9 Sep 2018

Time to cut the cord with the tech titans?

From Mediawatch, 9:10 am on 9 September 2018

A new report says our news media are too dependent on Google and Facebook. The author says it's also time to tax big online operators to secure the future of journalism. If this is even possible, how could it be done?  

Facebook and Google

Photo: AFP

"Facebook and Instagram users are in a frenzy after both social media giants crashed this morning"

So said a red banner on NZHerald.co.nz on Monday - and a news alert pushed to app users' phones.

Instagram and Facebook users took to Twitter “to express their grief about the issue,” said the story. No mention was made of those who reacted calmly and waited for the short-lived problem to be fixed.

The story came from the UK-based Mail Online which specialises in tabloid-type clickbait and relies heavily on social media platforms like Facebook to get it in front of millions of eyeballs worldwide.

Photo: screenshot

Since Facebook tweaked its algorithm earlier this year to de-prioritise news appearing on users’ timelines and news feeds, Mail Online lost almost a tenth of its global audience. Its digital advertising revenue growth slumped and its publisher's share price dipped. 

It was a powerful illustration of where the power lies in the modern media.   

Last month the Guardian reported a senior Facebook executive told Australian media companies if they didn’t cooperate with the social network, their businesses would die.

“In a few years ... I’ll be holding your hands with your dying ­business like in a hospice,” she said. 

The New York Times chief executive urged Facebook to stop distributing news and "just stick to cat videos". 

Duncan Greive

Duncan Greive. Photo: supplied

Last month, the publisher of The Spinoff Duncan Greive said New Zealand’s biggest news sites are down on traffic and audience too since Facebook's move, and it referrals to his own site dropped too. 

"In July 2017 social supplied 52 percent of The Spinoff’s web traffic; last month (July 2018) it was just 30 percent. So while our traffic and audience have increased year-on-year, it was a far more diverse and complex method of building an audience than before," he wrote.  

He said it's not only a big deal for individual websites.

"We in the media - and, by extension those interested in democracy and all that - need to understand Facebook’s capriciousness as the new normal," he wrote. 

Last Thursday, Dr Merja Myllylahti, research fellow at AUT’s School of Communication Studies - said local media had become dangerously dependent on Facebook and Google for online traffic.

At AUT's Centre for Journalism Media and Democracy, she unveiled new research showing the online platforms' share of digital ad revenues was growing, but New Zealand news organisations don’t make any substantial revenue from Facebook.

The paper titled Google, Facebook and New Zealand news media: The problem of platform dependency is the first report analysing the relationship between platform companies and NZ news organisations.

She told Mediawatch news publishers should pull out of Facebook - and Facebook and Google should pay a tax to ensure New Zealand journalism survives in the digital world.

AUT’s School of Communication Studies Research Fellow Dr Merja Myllylahti.

AUT’s School of Communication Studies Research Fellow Dr Merja Myllylahti. Photo: supplied

Dr Myllylahti found Facebook and Google combined account for 53 percent of traffic to news websites and they harvest 63 percent of available digital advertising revenue.  

She found a quarter of traffic to local news websites comes from Facebook but news organisations don’t make any substantial revenue from Facebook traffic and shares.

Dr Myllylahti said publishers were making the same mistake with Facebook news distribution as they did with their online news sites 20 years ago when they decided to make the content available for free and advertise to the large online audiences they could attract.

“Chasing clicks did not provide them with a sustainable revenue model, and chasing users attention is not working for them either. Facebook user numbers are declining in some major markets, and if the user numbers decline, so will the potential audience for news companies. Why do they stay on the platform?," Dr Myllilahti said.

“It is clear that platforms and news companies are mutually dependent, but ... news companies are failing to monetise traffic and attention they gain on platforms.This risks destroying their business model and raises the question of how content is to be funded,” she said.

Facebook and Google have not invested any money in New Zealand journalism, but they do benefit from the content, she said. 

She told Mediawatch there were other publishers New Zealand media could learn from such as Norwegian company Schibsted. 

"About 7 to 8 percent of their traffic comes from Facebook and Google. They have a paywall and they built their model outside of Facebook and social media," she said. 

Bernard Hickey has worked on several digital journalism projects here and overseas designed to attract advertising revenue online. 

Some were big established media companies - such as Reuters, MSN - and others smaller startups like Interest.co.nz, Hive News.

He was formerly the head of digital at Fairfax / Stuff and is now the managing editor of Newsroom Pro, the subscription-based service of Auckland-based Newsroom.co.nz which employs 14 journalists.

Bernard Hickey, Newsroom Pro

Bernard Hickey, Newsroom Pro Photo: PHOTO / RNZ Mediawatch

"From 2002 to 2012, we essentially agreed to let Google crawl our news and index it so they would drive traffic to us and we would make money from advertising. It seemed like a good deal at the time," he told Mediawatch

"Since then, they've engineered a 'bait and switch'. They captured the value from all those eyeballs by having a much better understanding of who was looking at the ads," he said. 

"Over that period, I've watched the value of advertising on news websites fall from about $70-80 per 1000 page impressions to about 4,5,6 dollars," he said.  

"I can see why people are now saying we should give up on Facebook."

Both Google and Facebook have invested support for online journalism, such as the Facebook Journalism Project  and the Google News Initiative. Both have launched tools to help media outlets secure paying subscribers

Dr Myllilahti said none of these initiatives have so far reached New Zealand. 

She said online platform companies should pay a portion of their digital advertising revenue towards journalism, and a special platform tax for them may be a most effective way to deal with it.

How would that work?

"I'm no tax expert, but either they should be levied or taxed or they should voluntarily be paying something from their advertising revenue into public interest journalism projects so we could have an independent trust to which the money could be paid," she said.

Dr Myllilahti's report is available here: Google, Facebook and New Zealand news media: The problem of platform dependency