The News Business Sinks Ever Closer to Rock Bottom

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A consortium of newspaper publishers are preparing to take the unusual step of begging the nation’s legislature for the right to collectively negotiate with Facebook and Google.

(Generally, antitrust laws forbid this kind of collective bargaining because it reduces economic competition, except in specifically legislated cases such as labor unions.)

It’s easy to see why publishers want to team up and bargain as one: Facebook and Google continue to take what they want from the news media—content to churn through the News Feed and ever-more-recent search results—while soaking up all the advertising profits available. This is a game where the distributor keeps almost the whole pie, and only so many news organizations can survive on the scraps the Internet platforms allow to fall to the floor.

So, how’d we get here?

We can radically boil it down to three movements.

1. Starting at the beginning: Ask most newspaper people and they’d tell you the “original sin” was that news gatherers decided to give away their product for free when they went online. This is a ridiculous frame (for reasons I’ll get into) but this would be most people in the news business’ common understanding.

It was the ethos of the time that stories should flow around the Internet, unburdened by payment systems. The key underpinning of the whole web was the link and anybody had to be able to view a link for it to be of maximum value. That was just an axiom of the early web.

So, (most) newspapers went along. Foreshadowing. But everything had changed: They were in an entirely different business and didn’t realize it.

2. Google took advantage of all the high-quality pages, and the links between them, being freely placed on the World Wide Web. They took all those links and turned them into the data that powered their search engine.

Google became the best place to find out about the world. One could know what was going on without a newspaper or a TV or a radio.

As Google gained users, newspapers gained greater reach and readership than they’d had before. Sure, most of them were visitors from outside the metro areas that their advertisers wanted to reach, but the business would fill itself in, everyone hoped.

Google, meanwhile, was figuring out its own business model, which turned out to be sponsored links running next to search results. They created an easy way to buy advertising and a backend that could tell you precisely how well ads were performing. (Other people were doing similar things, but only one of them has become one of the most valuable companies in the world.)

Turns out that many small, local advertisers preferred the Google way of doing ads to the newspaper way of doing ads. Combine that with the hit from Craigslist taking mainstay classified-ad business, and newspaper print advertising was in trouble.

That would have happened with or without the so-called “original sin.” The disruption came to the papers: their local/regional business practices got stomped by the efficiency of the technology business.

In the new advertising world, a reader wasn’t worth very much. Maybe a few cents a visit. But there was always a hope: more scale. More visitors meant more page views, which meant more ads, which meant maybe the news organizations could pay their journalists with enough pennies from web ads.

Thus, people are always searching out scale, traffic, visitors, page views, ad inventory.

3. And who has the scale? Facebook.

For a long time, Facebook was happy to send readers to news articles, but it was incidental to their larger concerns. And then came, roughly, August 2013, when Facebook turned on the taps for news organizations. Charlie Warzel noted it in Buzzfeed at the time: “traffic from Facebook referrals to partner network sites are up 69% from August to October of this year.” But he was just spelling out what many in digital media knew from their own traffic reports. Traffic was through the roof and it was all coming from Facebook.

“Facebook has sent unprecedented levels of traffic to publishers across the internet in recent months, a dramatic and unexpected increase affecting a large range of sites serving a wide variety of content,” Warzel wrote.

Read More: ALEXIS C. MADRIGAL @TheAtlantic.com

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