For hundreds of years, publishers were successful and prosperous by having the highly desirable role that technology people call a “platform”.

They aggregated content from their journalists (who, by themselves, did not earn very much for producing content) with advertising from their ad customers (who paid a lot because they didn’t have much choice when it came to reaching their audience) into a single product bundle and sold it – usually for money – to their loyal readers.

In other words, newspaper publishers were the channel, they controlled and dominated the communication between journalists, readers and advertisers. This was highly profitable and the basis of all their businesses.

Overtaking the channel

So, why did not everybody become a publisher? It is very interesting to analyze (and often overlooked) what it took to enter this business. One of the biggest challenges was technology – the printing plant. It was highly complex and very expensive, requiring both knowledge and capital to build and operate it. Once someone in the industry told me that, historically, many newspapers were founded by printers – because they already had the printing plant and realized that publishing a newspaper could make them much more money than just printing for others.

So it shouldn’t come as a surprise that today’s technology behemoths (Google, Facebook, Amazon, Apple) had essentially the same idea: Instead of selling their new technology and knowledge to others (publishers) they created channels and platforms themselves, for much higher profits.

What they lacked was content. Of course the Internet is rich with other opportunities to acquire content: First of all, there were a lot more people now that could create content (though, on average, of a much lower quality). But Google and Facebook realized that they needed credibility, like the credibility of established brands like NYT and the Guardian – at least at the beginning, to attract more users to their newly established channels. So they wooed these publishers to become “partners”, delivering their content to them and/or “working together” in advertising. It was the beginning of what I once called ritual suicide on the side of the publishers.

The First Stroke: Google

The “partnership” in advertising worked particularly well for Google. Until today, hundreds of thousands of publishers install the “free” Google Analytics tool, to get reports on their web sites. What they don’t realize is that what they are getting in terms of reports is a tiny fraction of the data that Google really collects using these (voluntarily) inserted probes. Google’s success in the digital advertising business (60-80% global market share, a monopoly by all definitions) is based on user data: Exactly the kind of data that your Google Analytics probe (or Doubleclick ad, or Firebase SDK in your app) collects from your readers. The irony is that Google by now knows much, much more about the readers of a typical newspaper publisher than the publisher himself.

Using this attractive user data and segmentation, Google acquired more and more advertisers. Using the endless new advertising spaces of the Internet (millions of hungry web site owners), it started to drive the ad prices down (until today), acquiring even more advertisers and at the same time earning more and more money every year. The cost (or revenue) of a single ad is tiny compared to earlier days in print, and by now, traditional publishers are receiving a very small part of all ads.

So, Google took away the first pillar that was the base of the publisher’s business: Advertising.

The Second Stroke: Facebook

This still left the publishers with the second pillar of their business: Their loyal readers. Traditional web sites, even those with Google/Doubleclick ads, still constitute a direct relationship between the brand (publisher) and the reader. Until then, the reader still entered “nyt.com” into his web browser, and ideally is a paying customer of the publisher.

This changed with Facebook Instant Articles.

The effect of Instant Articles was one that technology strategists like Ben Thompson call “unbundling” and “modularization”. While the printed newspaper was a (physical) bundle of content and advertising, and the web site – while accessible via direct links – still constituted something similar in the digital space, Instant Articles changed this fundamentally.

With Instant Articles, the reader no longer needed to go to the web site (= bundle) of the publisher – he or she could read the articles directly in the Facebook App. While this may have a certain benefit for the user *), it is deadly for the publisher: By now, he is reduced to a company that delivers articles, like millions of others. Anybody can publish Instant Articles, and if the social network pushes them to sufficient attention (like, say, Breitbart), millions or even billions of people will read them. **)

Thus, Facebook practically took over the second pillar of publishers: Their readers.

Conclusion

This left publishers with a role that they should already have known is not profitable: Content producers. Content producers (like, the journalists that they employ) are not able to make a lot of money because they are highly exchangeable (“modularized”, to use Ben Thompson’s expression). In fact, if you were a good journalist today, it might be more profitable to build your own reputation on a social network and publish directly – i.e. what successful bloggers have been doing for a long time. ***)

Publishers are no longer needed.

This will be the bitter conclusion, in my opinion, if they would continue on this path.

But, in contrast to many people in the industry (“the mood on the last WAN-IFRA Expo felt like on a burial”) I do not feel the situation is hopeless. There is hope, if these connections are understood, and the latest reports indicate that it is at least slowly dawning on them.

I also believe that there are a lot of possible answers (some ideas I want to share here in this blog, so keep coming back), and while nobody will have a perfect recipe, there are many steps that one can take to fight the dominance of these companies.

Technology is one of them, and maybe the most important.

I’ll dedicate this blog to this and similar topics, and I hope you will like it.

Peter Resele is co-owner of COMYAN GmbH, a company that has been specializing in digital publishing software for the newspaper industry for more than 20 years.

*) While most analysts believe that FB Instant Articles is successful because it is a benefit for the reader, I believe that the reader in fact looses a lot: The context of the article that the publisher has created in the newspaper or on his web site (other relevant articles on the same subject) is often as valuable as the article itself. A bundle was particularly successful when it provided a lot more value than the sum of its parts.

**) One could say that established brands like NYT lead to more people using Facebook, who then also found fake news articles from Breitbart because the social network pushed them. In a crazy connection of history, this might have even helped Trump to win the election.

***) This doesn’t only include real experts like John Gruber (daringfireball.net) or Ben Thompson (stratechery.com) who almost certainly earn more than if working for a publisher (and have a lot more freedom). It also happens in what used to be called “Yellow Press” – and the successful YouTube and Instagram girls that are offering their makeup advice to millions of “followers” are a perfect example.

(This blog post was published first back in 2017. Recently, the discussion in social media has been taking a similar direction. So I decided to revive it.)