With Google and Facebook now behemoths of the advertising market, together reaping 70% of advertisers’ digital spending1 while a multitude of middlemen fight over the scraps, how can any kind of power or independence be achieved? This is the inextricable conundrum that online publishers of content and services have had to contend with for years.
Between the latter, the battle lines have been drawn for some fifteen years. The total disruption of the sector has been so incredibly fast that it is enough to make your head spin. In a very short amount of time, Google, with all its freemiumfreemiumFreemium (a combination of the words "free" and "premium") is a monetisation model which proposes the same product or service in two different versions: the first one is free but contains a limited number of features, while the second one is comprehensive but charged.Learn more and high-performing services, became the de facto traffic controller. Then came the social networks – mainly Facebook – to occupy what little space was left for them, before establishing themselves as the gateways through which all editorial content is discovered. And due to this, more than 50 % of readers now access such content via social networks2.
15 years of fast-paced transformation
The publishers and major media, hitherto all-powerful, were incredulous as they came to realise just how dependent they were on the digital mega-platforms, and in turn how vast the advertising revenues that were lost to them in this new ecosystem. Technological innovation has disrupted both how content is consumed and the capacity to monetise it. This has triggered a dangerous spiral for the news industry, which has found itself caught between a fall in print readership and declining advertising revenues, while having to confront the increasingly desperate need to undertake some form of industry-wide transformation.
Conscious of its economic, political and societal role, and having to contend with a new balance of power where accusations of its market dominance abound, at the end of 2013, Google launched the first call for project proposals of the Google-AIPG Fund (Association de la Presse d’Information Politique et Générale, or French Association of Political and General Information) for digital innovation in the French press industry. This €60 million fund was designed to support digital innovation initiatives in the French news industry. It thus targeted any project coming from publishers of websites featuring political and general content, whether national or regional, a pure player or traditional player, provided that it specifically involved some form of digital innovation.
In just 3 years, more than a hundred projects were funded, with some topping several million euro. It does not appear that the US behemoth has any plans of stopping there, as evidenced by the introduction of the DNI (Digital News Initiative) in 2015, a new fund of 150 million euro over three years to support digital innovation in the news industry across Europe.
It is a way for Google to demonstrate the universal need for high-quality, professional editorial content, while also increasing its irresistible stranglehold on the industry.
The Gravity and Skyline alliances in France
Has a status quo been achieved then? Now that would have been altogether too easy! This summer, two competing groups launched initiatives to counter the all-embracing strategy developed by the US behemoth, which has been somewhat forced upon them, or at the very least not wholly consented to. Indeed, one after the other, Gravity and Skyline have set up their starting blocks, ready to attempt to recover, at least in part, some of the advertising revenues that they consider to be legitimately tied to their content production. Gravity is comprised of about twenty members, including French media companies, the telecommunications company SFR and the Fnac-Darty retail group, with all of them determined to hold on to the ownership of their own data, but ready and willing to share additional information between them that would enable everyone to together qualify and segment their own data more thoroughly. They consider the agreement a win-win situation, since audience data refined in such a way will be more accurate, reliable and secure, and of higher quality. Lastly, an additional source of revenue can be added to the mix, through the monetisation of the information exchanged.
A strategy focused on the monetisation of data is both new and pertinent, while perhaps being the only way that publishers are likely to gain a competitive advantage. It certainly indicates that publishers have had a healthy awakening when it comes to the value of their content and data. More than any other sector shattered by the digitalisation of the world, the news industry has, through the digital data generated by readers, a gold mine and a potentially powerful weapon to improve its editorial and service offerings. This could be achieved through the improvement and personalisation of editorial content, the optimisation of the reading experience (and thus reader engagement), and better advertising performance (more creative and less intrusive formats, better targeting, etc.). These three facets constitute a virtuous circle that is nurtured by data which must be reliable, complete, and well organised.
Now faced with Gravity, Le Monde and Le Figaro - major French newspapers - decided to instead enter into a two-way alliance. Leveraging their ability to reach 80 % of French Internet users, the two publishers created Skyline, a common marketplace in which to promote their inventories, focusing on branding goals rather than on the monetisation of data. With their two brands, the quality of their media environment and the richness of their content, they are betting on being able to immediately recover up to 30% of their inventory’s value by eliminating middlemen, whose contracts will not be renewed. Theoretically, they could thus be two-time winners, with increases in both independence and advertising revenue.
A trend that is not limited to the borders of France
The French uprising against Google and Facebook is no one-off. The number of initiatives is growing while taking on various forms. The US-based "News Media Alliance" has brought together such media outlets as The New York Times, The Wall Street Journal, and The Washington Post in an attempt to get Congress to pass an amendment to the antitrust laws in order to be able to collectively negotiate against the Google-Facebook duopoly. In Asia, Mediacorp and Singapore Press Holdings have combined to create SMX, a new digital advertising platform. Europe has not let itself fall behind either. In Portugal, the Nonio project is comprised of the six largest media organisations in the country, which are pooling their readers’ digital data in order to improve their advertising offering. In Germany, the biggest publishers, including Axel Springer, Bertelsmann and Der Spiegel, are combining and pooling their data on the Emetriq platform, with a view to offering a credible advertising alternative to marketers.
With each of them, the idea has been to shift the balance of power with the digital behemoths by pooling the brands, audiences, and data from media that are still in competition with each other, in the belief that the alliance represents a real strength in the face of the new enemy: the platforms.
An asymmetric battle...
The battle, however, is far from won. When taking into account how the near-simultaneous announcements of the two French initiatives overlapped, the counter-offensive comes across as scattered and disorganised, a fact that will not fail to please Google.
The two approaches are also different in terms of strategy, with data and segmentation on one side, and branding and streamlining of the value chain on the other. While governance – be it of two or twenty organisations – promises to be complex while slowing any implementation.
They also lack an international dimension, whereas the strength of the digital platforms lies in their global deployment on a very large scale.
Finally, they will find themselves crashing against the rocks of an inevitably complex technical execution, at a time when, in May 2018, European regulations will be caught up in the implementation of the General Data Protection Regulation and the ePrivacy Regulation, for which the interests of one and the other are not yet perfectly aligned – far from it, in fact.
... in a necessary uprising
More than ever, the great paradox of online media must be resolved. On the one hand, never before will so much editorial content have been produced and consumed, while the tools for producing, distributing and monetising this content will never have been so effective. And yet, on the other hand, publishers and the media will never have been so badly manhandled – if not threatened down to their very existence – by those who steer and distribute their audiences while hijacking the associated advertising windfall. In this respect, the Gravity and Skyline initiatives, like those launched beyond the French borders, are not only remarkable, but must be encouraged.
They will face enormous implementation challenges, as well as the short-sightedness of their market, but will be a step further towards the necessary collaboration with the globalised digital behemoths. Or, failing that, the balance of power will naturally harden in such a way that, in this new ecosystem, the powerful media brands, as guarantors of professional and independent journalism, will flourish. The names of the two initiatives, Gravity and Skyline, refer to the sky and astronomy. Let’s hope that they will enable the media to really take off by relieving it of the constraints of the digitised world, rather than falling heavily back down to earth.