Another blog post that won’t make any money
It’s been a strange and daunting decade for print journalism — it’s now an even stranger time for web journalism. We’ve become accustomed to reading headlines like BuzzFeed’s recent $19 million fund raising, followed by news of buyouts for veterans at the New York Times. This kind of zero sum flow of media resources from print old guard to the young online folks has started to feel inevitable — it’s not even clear that media reporters still care about the NYT.
All of this would be more comforting if the media business were headed to some cushy new world. Evangelists have long held up the web as the savior of the news business, the future of TV and the ideal for the self-expression business. They could be right. But all that digital triumphalism ignores web media’s basic economic dilemma: we’re simply producing far too much of it than is economically justified.
The dirty secret about the web media business is that there’s a massive oversupply problem. Everyday, content creators are producing more journalism, more think-pieces, more interactive graphics, more photo galleries, more tweets, more slideshows, more videos, more GIFs, and more deviously socially-optimized Corgi listicles. All of that is being distributed via more channels on more devices. This creates more supply for display ads, web media’s favorite and still growing revenue generator. All that supply, however, drags down ad prices.
In a November report titled “The Share of Time Versus the Share of Ad Spend Fallacy” Bernstein Research’s Todd Juenger laid out this conundrum. The share of time we spend online has increased by nearly 40 percent in the last 3 years. Meanwhile ads, measured in the CPMs, or the cost of a thousand views, are getting cheaper. Here’s Juenger:
Internet publishers (including social media services) continue to add inventory faster than marketers can use it. Every time Facebook introduces some new form of advertising unit, it adds billions of new impressions of supply. Unless ad demand keeps up with supply, CPMs will fall even further
Things are even worse when you factor in the booming mobile web. Jason Del Rey reported last year that mobile traffic is soaring for online publishers, while mobile ads are being sold for a fraction of the price of typical online ads. This is all, as Frederic Filloux put it, “economically absurd: in a ‘normal’ world, when audiences rise, advertising reaches more people and, as a result, rates rise.” Juenger puts it this way: web ad dollars are simply “a function of marketer demand”, not the amount of time we spend on the web.
How is the media business dealing with this supply problem? There are a few newish approaches. You can, as BuzzFeed is trying to do, build ads that people actually seem to like — which, as Tom Gara wrote, makes it a bit of a “people-heavy, old school” business. BuzzFeed’s strategy is a bit like the so-called native-ads that recently got the Atlantic in trouble running a glowing op-ed about Scientology.
Or you could mimic the structure of Facebook, Tumblr and Twitter and change the elemental unit of publishing from pages to streams, as Anil Dash has suggested. Ads, in this case, appear on streams of content, rather than on static web pages. (Reuters is maybe, possibly trying something similar, perhaps coming soon). Then, of course, you could simply charge people to see your content. This has worked better than anyone expected for the New York Times, where subscription revenue, including print, is now higher than ad revenue.
None of these seem particularly likely to solve the core problem that a wide swath of media — journalism included — is becoming less and less valuable as the Internet gets bigger. (Gawker’s move to blend its content with an e-commerce platform, where posts are a delivery system for links to products, seems like it could help reverse this. With the help of this “commerce journalism” revenue, Gawker’s collection of sites is reportedly surging).
But if you’re working in media now you shouldn’t be worried about getting your website to hit 20 or 30 million uniques — if ad rates continue to fall, even websites of that size may not be economically viable. Instead, media companies should be doing everything they can can to improve the economic value of their work (which may not mean more pageviews).
For those of us actually working in web journalism, this adds yet on another layer of existential angst. Journalists certainly shouldn’t spend their time worrying about how to make their articles more attractive to advertisers.
Falling online ad rates, at least, in theory, have an upside: all of this could mean that traffic for traffic’s sake isn’t a particularly good way to build a successful online media company. (Though it probably won’t mean, as Will Leitch put it, the end of “the tyranny of stupid popular things”). More isn’t really more anymore; churning out another slideshow certainly won’t help.