The digital news business is slowly falling apart across the world—because it simply doesn’t make money. In part one, we explain how the ad-supported model—which kept newspapers alive for decades—was destroyed. Part two looks at the consumers—and why so many of them won’t pay for oysters, i.e news.
Editor’s note: In India, news outlets exhaustively analyse every industry—except their own. Publications mysteriously shut down or go into hiatus (See Fiftytwo.in or The Signal) but no one talks about what’s happening—or why. We decided it’s time to change that.
How it all began…
Origin story: Digital journalism was born in the first dot com boom—back in 2000. At the time, it seemed revolutionary—threatening to upend the chokehold of what we now call ‘legacy’ media. In 2006, when Time magazine anointed “You” as its person of the year, celebrating the rise of Web 2.0: Editor Richard Stengel generously pronounced his own obsolescence:
These blogs and videos bring events to the rest of us in ways that are often more immediate and authentic than traditional media.. Journalists once had the exclusive province of taking people to places they’d never been. But now a mother in Baghdad with a videophone can let you see a roadside bombing or a patron in a nightclub can show you a racist rant by a famous comedian.
But Stengel didn’t or couldn’t see that the same internet would devastate print publications—destroyed not by ‘you’ but by upstart digital sites like BuzzFeed, Vice, and others. Even the New York Times teetered precariously on the edge back in 2008.
The new business model: No one worried about how these digital news sites would make money. Advertising moolah fled from print to digital—and online newsrooms were flush with VC funding. But soon there was a new disruptor in town: social media—specifically Facebook and Twitter—monopolising the most precious commodity: attention.
A new distribution model: Fear not! Social media promised to be an enabler not a destroyer—if news publishers did what Facebook said. In 2016, one of its top VP’s declared:
We’re seeing a year-on-year decline on text. We’re seeing a massive increase, as I’ve said, on both pictures and video. So I think, yeah, if I was having a bet, I would say: Video, video, video.
The Zuck predicted that in five years, people would only consume news on video. Newsrooms promptly hired entire video teams—and sacked reporters and editors.
But, but, but: It turns out Facebook was fudging its data—hiding it from publishers and advertisers. And then, the platform changed its algorithm to demote news—because it's, umm, a mood-killer. Fast forward to 2023, BuzzFeed and Vice filed for bankruptcy. The Zuck has entirely gone off on what he calls “political content”—making it almost invisible on news feeds.
Where we are now: The sinkhole of social media
About that ad revenue: There is no money where there is no traffic. And consumer eyeballs are trained mostly on social media platforms:
Remember the promised revolution? The rise of the independent digital publisher! Well, that didn’t work out after all. A recent YouGov survey found “digital magazine apps and online magazines attract fewer than two in ten global respondents (17% and 15% respectively). Even in individual markets neither of these mediums garner a high percentage of users.”
A rigged social media game: Go where the people are—isn’t that the favoured online business mantra? That’s why news publications dutifully upload posts and reels every day—in the delusional hope of attracting those ‘eyeballs’. But the Reuters annual Digital News Report suggests even that strategy may prove thankless:
Evidence that Facebook and others have been deprioritising news has been mounting over the last year. Parent company Meta has also been trying to counter the threat of TikTok – incentivising creators rather than journalists to use their platform. Meanwhile the turmoil at X (formerly Twitter), which included the removal of headlines from publisher posts – making it harder to distinguish them from other content sources – has sharply diminished its value as a source of intelligence and traffic.
This is the graph for Facebook over just one year:
This is what it looks like for X and Instagram—which never offered much by way of referrals:
And the winner is: Contrary to the fond hopes of publishers, money previously spent on print advertising and direct mail has not migrated to digital news sites. It is now being spent on search, social media, and online classifieds. Below is the chart of top companies that mop up nearly all of the display ad market. They are all tech companies—including social media platforms:
This should not be surprising, as Amanda Lotz points out in 360 Info. Internet companies are just way better in the ‘attention’ business:
[S]ocial media advertising allows them to target consumers more specifically... Unlike the business of newspapers and television, social media is an attention business that does not have the costs of creating the content that attracts attention. Its business model will always be more profitable than attention businesses that create or licence content.
The days of ad-funded news are never coming back—except news consumers don’t seem to have got the memo.
So let’s review: Most people consume news on social media platforms. Therefore, very few go to your news website—which means you don’t get much traffic or ad moolah. To make matters worse, social media platforms are now yanking news off their timelines. As a result, even your news posts and reels will get fewer eyeballs, as well. Not that it matters since the tech companies are making all the money off your deliciously sticky content—not you.
The bottomline: They say the definition of insanity is doing exactly the same thing—and expecting a different result. By that definition, many news organisations around the world are most certainly on the edge. In part two, we look at why news is like oysters—and how that affects the subscription business—the remaining lifeline of digital publications. Also: the good news about a way out of this very deep hole :)
Reading list
The Reuters Digital Report is very detailed. We suggest starting with the overview—and then digging deeper. Lotz in 360 Info lays out the brutal truth about advertising. The YouGov survey on digital news consumption is here. Nieman Lab has more on the Facebook video pivot—and how it affected the news industry. The Guardian explains the demise of Vice and BuzzFeed.
