Today’s journalism environment is deeply influenced by third-party platforms, or technical systems that mediate exchanges between content producers and consumers. Those platforms have significantly altered how news is monetized, distributed, and engaged with, and have consequently disrupted the financial support for journalism in market-oriented media systems around the world.
Many journalistic organizations have experienced what may appear at first sight to be a paradox: They now have access to a far larger potential audience than ever before through their digital distribution channels—and, in fact, often have more readers, viewers, and listeners than ever before—yet they have seen a drastic reduction in advertising revenue.
The reason for this is two-fold. The first reason is that the cost for placing an advertisement on an organization’s digital offerings is exponentially lower than the cost for placing an advertisement on that same organization’s analogue offerings, like a tiny newspaper section or television broadcast segment. This is due in part to the fact that online audiences have historically been devalued by producers and advertisers alike. However, it is also due to the increased supply of content online. If an advertiser wants to reach an audience member offline, they have a far more limited set of media vehicles—such as the lone newspaper for an entire county and the few broadcast channels that cover that area. Conversely, there is a seemingly unlimited supply of media vehicles online through the billions of websites that exist.
The second reason is that much of today’s advertising is managed through third-party platforms that not only govern pricing but also take a hefty cut. Put another way, if UMass wanted to promote its excellent Journalism Department to an international audience, it might work directly with The Japan Times to publish an advertisement in its newspaper. However, if UMass wanted to advertise on The Japan Times' website, it would need to work with an intermediary like Google’s AdSense, which handles all of the advertising for The Japan Times, as well as for millions of other websites.
This is the case for many journalistic organizations today, and it comes with many implications, the most important of which is that there is downward pressure to keep ad rates low online. Specifically, UMass may reason that its goal is to reach people outside the U.S. who are interested in journalism—and it may not care if those people are found on The Japan Times or elsewhere on the web. Thus, they will use an ad-tech intermediary—like Google’s AdSense—to target their ad to a certain demographic at a maximum price, and Google’s AdSense will allow any website visited by such a user—based on a profile that the ad-tech company has created—to show UMass' ad so long as they accept UMass' pricing. (Ad-tech systems do allow for black-listing, too. This means that some websites are not eligible to show an ad if they contain certain keywords. While this is usually restricted to offensive language, it can be extended to sensitive topics, like human rights abuses. That, in turn, discourages the production of such stories.)
All of those decisions are made by automated systems in microseconds through what is called programmatic advertising, and it often results in lower ad prices because a rational advertiser will seek the websites that require the least amount of money while delivering the desired audience. That scenario is made even more problematic when one realizes that those intermediaries charge a transaction fee for each ad shown. Consequently, not only are journalistic organizations receiving less money for each ad but they also only receive a portion of that amount.
It is thus unsurprising that while digital ad spending has grown immensely, much of those gains have been highly concentrated among a few companies. Specifically, Google and Facebook alone are estimated to receive more than half of global digital ad spending, with China-based Alibaba coming in a distant third.
In short, many of the gains in digital advertising are not being realized by journalistic organizations; the uptick in online ad revenue has not come close to replacing the losses in offline ad revenue for many journalistic organizations; and many journalistic organizations still rely on their offline products for the majority of their advertising revenue, even as they have much larger audiences online.
Third-party platforms are not limited to advertising, though. In the United States, much of Europe, and elsewhere in the world, a small group of Silicon Valley-based companies—namely Google, Facebook, Apple, and Twitter—largely control social media, Internet search, and mobile application platforms that audiences use to find and access news.
Because of their positions as intermediaries, those companies generally realize many of the economic benefits from news production while not suffering from its costs. Specifically, a platform like Facebook benefits from user-generated content like its users' posts (including any news they may break), from the fact that many people rely on Facebook to be their primary news source via the links that are shared by their friends, and from the many journalistic organizations that use Facebook themselves in order to promote their content by offering portions of it for free. All of this participation comes at negligible cost to Facebook, because it does not pay any of these people for the very content that makes its platform worthwhile.
At the same time, platform owners seek to avoid expensive legal and gatekeeping responsibilities by claiming to be distinct from media organizations. Put differently, they have used claims of being neutral, technical infrastructures to avoid the public interest obligations that governments have historically placed on broadcasters and other traditional media firms. After all, they claim, they do not produce journalistic content of their own, and their platforms are governed by supposedly impartial algorithms, rather than humans, to determine what to display and how to display it. Therefore, the argument is that such neutrality should shield them from journalistic responsibilities, or from legal risks like accusations of libel. (This is, of course, patently untrue. Their algorithms reflect the values or economic interests of platform owners, and the algorithms exercise a form of judgment in selecting content because it is likely to elicit engagement on the platform.)
Third-party platforms also create loyalty issues for journalistic organizations. In the past, audiences tended to go directly to trusted news sources to find information—that is, they actively sought it out. Today, audiences increasingly go to news aggregators like Apple News, or they wait for news to find them on social media platforms like Facebook, Twitter, and Reddit. As users are shown an array of news from a lot of different news brands, they begin to disassociate the content from the brand itself. Put another way, researchers have found that after reading a news story found on social media, less than half of people would remember the journalistic organization that published it—though they could remember which social media platform they used to find it. In contrast, 80% of people who found that same story on a journalistic organization’s website were able to remember who published it. In short, social media platforms end up receiving more of the credit for the content published by journalistic organizations than the journalistic organizations themselves—which, in turn, reduces the worth of the organization’s brand and the incentive to produce high-quality content to stand out in a crowded marketplace.
The massive size of these third-party platforms—Facebook alone counts billions of users worldwide—and their positions as intermediaries make it difficult for journalistic organizations to ignore them, and they are difficult to displace. Such platforms are subject to network effects in which a product or service becomes more useful as more people use it, creating conditions for monopolies or outsize power. Consequently, many journalistic organizations believe they must not only have a presence on those platforms but that they must engage with audiences there, too, even as such participation further tethers them to these platforms. Put differently, journalistic organizations are forced to weigh the short-term benefits of tapping into new audiences and remaining relevant against long-term concerns about continuing to cede control over their content, all the while participating in initiatives by platform owners that often do not provide clear benefits to the journalistic organization itself.
Third-party platforms refer to technical systems that mediate exchanges between content producers and consumers. This includes social media platforms like Facebook, search platforms like Google search, and ad-tech platforms like Google AdSense.
Although digital advertising has grown immensely over the past decade, it has not come close to replacing the revenue lost from non-digital advertising for most journalistic organizations. This is due in part to different pricing regimes and the ad-tech intermediary platforms that pervade online spaces.
Distributional intermediaries like Facebook and Apple News have benefited greatly from the economic benefits of news production yet bear little of its costs. They have also sought to reduce their media-related responsibilities by claiming to be neutral platforms rather than media companies.
Although these platforms have introduced many challenges to a range of journalistic organizations—especially non-digitally native organizations—those organizations have typically found the cost of non-participation to exceed those of participation.