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.
