digital-news-tough-year

Why 2016 was Exceptionally Tough for Digital News

2016 was an interesting year for journalism, to say the very least. It was a year of closures, acquisitions, layoffs (lots and lots of layoffs), reinvention and reorganization. Why? Because very few have cracked the code on how to make digital news profitable. 

Publishers are facing two major issues when it comes to turning digital news into dollars:

  • People assign low monetary value to digital news because so much of it is available for free
  • The rise of ad blockers is making it impossible to use digital advertising as a revenue source

To add insult to financial injury, 2016 was also the year fake news and clickbait-y headlines dominated a major election season and left many people questioning the integrity and validity of digital news sources. 

It’s not all bad news though. There is a silver lining. There are some differences in digital news media based on geography – particularly between North American news and European news. In fact, while most North Americans are reluctant to pay for digital news, media is protected by language in some smaller European countries and people are sometimes twice as likely to pay for a digital news subscription.

Some European countries have found creative ways to counter the issues mentioned above. But while there are differences, many issues faced by digital news outlets don’t abide country borders. In this piece, I’ll examine the current states of digital journalism in the United States of America and a few European countries. We’ll start with the nation that’s seen the most upheaval in its media landscape within the past year: America.

The United States of America

There are two very different digital news landscapes to examine in the US: pre-election and post-election 2016.

Pre-election 2016: Trying to Turn Digital News into $$$

American digital media is highly competitive and fragmented. Legacy publishers are going head-to-head with newer digital-born outlets – and all news outlets, new and old, are competing with social media. Nearly half of Americans use social networks as their source for news, with Facebook being the most important platform for this (more on the ramifications of this later in post-election US).

In 2016 before the election, the biggest problem facing the health of digital news media was the failure of advertising revenue’s ability to keep journalists employed.

Local journalism took the biggest hit. The Los Angeles Times along with other Tribune newspapers experienced significant cuts to editorial staff. Three media groups in Philadelphia (the Inquirer, the Daily News, and Philly.com) were all placed in a non-profit trust, with the intention being to preserve operations and experiment with long-form investigative reporting.

The dependence on digital advertising as a driving revenue source isn’t working. Publishers are being paid by advertisers on a CPM basis (how many thousands of impressions an ad receives) but the rising prominence of ad blockers has thrown a huge wrench into this business model. In 2015, publishers lost $22 billion to ad blockers. That number only grew in 2016.

Then there’s the added problem of Google and Facebook. Facebook Instant Articles and Google AMP have stolen away clicks and ad impressions from publisher websites. Readers don’t have to leave either platform to get their news.

There is a bright spot. Kind of. Subscription models. Some publications like Politico and Business Insider have done well with their models, and it’s anticipated that other publications will follow suit. Pre-election, only 9% of the US population paid for news. Post-election? Some publications welcomed huge numbers of brand new digital subscribers. Let’s get into it.

Post-election 2016: Fake News and Clickbait

Let’s start with the good news, because there currently isn’t a lot of it:

  • Within one week of Election Day, the New York Times welcomed 41,000 new paying digital subscribers, the largest one-week increase since the publication introduced its digital subscription model in 2011
  • By the end of November, the New York Times had added a total of 132,000 paid subscriptions
  • Tronc Inc., formerly known as Tribune Publishing Company, saw an average of 29 percent increase in paid digital subscriptions during Election Week
  • The Los Angeles Times, Tronc Inc’s largest publication, gained 61% more digital subscriptions during Election Week, and subscriptions grew another 47% in the two weeks after the election

On to the bad news.

Leading up to the 2016 election, political polarization contributed to growing distrust in news media. Two sides of a divided country accused each other of using the news media for political gain. This all came to a head after the election. Actually, it exploded. Clickbait culture and fake news became a major part of the US’s post-election narrative.

A wise man recently said:

“If you don’t read the newspaper, you’re uninformed. If you do read it, you’re misinformed.”

Denzel Washington

This narrative is best represented and summed up by “pizzagate” which all started with Wikileaks and the release of John Podesta’s emails (Podesta is the former Hillary Clinton 2016 Campaign Chairman).

Users of message boards, like Reddit and 4Chan, picked up on the word “pizza” used in emails about small social gatherings hosted by Podesta and friends. Internet sleuths decided that “pizza” was a codename for something much, much, much more sinister and accused Hillary Clinton and her associates of something unfounded and ludicrous. Salon.com did a great job at breaking down the entire debacle, and you can read that here.

Ultimately, the allegations spread across the internet like wildfire with fake news sites presenting them as fact. This all culminated into a 28-year-old man driving from North Carolina to Washington DC to self-investigate a popular pizza spot, Comet Ping Pong (the venue where allegations were purported to have taken place), and started firing an assault rifle once inside. The police never investigated Comet Ping Pong or any of the reported allegations that caught the attention of so many people because there was never any evidence to support the claims.

Facebook has also become a huge character in the narrative of post-election US media. Almost half of Americans go to Facebook to read and watch the news – but since the election, it has been revealed that fake news was rampant on the social network in the lead-up to Election Day. For example, a widely shared “news story” on Facebook reported that Pope Francis had endorsed Trump’s candidacy. Not true. Another popular one insisted that an FBI agent involved in Hillary’s Clinton’s email investigation had died in a murder-suicide. Also not true. It was so bad that Facebook’s fake news and it’s virality has been accused of influencing the election result.

Since the election, Mark Zuckerberg and Facebook have made moves to combat fake news. Most recently, Facebook announced that it is looking to hire a head of news partnerships, an experienced media executive that will work to repair relationships between the social network and news media, as well as to address growing concerns about fake news and its influence.

So, the news media in the US is ending the year in a state of disarray. It’s a mess. I would have linked to more third-party content to showcase examples and analysis of fake news and clickbait culture, but I don’t even know what is real anymore, or who to trust or what is fact today only to be discredited tomorrow. How did America get here? President Barack Obama said it best when he told Rolling Stone:

“The challenge is people are getting a hundred different visions of the world from a hundred different outlets or a thousand different outlets, and that is ramping up divisions. It’s making people exaggerate or say what’s most controversial or peddling in the most vicious of insults or lies, because that attracts eyeballs. And if we are gonna solve that, it’s not going to be simply an issue of subsidizing or propping up traditional media; it’s going to be figuring out how do we organize in a virtual world the same way we organize in the physical world. We have to come up with new models.”

Europe: Little Gleams of Hope

Across the pond, digital news is faring better than US media in some ways (no pizzagate), and experiencing similar stresses in others.

Germany: Distrust, Digital Diversification and Busting Ad Blockers 

The percentage of people that pay for digital news in Germany is just 8% of the population, lower than America’s 9%. Similar to America, the press is dealing with issues of trust. While most Germans trust their country’s news media, trust has become a hot topic over the last year. Criticism of recent errors made by journalists, the concealing of facts and biased reporting resulting from government intervention has led some citizens to accuse German media of being controlled by the politically correct elite. Some right-wing groups have started using the slogan “Lugenpresse” which translates to “lying press” when referring to the media. “Lugenpresse” was a term very popular during the Nazi era.

Digital news is the main source of news consumption for people under 35 – and legacy news brands dominate the space with very little disruption from digital-born publications. Germany’s most well-known publisher, Axel Springer, recently announced increased digital revenues, which account for 70% of the publishing group’s total revenue. This success came out of a strategy to diversify and invest in digital business across Europe and into the US (the publisher has a 97% stake in Business Insider and bought into Politico Europe).

Germany has also been the most proactive in stopping ad blockers from stealing revenue away from digital news outlets. Axel Springer restricted all access to one of its publications if a user didn’t turn off their ad blocker or sign up for a monthly subscription. Other German publishers have used their platforms to inform their readers that digital ads support quality journalism and ask that ad blockers be turned off.

France: Digital Consolidation and Working Together to Beat Ad Blockers

Television is the go-to news source in France, and its broadcasting sector is strong. Digital? Not so much. Digital media ownership is becoming more and more concentrated, exclusive to a very small group of powerful tycoons which is concerning in terms of reporting bias. The result of media consolidation by a select few has contributed to France’s distrust in media being among the lowest in all of Europe.

Digital advertising revenues are not making a dent in publisher revenues because 30% (higher than the European average) of the country is using ad blockers. In March 2016, France’s biggest publishers teamed up to launch a coordinated campaign to build awareness regarding the detriment that ad blockers have on quality reporting.

It’s not all bleak in France. Mediapart is a profitable digital news outlet that is well-liked for its investigative pieces and strong op-eds. The website survives solely on subscription income and does not use any advertising.

Norway: High Subscription Rates and Innovative Business Models

Digital news is doing okay in Norway. Norwegian media has built a reputation for being digital innovators when it comes to business models. 27% of Norway pays for online news, one of the highest adoption rates in the world.

An example of Norway’s digital news innovation is the way it tackles digital intermediaries like Facebook Instant Articles and Google AMP, as well as the rising ad revenue share that is being gobbled up by Facebook and Google. In February 2016, an alliance between Norwegian publishers was born to counter the revenue lost over missed clicks and lost ad impressions – publishers are collaborating on content, distribution, and are sharing user data with each other to keep the cost of content creation at a minimum.

Another digital Norwegian success story is Filter Nyhter, which launched in 2016. Its business model is based on sponsored and branded content. Its investigative journalism is supplemented with a popular newsletter that aggregates content from other media sources.

In Conclusion

It’s hard to feel optimistic about the future of journalism when the perpetuation of fake news results in assault rifles being fired in safe places like pizza joints. Only time will tell how digital news will fare in 2017.   In the meantime, you can install Slate’s “This is Fake” Chrome extension to help you identify fake news on Facebook and easily flag it – and test your ability to spot fake news with this quiz.

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