The changing shape of news income

21 Sep, 2021
Merja Myllylahti
Merja Myllylahti

Critical Media Studies senior lecturer Merja Myllylahti investigates the first decade of digital revenue payments, the trends and forces that have emerged, and ponders how payments between platforms and publishers will shape the future of the media market in a new paper for Digital Journalism.

Dr Myllylahti, who is also co-director of the Journalism, Media and Democracy Research Center at AUT, says the first 10 years of digital reader revenue – subscriptions – were largely the news publishers’ domain, despite Facebook entering the market.

“The first decade of payments has seen major players develop dominant positions in major markets. Their ability to monetise their audience gave them a dominant position in the market. However, local news outlets are at risk, as they are largely excluded from the platform payments, potentially weakening their financial position.

“External forces such as regulation have been the key driver for platform payments to publishers, which suggests future payments will be unpredictable.”

Current events drive subscriptions

“When the global financial crisis in 2007-2008 caused a severe slump in global newspaper advertising, newsrooms started to seek partnership with other news organisations to expand audience reach and traffic and to gain additional revenue. In the face of deep cuts to staffing and resources, these partnerships sought to find ways to sustain the quality and depth of their journalism.”

Over the decade current events have affected subscriptions, with The New York Times Co., and The Wall Street Journal benefitting from the ‘Trump bump’ following President Trump taking office in 2017.

In the first half of 2020, large news publishers in the UK and the USA reported substantial increase in digital subscriptions: by June 2020, the 10 largest newspaper groups in the two countries gained collectively more than a million new digital subscriptions.

The Covid-19 pandemic also had a dramatic and unequal impact on independent news media with 36% of companies expecting a severe drop in their revenue due to the pandemic.

Competition for both attention and revenue

Since the launch of digital reader revenue models, news publishers have been competing for people’s attention and related revenue with each other; platforms; and other digital services such as Netflix and Spotify, which are priced more affordably than news subscriptions.

Platforms operate as algorithmic gatekeepers of the public’s attention by processing and filtering content and selecting what is seen, how it is seen and even when it is seen.

News continues to gain attention on social media platforms but the platforms continue to be the main beneficiaries of it. Advertisers increasingly prefer platforms as they provide sharper customer segmentation and targeting.

In some markets, news consumption has largely shifted to social media platforms. In 2020, 53% of American adults received news from social media, and for 36% of them, Facebook was a regular source of news.

Dr Myllylahti’s analysis is based on data from three platform companies, 14 newspapers groups operating in 9 western markets. The countries included in the sample are among those where paywalls were first introduced, and the news publishers included in the sample are largely regarded as some of the most advanced in monetising digital readers. The platform companies included in the analysis are Google, Facebook, and Apple.

Some news publishers have become dominant as they grow in assets – including digital subscriptions – and as they expand across geographical boundaries. Large news publishers such as News Corp, The New York Times Co., The Financial Times (Nikkei), and the Washington Post have become ‘winners’ in the global digital subscription market. A few ‘national’ champions or potential survivors are leading in their national markets but are not large enough to break into the ‘first tier’.

The platform payments are targeted at the publishers with the most attention and have a potential to strengthen the ‘winners’ and weaken the ‘losers - including regional and local news publishers and independent news outlets. These payments can also make the publishers’ revenue models more dependent on the platforms. In Australia, Google and Facebook have agreed to pay news publishers for their content for a period of three years. They may only give short-term relief.

As witnessed early in 2021 in Australia, platforms can also take away attention for news, or they can restore it. In early 2021, both Google and Facebook temporarily removed news or access to news from their services because the terms of the ‘news media bargaining code did not please them. By removing content, they forced the Australian government back to the negotiating table, and the terms of the code were changed. In the meantime, the news became invisible.

“Where the news is consumed, monetised, by whom and how, most likely has a great impact on how this market is shaped in the future. We know that platforms’ willingness to pay for news is not evolving naturally; the payment schemes are enforced by the regulators and legal frameworks in different continents, countries and markets. So far, payments have been made in response to regulatory pressure and legal rulings.

“What this means in New Zealand, where the government has a laissez-faire attitude towards regulating platforms, remains to be seen,” says Dr Myllylahti.

The news publishers studied for this analysis were Schibsted, Bonnier, Nikkei, Sanoma Oy, Bild, Süddeutsche Zeitung, Le Figaro, Le Monde, The Telegraph, News Corp, Nine, The New York Times Co, The Washington Post and Gannett, based in Norway, Sweden, Finland, Japan, Germany, France, the UK, Australia and the USA.

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