom, it's very hard to effectively exit the relationship. If you look back a few years, around 2001, Toys R Us, Circuit City and Borders (remember any of them?) all handed over their fulfillment operations to Amazon. By 2005, they each tried to bring these operations back in house since they mistakenly thought that they had learned how to do this business by watching Amazon. They all went bankrupt.
There aren't any simple answers, but the only good thing about the completely disingenuous claim by the various platform players that they are simply conduits, megaphones and pipes and not content producers or publishers is that, unlike the products in other verticals like clothing--where Amazon has introduced more than 60 of its own private label offerings--they are unlikely to invade the production part of the print media business. That means that there will always be a need for independently generated information (albeit delivered in new and different ways) and this will always represent an opportunity for talented creators.
But it will never be a scalable business, which may also be good news and somewhat of a relief to writers and journalists. In the final analysis, no one with any real talent gives a crap about the crowd anyway. Audiences, not traffic, are what matters to people with something to say and the skill to say it well. The two rules for storytelling success going forward are going to be: worth saying and worth sharing. The podcast revolution is an early indicator-- we're back to a world of narrowcasting, not broadcasting, which the web inexpensively enables. This means that the future of meaningful media is going to be all about finding your niche, developing your engaged and connected audience, and delivering the goods to them. And, the economics may also come to be properly re-aligned because that connected, concerned and committed audience (small, but mighty) is precisely who the smart, high-end advertisers want to reach.
Publishers looking for a quick (and very modest) buck or a way to offload their own infrastructure investment costs by turning over their content to Apple and abandoning the direct connection to their readers will increasingly be marginalized. As a consequence, they will lose their individual brands and identities in the mass of marginal media. Worse, they will also lose their talent to other personalized channels and more authentic outlets-- and they will eventually disappear.