Local News and Ad Industries Eye Sweeping Realignment With Users (Part 1)

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Digital audiences no longer have to go to news publishers to find their news. They can get it (and, better yet, comment on it) from their friends on Facebook. Audiences are empowered to say no to advertisers just as emphatically – by blocking out their messages with inexpensive and even free software.

Concerned especially about what it sees as a threat to the very existence of news publishing and its historical role in helping to make democracy work, the Reynolds Journalism Institute made a go-for-it move in the spring of 2015. It convened six “action call” meetings across the country from May to this month that brought together equally concerned representatives from publishing and the ad industry, whose messaging helps finance the cost of news.

Today and tomorrow, Street Fight is presenting the story of how this daring initiative went from talk to action, what proved crucial at the meetings, and what’s next. Here is part one.

(NOTE: The actual meetings were not public. The author reconstructed what happened at them through on-the-record interviews with RJI officials and with confidential documents whose public release was approved by them.)

In the wild and woolly world of digital, news publishers still act like the media kings they once were. They know their scepters are bent and their crowns askew, but they believe they still carry their Arthurian sword: high-quality editorial content.

The thinking is that the disrupters can pump out a firehose of curated, aggregated news, tweets and “likes” numbering in the millions, cute cats and other GIFs with pageviews in the same seven numbers. But the publishers know, and know that advertisers know that they know, that one of the most proven ways to ring up a digital sale is with an ad message from inventory that includes high-quality news.

Premium news builds trust between the user and the publisher, and this trust, experience shows, often gets conferred on adjacent ads. Publishers charge higher CPMs for this preferred placement. In an over-supplied content market, they don’t always get the price they want, but as more and more ads are targeted, news publishers are feeling more secure with their Excaliburs. They believe they can still repel the challenge that their disruptive competitors hurl at them.

But not everyone in news publishing shares this confidence. Throughout the industry and on its periphery – in buttoned-down and loose-collared corporations, entrepreneurial shops, foundations, associations, think tanks and academia – there are restless individuals who focus their brains on the future of news. By early 2015, they didn’t like what they thought they saw: “The Platforms,” (including Twitter, Google+, Instagram, Pinterest and, above all, Facebook) were becoming the new center of gravity in news publishing. The publishers’ Excaliburs were still formidably sharp, but now they were gravitating to The Platforms, where they would be beaten into… conversation pieces. The publishers would be left with empty scabbards.

Social media use by age group, Pew Research Center

One of the publishing futurists who is studying this unwelcome prospect is Dave Gehring, consultant to the digitally innovative London-based Guardian News & Media. At an April 2015 event sponsored by the Reynolds Journalism Institute at its headquarters in Columbia, Mo., Gehring talked about the special power of The Platforms, where news has morphed into conversations, millions of them, which stayed right where they were, far from the publishers’ home base. He said:

“The problem is that this engagement on platforms that we don’t own as publishers makes for a really tough business – because we don’t get to sell that inventory, we don’t get to leverage that inventory, we don’t get to know much about the audience that’s there.”

Its true that some of the people talking about news on Facebook or Twitter or other social platform do go on to the publishers’ sites, where the news originates. There are also the huge numbers of people who are sent to the sites by search and links. But, as Gehring said:

“When we get our audience from search and social channels … we don’t know much about that audience. We can’t monetize it very well. We can’t tell an advertiser this is the nature [of the user], this is the demographic, this is the psychographic, this is the location, so they’ll want to pay extra for the sake of being able to communicate with that audience.”

Gehring has special credibility because he spent three and a half years working at Google (primarily its YouTube subsidiary), one of The Platforms.

For Bill Densmore, a fellow at RJI who has a long career as an entrepreneurial news publisher in New England, what Gehring said summed up the publishing dilemma he had been worrying and writing about since the Internet began to take hold more than 20 years ago. The solution, Densmore has contended, will require far more than adding a lever here and tightening a bolt there. It will necessitate, he says, a total transformation of the news industry that will include new and more transparent and mutually beneficial relationships among publishers, users and advertisers. It can happen through what Densmore calls the “Information Trust Exchange.”

A nonprofit entity, the ITE would not get involved in producing the content it would provide, nor would it get involved in pricing ads whose CPMs might be based on user information it releases on behalf of users.

Densmore says the ITE would function somewhat like a credit-card network.  It would establish the rules and technology for exchanging the cost of the product or service charged, or help pay publishers or users for running ads – but wouldn’t set the price for anything, leaving that to the market.

For publishers, the ITE would be a friction-less system that monetizes every editorial article, video or other piece of editorial content. For users, it would let them buy this content as if they were in an editorial cafeteria — by the piece or, if they prefer, by subscription. For advertisers, it would give them access to the profiles and purchasing behavior of every user who became a member of the Exchange, provided he/she signed off on releasing the data.  Users could choose to release partial information or exclude some advertisers from obtaining their data.

“By creating an exchange that allows two-way payments in one service, we believe the marketplace will then find and value user persona information,” says Densmore. “You will be able to decide how much of your privacy you’re willing to surrender to in order to have customized advertising support the content you want.  Or you can pay directly for the content and maintain your privacy.  There is lots of conventional wisdom in Silicon Valley that says people won’t pay for content because they don’t care that advertising is targeted to them. The ITE can establish that value exchange once and for all.”

Besides being a win-win-win for publishers, advertisers and users, Densmore says, the ITE would “sustain the values, principles and purposes of journalism in a participatory democracy….Without an ITE, bundlers, aggregators and platform owners will become the dominant providers – and financial beneficiaries – of providing civic information to citizens. This wouldn’t be good for democracy.”

There would be many moving parts in the ITE, some of them highly technical, like how to transfer specific information across Internet networks and among all the parties (publishers, users, and advertisers). But when Densmore interviewed 85 experts in news publishing in 2014 and early 2015, the consensus was that the Exchange was a do-able proposition — journalistically, business-wise, and technologically. But the experts were generally doubtful that publishers and the advertising and marketing world were ready to move forward on a collective solution.

By early 2015, though, Densmore and his boss, RJI Executive Director Randy Picht, decided it was time for a bold move: “Whenever we thought we had a good handle on how to go forward, something would drop out of the sky and we’d have to go back to the drawing board,” Picht said. “We realized we needed more voices and more expertise.”

RJI sent out an “action call” to more than 100 key people in the news publishing industry – many of whom had participated in the 2014 survey – to move the ITE concept beyond circular talk to a decision point on whether to build a prototype of the ITE that would test all the moving parts in the disturbing “new landscape” that had been sketched out by Dave Gehring in the 2015 event at RJI.

The needle moves — to a key test meeting in Chicago.

Part 2 of this column will be published tomorrow.

Tom GrubisichTom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present, and future of Charleston, S.C.