LMC’s Coats Not Bullish on ‘Information Trust Exchange’ to Monetize Content
In this space, I recently looked into plans by publishers to try and dramatically reshape their relationship with audiences and advertisers (here and here) in the form of an Informational Trust Exchange.
After mulling over this plan for a bit, I went to Rusty Coats, executive director of the Local Media Consortium, to see if he thought the key players would buy into such a realignment. If the concept has any chance of succeeding, it has to win support from at least a good-sized share of “legacy” publishers, many of whom are members of the LMC. Proponents of the ITE says it will rescue publishers from “The Platforms” — Facebook, et al — who they say take publishers’ content as fodder for millions of daily conversations, which then remain on the platform, depriving the publishers of audiences and ad revenue. The ITE says its plans would benefit advertisers, too, by giving them much more detailed, but privacy-protected information about readers they want to talk with as consumers.
My questions for Coats and his blunt answers:
Does the prototype ITE point the way to a realignment of the news publishing and ad industries with users that would better serve all three parties?
No. The ITE, as described, indicates a misunderstanding of user behavior both present and past. It is not likely that a significant portion of the advertising community will have any interest in supporting the initiative, because advertising will go where the users go. In order to survive, the news publishing industry needs to do the same. Attempts to force users into a construct for which the users have shown no interest are doomed to failure.
Even so, do you see any value in the LMC getting involved in development of the ITE prototype in an attempt to make it better serve the interests of your members?
No. The prototype would almost certainly be technically challenging and operationally brittle. The likely cost would far outweigh any possible or imagined benefit.
So, the ITE concept is not, in any shape or form, a desirable solution for rebuilding long-term publishing-advertiser-user relationships?
No. It is a bit like making efficiency improvements to a steam car in hope of competing with Tesla.
News publishers have to do something to ensure they’ll survive for the “next hundred years,” as one participant in the ITE talks put it. It’s not just the platforms that are putting pressure on them. The new Borrell “Benchmarking Local Digital Media” report finds that newspapers, which used to own their local markets, now get only 7% of local digital revenue in large markets. This is the breakout:
“Pureplays,” most of which weren’t even in existence 15 years ago, control 45% of local digital revenue in large markets. At the same time, newspapers continue to lose revenue from their print versions.
Unless newspapers find a steady and reliable source of revenue, they will go out of business. Two major chains have been going in and out of bankruptcy, and some other chains that are public companies are seeing their stock traded for a dollar and change a share.
Under the deterministic business philosophy of “creative destruction,” newspapers would be replaced by more digitally agile publishers — the pureplays, who already scoop up the biggest share of local revenue in the space. That’s fine, but the Yelp’s restaurant reviews, Craiglists’ want-ads and Groupon’s deals, aren’t intended to make democracy work better. That’s been the job of newspapers for more than 200 years. They don’t always do their job that well, but their disruptors — the news pureplays — don’t have the resources to be adequate replacements.
The ITE is not a would-be “improvement” on the steam car. The blueprints I’ve seen for the network consist of complex interfaces that would blow most minds. But the network between publishers, advertisers and their audiences is not a Rube Goldberg-like contraption. The technologists who have torn the concept apart in ITE task meetings says it’s feasible to be deployed to create a network where every piece of editorial content in cyberspace is monetized. No longer would newspapers be so dependent on advertising. The new system of pricing content by the piece would encourage publishers to put out the best work they can commission. It’s true that some readers want fluffy stuff, but others want a more balanced menu that might include stories about the safety of their water supply, the persistence of racial disparities, the quality of their children’s education. If serious readers have to do nothing more than click on a URL to purchase an article (and get instantaneously charged, say, 50 cents or a $1), they are likely to do it.
The ITE would not be an exclusive deal for newspapers. Entrepreneurial pureplays could monetize their editorial content too.
Coats sounds adamant in his opposition to the ITE. But the newspapers who are members of the Local Media Consortium can’t exist forever with a 7% revenue share in their markets. If they don’t develop a better way to monetize their produce, it’s they who will go the way of the steam car.
Tom 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.