Summer appears gone; prepare to mark the first day of fall in the traditional fashion, with a new set of announcements from Apple. On Wednesday, Apple will dazzles with new iPhones, a new Apple TV, iOS 9, and a few more reveals about Apple News. The event has gotten many in the media business moving, prepping their technology and meeting frequently, both with Apple and internally, to get things sorted out.
With that event in mind, let’s step back and look at the furies of the year so far, as the pace of 2015 media changes whets our appetite for 2016. Here are 10 could-be headlines for the season ahead.
Verizon buys AOL. NBCUniversal (and Comcast) expand their media holdings, with big stakes in both BuzzFeed and Vox Media. AT&T swallows DirecTV. On Wednesday, Charter and Time Warner Cable got to set the 180-day clock toward their own merger. Think about it: Four big pipes companies, dominating broadband and “TV”/video, and each working toward escaping their plumbing roots. They all intend to be media companies when they grow up.
Certainly, other large media companies (“What are they thinking? NBC-U and the ‘digital dozen’ seek perpetual youth”) — including 21st Century Fox, Disney, Hearst and the biggest news players — have much sway in the world, but it’s the pipes companies who are ascendant. They’ve got direct pipelines to tens of millions of customers, and the kind of cash flow of which content-producing companies can only dream. Amazingly, at the same time, unionization of media quite unexpectedly woke from the dead this year. As the News Guild enjoys a $500,000 kitty (“News Guild starts $500,000 campaign to organize digital newsrooms”) to aid its NYC media organizing, with successes already at Gawker, Vice, The Guardian U.S., Salon, and Al Jazeera America, we’re seeing a restoration: Big capital and big labor. Maybe the Internet changed nothing.
For the pro-consumer- and pro-privacy-positioned Apple, which relies on advertising for just 0.3% of its total revenue, ad blocking is a twofer. First, it can set back direct competitor Google, which may depend on iOS customers for 75 percent of its mobile revenue. Second, it can reward and channel revenue to its new buddies, its publisher partners. Participating Apple News publishers enjoy, for now, 100 percent of the revenue on ads they themselves and 70 percent on any ads that Apple sells. Secondly, those with their own iOS apps manage to skate through the ad blocking walls, encouraging a pro-iPhone/iPad publisher orientation; only the mobile browser will gain the ad-blocking tool, not apps.It’s a delightfully devious war of tech being played out, with publishers as bit players. The result: We should see more emphasis on publisher apps — a good idea anyhow, given the five-to-one loyalty app users show compared to the browser-centric (“Newsonomics: Why native apps still matter in the Age of Distribution”). Yes, Apple News will have an impact on 2016 publisher fortunes, but it’s only part of the puzzle. All this new distribution is still generally additive (and, publishers hope, won’t become too subtractive). It will take time to get into the market and to assess. For publishers, it’s a game of keeping up, requiring a much greater level of audience knowledge (and analytics) and sophistication as they manage their way through the new landscape. But remember, these changes often occur more slowly than the headlines would have us believe. Facebook Instant Articles, for instance, is still in the testing phases, with few actual articles actually circulating.
Who’s got a case of economic jitters? No one wants to talk publicly about the incipient malady, but anyone in the media business should take note of the China economy meltdown effect. Consider that every media decision we’ve seen this year — in big new-media investments by media companies, consolidation in the newspaper business, even Nikkei’s acquisition of the FT at an oh-so-premium price — assumes a healthy and growing economy. At this writing, we don’t know how much impact a global economic slowing may have on the U.S. (and European) economies. We can all hope that impact is transitory, but if it isn’t, the optimistic investments in advertising-dependent media businesses may be ill-timed. Do you really want to buy more newspaper companies — already squeezed much to make more minimal profits — if the ad landscape gets tougher? As red ink threatens black, the proposition of Gannett and New Media Investment Group (GateHouse) that “we’ll make it up on scale” weakens. Will investments in Vox and BuzzFeed pencil out if a more tepid economy (and ad blockers) take their toll? Perish the thought (almost), but what if a recession were to happen sooner than later?
In the doldrums of August, Facebook crossed over. According to web watcher Parse.ly, it surpassed Google as a referrer of traffic to news sites. This is no surprise to publishers. They’ve steadily seen Google’s share of referrals decrease. For many, it’s a drop from the neighborhood of a third to about a quarter of overall traffic. So Google — the king of intent, as divined by search-box typing — is still important. With the Alphabet shuffle, the company is both more obviously vulnerable to market change — and potentially revitalized. But the continuing ascendance of Facebook remains the biggest story of the year, as the company shows no sign of peaking. Word of mouth beats intention, it seems. Already, the smarter publishers have put more resources into social optimization — with audience teams populated by living, tweeting, posting sharers — and fewer into the older arts of search engine marketing and search engine optimization. Most importantly, though, is the double dominance of these two companies, a search/social duopoly of this era. They are twin suns around which much revolves.
This has been the year that over-the-top video fulfilled its long-promised destiny. After years of pooh-poohing the impact of cord cutters, even the cable and satellite companies, led by Verizon, are now testing video bundles; Comcast soft-launched Watchable Wednesday. With the second quarter seeing the single largest subscriber loss for pay-TV services, it’s clear we are seeing the end of one era and the awkward beginning of another. Netflix has birthed the new era, and opened the doors for Amazon, Google, Apple, and former pay-TV loyalists HBO and Showtime. The whole question of how we watch our favorite stuff — video — is blown wide open, with profound implications for anyone in the moving pictures business.
If the deep-pocketed pipes companies figure out how to find new customers and revenues in audience shift, the owners of broadcast and cable stations are beginning to feel related heat. Even before the stock market tanked, lowered financials prompted multiple downgrades of giants like Disney, 21st Century Fox, and CBS. Suddenly, the world seems less stable — more than $40 billion in market value has disappeared from that sector — while companies play catchup to find paying digital-only customers.
Through all the digital publishing change, Yahoo’s never-ending identity crisis never seems to end. At the ripe age of 20, it should be beyond adolescence. In the latest of CEO Marissa Mayer’s many moves, it completed on Wednesday its acquisition of the Polyvore shopping-centric fashion site, but that doesn’t inspire anyone to believe Yahoo will be a native ad leader. Instead, it seems to be casting about in lots of newer playgrounds — but after others have staked leads, established branded awareness and gotten traction. It’s happened in original video, in digital magazines, in branded news (Katie Couric), in social (Tumblr acquisition), and the list goes on and on. As Mayer has reached the three-year mark, the Google search results combining Mayer and failure grow. We have to wonder what might be the statute of limitations on still more meandering Yahoo leadership.
The world stage has truly been set this year. Out of the blue, Nikkei snatched the Financial Times prize away from Axel Springer, showing the diversity of digital-seeking world capital — and bolstering the FT’s chances of faster growth (“What are they thinking? FT’s ’emerging markets'”). In newer media, The Huffington Post planted a bunch of new flags, as did BuzzFeed, and Quartz claimed an Africa franchise. The Wall Street Journal is spiffing up its international products, print and digital, and look for The New York Times to make international business expansion a 2016 business priority. Against all the vicissitudes of U.S. digital audience and revenue competition, the 6.5 billion-plus people outside the U.S. now find their way into more and more business plans.
As publisher Austin Beutner reshapes the Los Angeles Times with a profound community empowerment strategy, he also discovers new niches. Beutner called Gov. Jerry Brown and invited him to a one-hour televised (and streamed) interview on the California drought. Good PR, good brand building, and maybe a little piquing of audience interest that the Times may be something more than another dying newspaper. But wait — the Times unexpectedly picked up water-related ads from drilling and irrigation companies, bringing new advertisers out of the parched ground. Beutner now thinks there may be a newsletter — sponsored, and maybe paid — in this niche interest. Overall, he sees a restyling of the Times from simply a major general interest paper to one also serving a fleet of niches. Think Politico Pro, now a popular model, brought to regional journalism. (Disclosure: I also write for Politico Media.) The Times is far from alone. The Boston Globe now launches Stat, an ambitious health news site, being tested along with its all-things-Catholic Crux site. Last month, Cox Media launched the first of its planned half-dozen niche sites, one on University of Georgia football. All strategies share a passion for serving passionate audiences — and deriving revenue from readers, sponsors and commerce. If some of these get traction, regional publishers may beat a path from former mass (as they increasingly serve only pockets of their communities) into new niche. It’s one road forward.
Does Bezos yet have a different way of making the news business of 2018 sustainable, profitable, and growing?