Wolff: Digital TV Can Save Digital Publishing
According to data from Ken Doctor, 53% of U.S. digital advertising revenue is going to Google and Facebook.&nbsp;
Michael Wolff

USA TODAY

The redoubtable Ken Doctor, a leading chronicler of the decline of the publishing industry, recently assembled a list of metrics that describe some of the forces shaping or perhaps dooming much of digital media. Here's one of the most telling and confounding: 52% of all U.S. digital advertising goes to Google and Facebook.

This prompts, or ought to prompt, the inevitable question: What, then, is left for everybody else? One answer is provided among Doctor's other numbers: the monthly digital ad revenue at The New York Times in the first quarter of this year is about $14 million.

As a point of comparison: The printed Times, with now half as many paying readers as the digital version, took in about $50 million a month in advertising revenue. The Times currently has 1.5 million paying readers in print and digital, the same total of readers it had for an exclusively print product 20 years ago — at that time it was taking in more than $100 million a month in advertising.

These figures are even more stark when you realize that in traffic terms the Times now claims a total audience — including those not subscribing and merely looking at free articles — of monthly unique visitors of around 50 million. Hence, where once the Times received $100 million a month for 1.5 million readers; now it makes $14 million a month for 50 million readers.

And, outside of Google and Facebook, The New York Times is one of the most successful sellers of digital advertising.

Even if, as noted in last week's column, by some estimates digital advertising will increase by more than 50% by 2019, and assuming that Google and Facebook don't use their overwhelming strength to take an even larger market share, the Times, at a 50% jump, still is running an ad business that's a shadow of its former self.

Recognizing this, the Times has built a helpful and growing subscription business. But it is one of the few examples of a consumer publishing brand unique enough to build a subscription business. The overwhelming number of digital media businesses continue to be exclusively supported by the scraps left over from Google and Facebook.

This prompts two considerations, the first existential, the second about business organization and policy, i.e. what to do about Google and Facebook.

In the first, the reasonable conclusion at this point in media time is that the publishing industry as we know it — that is, one that resembles something with the resources and talents that have existed in the industry for the better part of a century — is finished. Indeed, what is still left of it now is largely supported by legacy print businesses — that is, the businesses that are inexorably being consumed and replaced by the far less profitable digital versions. Hence, in short order, we will be left with an entirely different notion of publishing.

In one version, there is The Huffington Post — now with its vast traffic, making just about the same monthly ad revenue as the Times — proposing to build a million-strong base of unpaid contributors to help it achieve profitability.

In another version, it is something like BuzzFeed, ever-more blurring the distinction between editorial and direct-response advertising (Reader's Digest long ago perfected this model).

And, in almost everyone's version, it is to fashion businesses largely staffed by the young, inexperienced and low paid.

And yet another approach is in effect to abandon publishing altogether and to go into video. Vice, providing everybody's favorite model, began as a magazine, then became a web product, will shortly become a cable channel.

And then there is the issue of Google and Facebook. Arguably both have thrived on a lack of policing by the publishing community and on the traffic that has accrued to them on the basis of their casual use of other people's content. And now, publishers beg for their property to be used by Google and Facebook. Ad revenue may be meager, but there is none at all without the traffic streams provided by these two platforms. In another of Doctor's numbers: 75% of BuzzFeed's traffic comes from links from social media.

There is, to my knowledge, no current meaningful challenge in the U.S. to the hegemony of Google and Facebook, neither a legal challenge nor a challenge in the form of a business strategy to create publishing brands that would not be dependent on social or search traffic streams.

The challenges that do now exist are outside of publishing.

One is in Europe, where Google and Facebook face a variety of privacy and antitrust charges, a cause which, Stockholm-syndrome like, almost no American publishers have rallied to.

The other comes from television. Television has long-resisted the inevitability of free digital distribution; it fought casual sharing; and it has maintained vigilant control over its pricing. Hence, while Google and Facebook hold 52% of digital media advertising, television holds 100% of a far greater and more profitable advertising pie. And, curiously, this offers a glimmer of hope for publishing. As streaming video becomes a key digital activity, as digital advertising rates decline, and television's hold firm, Google and Facebook are being forced to build their own streaming strategies, meaning they will have to bend to television's traditional business model — i.e. getting paid for content. In this deal, a new model of digital content use and revenue sharing surely emerges.

And this, finally, gives the publishing industry its opportunity to renegotiate. And to litigate.