April 2009, I busily bang out a news analysis for Microsoft Watch, one of two news sites I edit for Ziff Davis Enterprise. My boss sounds alarm that there is some jeopardy to my job. I earn a six-figure salary, which panics investors/creditors that recently increased involvement in editorial operations. He infers that I am the highest-paid writer on staff.

Days later, he informs me that in two weeks, ZDE will lay me off—the first time this has ever happened in my long journalist career. My last day will be April 30. As the end approaches, but I continue to produce content normally, he returns with an offer: Stay on writing news stories for eWeek, take a 36 percent reduction in pay, and agree to a 5-story-per-day quota. I politely decline but privately fume. 

While the salary decrease offends me, I am more disturbed by the quota. I see a rapidly exploding trend, where blogs and some news sites game Google for pageviews or Google News placement. Appearing on GN can generate tens of thousands pageviews in minutes to a few hours. Behind it all is the quest for advertising revenue. I tell a former colleague: “They’re like hamsters running in a wheel, going nowhere”.

Following the financial crisis of 2008, the Google Free Economy—giving away valuable content on the promise of ad dollars in return—is in the process of transforming the news media. I have watched as newsrooms across the planet lay off costly, senior salaried staff, never expecting to be among them. Some of the reporters return as contractors or freelancers, covering the same beats but for a fraction of their previous pay and stripped of medical benefits. More common practice: Less-experienced, lower-salaried employees cover the beats with quotas imposed.

The rationale: More stories mean more pageviews, which means more advertising. But the concept is fundamentally flawed. If most blogs or news sites pump out more content, and much of it also is similar, competition for advertising increases, driving down page rates. The hamsters run faster, but they still go nowhere.

My problem with quotas is something bigger: Good reporting takes time, which is a luxury under the “more stories equals more pageviews equals more ad revenue” principle. Bloggers with whom I casually chat admit pressure to produce rather than report. Among the default tactics: Aggregation—writing a synopsis story from reports posted to other blogs or news sites.

When reporting for CNET News (1999-2003), I often banged out three or more stories a day—and I write long. That’s quota-like output. Some people might assume that, being the online tech news pioneer, CNET’s policy was to post fast. Yes, if the story was accurate and sourced. The majority of editors came from newspapers and brought with them clear editorial flow: writer to editor to copydesk to posting, with some fact checking along the way. Pageview hunters have different priorities.

On May Day, with ZDE behind me, I survey the changing editorial landscape; quota chasing and “post first, correct later” is not the kind of journalism that I want ot practice.

State of Collapse
Fast-forward six years, and the news media is radically changed. For example, according to the American Society of News Editors, from 2007 to 2015, the newspaper newsroom workforce plummeted by 40 percent (55,000 to 32,900). The number represents newspapers’ decline as more people consume information online and from native producers that successfully tap into the Free Economy, which drives dramatic changes in revenue models.

Traditional news media organizations sell advertising natively, an easy feat when controlling mode of content distribution—print, radio, or television. But online, the dynamics are different. Pew reveals in its “State of the News Media 2015” report that last year AOL, Google, Facebook, Microsoft, and Yahoo, “generated 61 percent of total domestic digital ad revenue”. That’s “$30.9 billion out of a total $50.7 billion”.

Stated differently, online advertising and search technology providers determine the value of distributed content and not the producers of it. In that mix, Google’s influence cannot be overstated, and in future reporting, with the help of analysts, I hope to quantify in billions of dollars the full expanse of the search-driven, ad-dependent Free Economy. For this analysis, stage-setting data:

  • In the United States, last year, Google accounted for 38 percent ($19.3 billion) of digital advertising revenues, according to Pew.
  • In the United Kingdom, this year, Google will account for 41.6 percent of digital ad spending, eMarketer forecasts.
  • Globally, Google will account for 54.5 percent of search ad spending in 2015, eMarketer estimates.

For comparison, Baidu, with 8 percent search ad spending share, is second to Google, but largely because of the American company’s abdication of China. Five years ago, Google stopped censoring Chinese searches, resulting in its censure by the government.

However, digital display advertising matters more to news outlets, and there Facebook has pulled ahead of Google—24 percent to 14 percent, respectively, followed by Yahoo (6 percent). “News publishers fall into the large ‘other’ category, along with ad networks, other social media sites and many other types of Web properties”, according to Pew. The point: Most news organizations do not natively control advertising.

The economics of the replacement model aren’t sustainable, when advertising’s value is determined by distribution of free content—and there is too much of it to generate meaningful revenues. A future analysis in this series will explain why paywall strategies fail, as an alternative means of financing news gathering and distribution, and quantify the previous assertion with anecdotes and data. For brevity, this analysis doesn’t discuss mobile and video advertising’s increasing importance; that topic will come later depending on funding.

New Media Moguls
As the second part of this analysis will further explain, the Google Free Economy is not the cause of the traditional news media’s collapse but rather enabler of its displacer. As the Fourth Estate lost its way, the Free Economy illuminated a path for new media entities that adopted different editorial standards. I identify three waves of new media:

  • Among the first: Gawker (March 2002); Daring Fireball (August 2002); and Engadget (March 2004), which like CNET mixed traditional news gathering methods and metrics with the realities of giving away content recovered thru advertising. Another trait: They produced original content.
  • Among the second: Huffington Post (May 2005); TechCrunch (June 2005); BuzzFeed (November 2006); Silicon Alley Insider (May 2007), becoming Business Insider (February 2009). This is the rise of the aggregators that regurgitated and repackaged content taken elsewhere. TechCrunch is a little unfairly lumped in, as it mostly produced original cotent.
  • Among the third: ProPublica (October 2007); The Verge (November 2011); Ozy (September 2013); re/code, Inside, and Yahoo Tech (January 2014); Vice News and First Look Media (February 2014); FiveThirtyEight (March 2014); and Byline (April 2015), among others. These are the redeeemers, so to speak. They briing old media standards to new media publishing, reviving in a way what CNET accomplished in the late 1990s. Several organizations adopt revenue models that don’t depend on the Google Free Economy.

The oldest and most aggressive feeders off the Free Economy are influential. For example, based on unique visitors, Huffington Post and Buzzfeed rank in the top 10 for all news media outlets online, according to comScore, and above the New York Times. HF benefits from parent company AOL’s advertising platform.

At my request, comScore provided an unofficial list of the top-15 native digital news outlets, as of July 2015:

  1. Huffington Post
  2. BuzzFeed
  3. Business Insider
  4. Yahoo U.S. News
  5. Bleacher Report
  6. CNET
  7. Independent Journal
  8. Mashable
  9. Vice
  10. Slate
  11. The Blaze
  12. Complex
  13. Mic
  14. The Daily Beast
  15. Gawker

The three leaders are among the most successful and aggressive exploiters of the Google Free Economy. Each, to varying degrees:

  • Uses so-called clickbait tactics to generate pageviews
  • Specializes in the aggregation of news culled from other sites
  • Posts top-x-number lists and slideshows that generate repeated clicks
  • Repackages as original content news or information culled from blogs, news sites, and other online sources

Aggregation, clickbaiting, and rumormongering create negative perceptions among news consumers about all reporting. This comment, to one of my technology news analyses from 2010, captures the sentiment: “The ‘media’ is a freakin’ train wreck these days. You’re all a bunch of desperate panhandlers willing to sensationalize crack lint if you thought it would advance your readership”.

Cha-Cha-Cha-Changes
In fairness, the top-15 produce original content, to varying degrees, and the three leaders operate newsrooms that increasingly adopt some of the best practices of old media. But they also are redefining the Fourth Estate and transforming it into something else (part two will discuss the Fifth Estate at length).

For example, the Huffington Post front door (e.g. landing page) typically looks more like a newsprint tabloid. The in-depth reports can be compelling, but on closer examination, rather than be investigative they are aggregative—pulling together content from various other news outlets. It’s good editing, but not reporting that vets sources.

The leaders also mix promotional content with that which is editorially curated, and discerning the difference isn’t always obvious. More, more, more is the editorial ethos.  It’s the “more stories equals more pageviews equals more ad revenue” principle at work.

Brian Morrissey, Digiday editor-in-chief, laments about content he posted on Slideshare that Business Insider aggregated:

The online publishing game is all about volume right now. It’s not about quality and originality. When volume is your organizing principle, you take shortcuts. Ripping off others’ work is simply the norm now. It is absolutely effective, and it is absolutely depressing.

The Google Free Economy is built on a simple concept: Create a platform for providing access to content someone else produces and profit from it. Business Insider aggregates to success, culling content for reuse. Again, that’s editing, not original reporting, but it’s also often more compelling reading than the original.

Ariana Huffington has bolder ambitions: 1 million contributors to the site that bears her name. The number already tops 100,000. Like Google, tapping into the Free Economy’s revenue model, Huffington Post profits from content that is provided, or taken, for free. More contributors means more content means more pageviews means more advertising revenue, right?

Among the questions this series seeks to answer: Will more, more, more content lead to less, less, less number of reliable news outlets to choose from?

Editor’s Note: This analysis first appeared on Byline.

Leave a Reply