Facebook and Google: Help out or pay up

“Either Facebook and Google are platforms, in which case they need to manage their infrastructure in a way that allows independent journalism to thrive. Or they are publishers, in which case they need to provide direct financial support for the journalism their platforms deliver.”

With a hat-tip (or apologies) to Axios and Mike Allen, who have reinvented the email newsletter and made it a must-read…

1 Big Thing: The next big battle with the platforms

As more and more news organizations turn to paid subscriptions to offset dwindling digital ad revenue, the next big issue they’ll confront is who controls the customer: publishers or platforms. Specifically, who determines the pricing, bundling, and fulfillment of subscription payments in an aggregated news environment.

Why it matters: Depending on how it plays out, the platforms could lend added muscle to efforts to find a sustainable business model for digital news and information. Or they could rob editorial enterprises of one of the last remaining points of economic leverage, namely their trusted relationship with the reader.

To their credit, Google and Facebook are in the early stages of testing how they might support publishers’ subscription models.

So what’s the rub? Digital subscription and membership models have yet to prove themselves as an industry-wide solution. A handful of big publishers (and several smaller niche publishers) have seen real success. But most have so far struggled to generate meaningful revenue.

In a news-feed environment where readers encounter a mix of free and paywalled content, there is a real question whether they’ll be willing subscribe to a multitude of different publications. If they don’t, it’s almost inevitable that the platforms will urge publishers to blend and bundle multiple titles into a single coherent subscription package.

And publishers will find themselves with a Hobson’s choice: Try to drive standalone subscriptions in a crowded marketplace, where only a few thrive. Or give in to bundling and turn over to the platforms their relationship with the reader in return for fractional shares of the bundled price. Neither outcome is likely to be satisfying or sustainable.

Independent, fact-based news gathering is the foundation of an informed society. In disrupting the business model for news, Facebook and Google have done so without replacing the essential news gathering on which democracy depends. (Indeed, to their chagrin, the platforms have lately become purveyors of an alarming amount of misinformation.) In that environment, the question of their obligation to news publishers, to journalism, and to society looms large. The solution is fairly simple, if not easily achieved.

Be smart: Either Facebook and Google are platforms, in which case they need to manage their infrastructure in a way that allows independent journalism to thrive. Or they are publishers, in which case they need to provide direct financial support for the journalism their platforms deliver.

Simply put, that either means providing tools for publishers to manage their business on the platforms (via APIs and direct ownership of the customer). Or it means paying publishers for their content.

Google has taken an important first step in giving publishers control over how many stories can be viewed for free when readers click through from search.

But it is merely the first step in a larger conversation over control of the customer that will unfold in the year ahead.

Kinsey Wilson is a digital executive with The New York Times.

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