Google and Facebook's New Love for Pay Walls Will Make Online Publishing Less Open
Knowledge is power, not just for those who hold it, but for those who sell and transmit it. That's why it's always worth paying attention when the two of the biggest media companies (or is that tech companies?) in the world, Google and Facebook, change how they funnel the world's vast store of information to the public. Just such a change came at the beginning of this month, when Google announced it would drop its controversial "first click free" policy, which previously forced subscription-based news sites to let the (non-)paying public read at least three articles for free before being required to stump up cash. In fact, Google has now gone one better than this olive branch to publishers, with its head of news, Richard Gingras, revealing that it will actively work to promote paywall publishers in its search results. Not only that, Google will take a cut of the subscription revenue generated in the process, an (as yet) undisclosed proportion that will no doubt double as an incentive to the firm to increase the subscriber bases of those online publishers that do charge their readers.
While Facebook has no plans as of yet to take a cut of subscriptions (unless Apple gets its way), it began trialing a new promotional tool for subscriptions this month, with its mobile-based Instant Articles feature now directing users to pages where they can become subscribers. That Facebook and Google are both working to push toll-based publishers may come as a huge sigh of relief to said publishers, with some seeing referrals from the search engine drop by as much 94 percent as a result of ignoring its first-click-free policy. However, their shift to promoting paywalled content raises serious questions about media concentration, the openness of the internet, and the ability of media outlets and online voices to reach the public on an equal footing.
At the very least, it's highly likely that this shift will incite a corresponding and increasing shift among publishers away from ad-based revenue models toward paywall-based ones. This is what Joseph Evans, a media analyst at Enders Analysis, foresees happening.
"We're going to see more publications moving to incorporate some sort of subscription model," he explains, "and I think the end game is actually a relatively small number of publications with no subscription model at all, or membership model at all…the really mass-market [websites], MailOnline, the Independent, and then a couple of digital natives like Buzzfeed. I think for everyone else it makes sense to at least offer something, given that they've seen ad revenues disappoint."
In other words, Google and Facebook's newfound interest in subscriptions—and by extension, our newfound interest in subscriptions, since we tend to consume the news they direct us toward—will result in an online publishing landscape where most (surviving) outlets have erected paywalls for their readers to negotiate. Yet to a considerable extent, such a landscape has already been forming for several years now. As Rick Edmonds, a media business analyst with Poynter, says, "Among legacy outlets (newspapers and magazines) an increasing emphasis on paid digital subscribers has already begun," with the Washington Post, for example, increasing its digital subscriptions by 145 percent last year.
Such outlets aren't only increasing their “emphasis” on paid digital subscriptions, they’re increasing their readership by significant margins. This is what Gitit Greenberg, the director of digital insights and market intelligence company SimilarWeb, reports.
“In the last 24 months, from September 2015 to September 2017,” he says, “we've seen significant traffic growth for outlets like nytimes.com, cnn.com and washingtonpost.com with increases of 44 percent, 38 percent and 79 percent, respectively.”
Such impressive growth is a big part of the reason why Facebook and Google have made the inroads they've recently made, yet the fact that expansion has already been possible without their help (and in many cases with their opposition) underlines just what a big difference their active involvement could make to the proportion of websites that fund themselves via paywalls.
To be fair, Google's exact methods for promoting subscription-based websites haven't yet been divulged, so it's still open to debate as to just how strongly its backing will drive the success and growth of such websites. Nonetheless, it's clear that Google is going beyond simply dropping the first-click-free policy that disadvantaged the likes of the Wall Street Journal, and will instead be actively working to raise the standing of such outlets in users' search results. As such, there's a danger that by going well beyond simply creating a level playing field, the search giant will be giving once "neglected" websites a newfound and distinct advantage, with smaller, independent websites incapable of sustaining a subscription model suffering as a result.
Matti Littunen, another media consultant with Enders Analysis, agrees that this would be a distinct possibility if Google's approach to promoting subscription-based publishers took a selective rather than open approach. "Will this initially be rolled out as a partnership with a select group of publishers? Or will it be a platform like, say, the accelerated mobile pages that are open to everyone? If it's the latter, then the smaller publishers have less reason to worry."
Of course, the implication here is that, if it ends up being the former, then the same smaller publishers will have more reason to worry, given that Google will be dedicating its masses of data and its powerful algorithms to increasing subscribers and revenue for an elite band of outlets. And at the moment, a more selective approach is precisely what Facebook is taking with it own subscription-promoting tools, which the social media giant are testing in partnership with only ten outlets/publishers worldwide: Bild and Der Spiegel, the Boston Globe, the Economist, Hearst (the Houston Chronicle and the San Francisco Chronicle), La Repubblica, Le Parisien, the Telegraph, Tronc (the Baltimore Sun, the Los Angeles Times and the San Diego Union-Tribune), and the Washington Post. That the number of publishers is so small is potentially worrying, excluding as it does the rest of the globe's outlets from increasing their revenues in the same, subscriptions-led way. This is all the more so if Facebook maintains such a "partnership" model once its tools are rolled out more generally, and especially if Google follows its example and does much the same with its own services.
Yet the question of whether Google and Facebook take a selective or open approach may be irrelevant, for the simple reason that smaller websites are nowhere near as capable of making a subscription model work as their larger rivals, many of which benefit from being legacy outlets with large, preexisting readerships. And even if the tools of both companies were open to every online publisher, some outlets are going to be inherently better at enlisting subscribers than others. That’s because, as Matti Luttinen makes clear, "It's not easy to create an online subscription business. The bar for the experience is set so high, in terms of all the content and the experience from a technical perspective."
His colleague, Joe Evans, agrees, predicting that established newspapers or journals that can offer deep investigative reporting, or websites known for specializing in a particular field (e.g., The Economist, New Scientist), will be able to attract subscribers and grow their revenue bases, since they'll be offering something that can't wholly be had elsewhere. By contrast, more general and popular news sites that overlap in their coverage will struggle to compete, with Evans noting, "no one will pay to subscribe to a newswire just to find out what's happened, because you're always going to be able to get that for free." As a result, the first type of publisher will see their readers, revenues and thereby their resources increase. Meanwhile, the second will witness losses and shrinkage as the first becomes better able to attract available readers and also advertisers, with the result being market concentration and a loss of publishing diversity.
To a certain extent, this may be a good thing. In an era of "post-truth politics" and fake news, it may be salutary for us as a society if questionable websites that rely solely on ad revenues were to see those revenues dwindle as an increasing quantity of web traffic goes to increasingly large subscription-based publishers. This may be true, yet for those websites that aren't out to spread misinformation and don’t have the kind of legacy readership to make a subscription model work, there's a risk they'll find it increasingly difficult to survive as readers and ad dollars become more scarce. Given that much of the earlier hype surrounding the internet claimed it would be an open, democratic forum in which a greater plurality of voices could be heard, this suggests that the new emphasis on subscriptions could cause things to come full circle, with the public being predominantly fed news once again by an elite group of publishers.
Yet the fact is, even today the news is delivered to the public mostly via a small handful of outlets. For example, in the U.S., the top 10 news sites (including CNN, Fox News, the New York Times, and the Washington Post) have more combined pages views than the next 90 put together, according to SimilarWeb. They command just over 52 percent of all monthly views garnered by the top 100 as a whole, while the top 20 and the top 30 take in 67.65 percent and 75 percent, respectively. And these commanding proportions come from how things stood in May, when neither Google nor Facebook had even intimated a willingness to devote their data and algorithms to the task of boosting subscriptions.
Added to this, the high ranking of many of the websites in the top 10 and top 20 can be directly attributed to the kind of superior resources and reach that comes from charging for content, since while not all of them necessarily run online subscriptions (at the moment) like the New York Times, Washington Post and Business Insider, the likes of Fox News, CNN, ESPN and CNET all charge directly for other output (e.g., their print titles or TV channels). This goes to show the major difference paywalls of one kind or another can make in giving publishers an advantage over their smaller rivals, and more significantly, it suggests that when the subscription tools of Google and Facebook are firmly in place, such an advantage will only grow over time.
Some analysts, however, believe that Google and Facebook's recent overtures won't make a massive difference to the balance in the media industry between subscription-based and ad-based models. Rebecca Lieb, a media analyst and founding partner at Kaleido Insights, says, "putting Google's power behind a subscription growth model could be a powerful engine. All that said, digital subscriptions are not going to replace advertising revenues. The two go hand in hand online, just as they always have in print."
This may be true, yet just because ad revenues will remain significant doesn't necessarily mean they'll be distributed among the globe's websites in much the same way as they are now. That things may change, and that subscription-based publishers will begin taking in an even larger share of ad revenue, is indicated by how most of the media websites that currently rake in the biggest ad revenues are already those that exploit some kind of paywall.
For example, in Zenith's list of the top 30 media owners in terms of ad revenue, the top ranking owners of news sites are precisely those who charge for much of their content. Hearst is the highest ranking of such owners at 15th, while Advance Publications (owner of CondÃ© Nast), News Corporation (e.g., the Wall Street Journal), Grupo Globo (owner of Brazilian newspaper O Globo), Verizon (owner of AOL, owner of HuffPost and TechCrunch), and Axel Springer (owner of Bild) all figure in the second half of the top 30. With the partial exception of Verizon, they all charge for content, either in the form of digital subscriptions or print editions. And this is why it should be no surprise that they chart in the top 30, since their earning of paywall revenue affords them the kinds of resources with which they can improve the experience provided by their sites and, by extension, increase their readership and ad revenue.
And given that the backing of Google and Facebook's subscription tools are now being thrown into the mix, they'll be able to increase their subscription revenue even further, which in turn will also further increase their readership and their ad revenue. In the process, those websites unable to shift to some kind of subscription model will see the opposite happen, as a portion of their readers and their ad money go to their increasingly better-endowed rivals. And on it will go, with the online publishing industry becoming more concentrated with every new subscriber who devotes their loyalty and time to one of the big players.
This mention of loyalty and time is important, with the reason being that subscribers, having paid for the privilege of reading paywalled content and wanting to get the biggest bang for their buck, are more likely to spend less time reading news elsewhere. For example, Gitit Greenberg reveals that, over the past couple of years, there have been “page per visit increases of nearly 30 percent for the nytimes.com and 100 percent for the washingtonpost.com.” The 100 percent figure is particularly significant, since it furnishes a strong indication of the extent to which readers increase the time they spend with news sites when they become subscribers to them.
In the case of the Washington Post, this time more or less doubles, which is fortunate for the Post but unfortunate for everyone else, since such loyalty will only make market concentration more acute. Combined with Google and Facebook's newfound love for subscription-based publishers, it will only deprive non-paywalled websites of even more readers, and ultimately contribute to the whittling away of smaller, independent publishers, who will increasingly struggle to survive. It's hard to say just how many or what proportion will meet their end as subscription-fed giants suck up most of the available readership and revenue, but the decrease in plurality in the media can only be a bad thing, at least for any nation that likes to regard itself as democratic. By subjecting everything that's happening out there in the world to an ever-tighter bottleneck, it risks depriving us as a society of info, experiences and perspectives that could make all the difference in our lives between informed and ill-informed choices. It risks making us poorer, which would be kind of ironic, seeing as how we'd be pumping more money than ever into our news.