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How can publishers respond to the power of platforms?

The following essay is adapted from The Power of Platforms: Shaping Media and Society by Rasmus Kleis Nielsen and Sarah Anne Ganter, which was recently published by Oxford University Press. It’s reproduced here with permission.

Large technology companies such as Facebook and Google — in competition with a few others including Amazon, Apple, Microsoft, and a handful of companies elsewhere — increasingly define the way the internet works and thereby influence the structure of the entire digital media environment.

But how do they exercise this power, how have news organizations responded, and what does this development mean for the production and circulation of news? These are the questions we focus on in our new book.

Our primary objective is to understand the relationship between publishers and platforms, how these relationships have evolved over time, how they play out between different publishers and different platforms, how they differ across countries, and what this wider development — where news organizations become simultaneously empowered by and more dependent on technology companies — mean for news specifically and our societies more broadly.

The analysis is based on interviews with more than 50 people working across a range of publishers and platforms in the United States, France, Germany, and the United Kingdom as well as background conversations and observations at scores of industry events and private meetings. We trace the development of the relationship between publishers and platforms over the last decade and focus in particular on the rapid changes from 2015 onward.

Beyond “frenemies”

Despite 20 years of often difficult relations, a clear recognition of the “frenemy” dynamic at play, and the reality of intensifying competition for attention, advertising, and consumers’ cash, many publishers still actively seek to collaborate with platform companies. The vast majority continue to invest in platform products and services even when they’re not offered opportunities to collaborate directly.

Here’s how the director of strategic initiatives at a major U.S. newspaper aspiring to join the inner circle of “platform darlings” described the process of actively seeking collaboration with companies that he explicitly recognizes as major competitors for attention and advertising: “We did a lot of begging. We promised to be completely committed to whatever you ask, as long as you ask.” He explained: “We may not like them, but they have been absolutely essential in expanding our reach and building our digital business.”

Going forward, individual publishers have a series of important choices about how to structure their interactions with platforms.

(1) What balance do they seek between onsite and offsite reach? How can the two complement each other while minimizing the risk of cannibalization?

(2) What is the core business model, including the balance between advertising, reader revenue, and other sources? Which combination of platform partners is most likely to enable that business model?

Finally, given that we know that the platforms are here to stay and that their basic offer of reach in return for content is clear, but everything else is likely to continue to change: (3) How can publishers continuously assess the material and immaterial benefits of their investments in platforms and ensure that they are able to adapt to constant change, without locking in on the (all too often mistaken) assumption that a particular platform opportunity or specific platform product is here to stay?

Every publisher will need to think through what reality-based beneficial relationships with various platforms — based on the solid ground of mutual self-interest, not hopeful dreams or empty promises — can look like. Perhaps it is time to leave behind the somewhat moralizing terminology of friends, enemies, and “frenemies,” lest it gets in the way of clear-eyed analysis. Has anyone ever really been “friends” with a billion-dollar corporation?

What comes next?

While there is an increasingly lively policy debate around platforms, it is clear that the regulatory road ahead is long, slow, and uncertain.

Publishers, at least in Europe, have often ultimately secured political support for much of what they asked politicians for, but getting policies passed (let alone implemented) takes years, and the concrete benefits have often fallen far short of what publishers hoped for.

The CEO of a major U.S. newspaper company said: “We plan our strategy with two assumptions. The first is that in the future, we will have no print profits. The second is that the regulatory environment will stay roughly the same.” He added: “Even if we did see, for example, antitrust action against the platforms, it would take years, probably decades, and in the end might not really benefit us. So we focus on the things we can control.”

The “things we can control” are the decisions that publishers themselves make, individually and perhaps together. These decisions are shaped by the power of platforms and many other forces, but the decisions still matter. A growing number of individual news publishers around the world are demonstrating that while the industry as a whole continued to decline, shrink, and struggle to adapt to a changing media environment, some have managed to developed editorially and technologically compelling offers and build sustainable, even growing businesses.

Globally recognized brands like The New York Times are the most prominent examples of this, though given how unusual its position is, the arguably more important examples are the growing number of smaller organizations that are succeeding, whether legacy newspapers like the upmarket Dagens Nyheter, the popular VG, or local news publisher AMedia, or digital-born brands like the upmarket MediaPart, the widely read El Diario.es, the popular Brut, and the local Lincolnite.

Corporatist, complementary, and collaborative approaches to platforms

Individual corporate strategies and possibly public policy interventions aside, it is possible to imagine some publishers, or even groups of publishers, trying to forge different paths ahead. Three paths that seem possible include corporatist approaches, complementary approaches, and collaborative approaches.

First, publishers have repeatedly tried corporatist approaches to platforms, trying to present a joint front to get more leverage and negotiate more favorable terms of trade with platforms. Some U.S. newspapers explored this in 2009 under the aegis of the Newspaper Association of America. Their French counterparts did the same through SPQN, as did a group of German publishers through VG Media. The American attempt came to nothing, the French initiative resulted in a modest settlement, and the German group ultimately granted Google free licenses to use their content.

Each case illustrates how attempts to act collectively have foundered. Most publishers are loath to surrender the very real short-term benefits of collaborating with platforms. Some will always refuse to join collective action because they have very clear incentives for going it alone. And competition authorities are skeptical of what could look like cartels.

But the idea lives on. In the United States, the News Media Alliance, which represents 2,000 news publishers, has been lobbying for legislation to provide a temporary antitrust exemption for news publishers to negotiate collectively with platforms like Google and Facebook. In Europe, some of France and Germany’s major publishers are trying to close ranks in a fight with Google over the platform’s response to the European Union Online Copyright Directive.

South Korea is the main example of an enduring corporatist approach to platforms. There, the dominant platform companies Naver and Daum work with the “Committee for the Evaluation of News Partnership” (whose members are recommended by the Korean Newspapers Association and the Korean Broadcasters Association, among others) to identify privileged partners. Out of many thousands of South Korean online publishers, several hundreds are recognized by the Committee, and about a hundred have been paid a licensing fee that, in total, amounted to tens of millions of dollars a year, primarily to the biggest publishers.

Second, more publishers might go all-out on the opportunities that come with primarily being complementors to very large platforms, investing in a portfolio of platform opportunities in search of distributed reach, and entirely avoiding head-on competition and attempts to build up direct relations with readers.

With pivots back to websites and apps, even prominent distributed publishers like BuzzFeed missing their business goals, and the odd product change to remind everybody that what platform companies give, they can take away, this is clearly a risky strategy, and just as almost no publishers focus exclusively on on-site, exclusively off-site approaches are rare.

In particular, the strongest publishers, with distinct and effectively differentiated offers and strong direct routes to market, tend to bristle at the very idea, even as the list of top English-language publishers on Facebook in late 2019 was full of familiar names, with CNN, the Daily Mail, and Fox News occupying the top three spots, and The New York Times, the BBC, The Washington Post, and the Guardian all in the top 10.

Thus, while the platform risk is considerable, with the contingency of relying on platforms where, at any moment, the product may change, a number of publishers are pursuing these opportunities aggressively. Looking beyond established models of publishing, whether legacy or digital-born, complementary strategies focused on pursuing platform opportunities while managing platform risk can take many forms. At one end there are individual “influencers” on Western platforms, from stars like PewDiePie making millions every year to countless “nano-influencers” earning a little on the side — independently operated individual profiles working across platforms, producing original content, often as a business or at least a side job, and leveraging platform opportunities to compete with established publishers for attention, advertising, marketing, and the like. At the other end, one can point to the app economy and the video game industry as big, competitive, and lucrative industries that are almost entirely based on a multitude of third parties — some of them large profitable companies — built in large part by complementing a few dominant platforms.

Third, if the central risks publishers are trying to contain are asymmetry when faced with much larger platforms, and the contingency and platform risk that comes with being too dependent on them, publishers might collaborate to create their own alternatives to some of the products and services that dominant platforms offer.

Serious publishers have already embraced the idea that, to succeed, news media has to combine editorial excellence with technological excellence, matching the expectations that audiences and advertisers have become accustomed to through the experience of using platforms’ products and services.

Some of this work begins internally, with publishers like Vox Media and The Washington Post developing new digital publishing platforms (and in turn offering these up for licensing to other publishers), and The New York Times and others investing in advertising technology.

Occasionally, this involves publishers operating their own platforms, which companies like Axel Springer and Schibsted do very successfully with classified advertising platforms, and which Springer does in partnership with Samsung on the mobile news aggregator Upday.

Still, the track record of publishers’ dabbling in platforms has been uneven and often unsuccessful. Rupert Murdoch’s News Corporation bought Myspace in 2005 for $580m, only to sell it for $35m in 2011. The Georg von Holtzbrinck Publishing Group brought the German social network StudiVZ in 2007 for €85m, but sold it in 2012 for an undisclosed sum. French publishers have repeatedly declared their intent to launch their own aggregators and search engines (none have materialized), and several publishers have tried to launch blogging networks and various other forms of platforms for readers and subscribers, often with limited success.

More recently, there is an increasing number of examples of smaller groups of publishers collaborating on joint platforms for advertising sales, registration, subscriptions, and the like. Collaboration on specific solutions to specific problems seems like a promising route for publishers seeking to retain their independence and make the best possible use of the opportunities existing platforms offer, while finding ways of reducing the platform risk that comes with becoming increasingly reliant on and intertwined with them across distribution, advertising sales, analytics, sales, and more.

Publishers taking control of their own destiny

Publishers make their own decisions, but not under conditions of their own choosing. They are decisions nonetheless, and decisions that matter. Unwarranted determinism about the supposedly sovereign power of platforms is paralyzing, disrespectful of the difference that clear strategic thinking and careful execution makes, and ultimately not supported by the evidence.

Some publishers have demonstrably been better at building reach via platforms. Some have been demonstrably better at acquiring subscribers via platforms. The choice to try to do one or the other is a key strategic one. Some publishers have been much better at building direct engagement with audiences, and some have very significant direct traffic and very wide reach via platforms.

In the years ahead, publishers will continue to make different strategic decisions about how to realize platform opportunities while minimizing platform risk — individually, each pursuing their own interest, and perhaps sometimes in groups, whether through corporatist, complementary, or collaborative approaches.

Rasmus Kleis Nielsen is director of the Reuters Institute for the Study of Journalism and a professor of political communication at the University of Oxford. His other books include The Changing Business of Journalism and its Implications for Democracy and Political Journalism in Transition: Western Europe in a Comparative Perspective. Sarah Anne Ganter is an assistant professor at Simon Frasier University’s School of Communication.

Image of different podiums and platforms by Rodion Kutsaev is being used under an Unsplash License.

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