Last week, News Corp announced a major content-licensing pact that will see it partner with artificial intelligence company OpenAI. The estimated $250 million five-year deal is predicted to profoundly impact the news publishing industry.
The deal will allow OpenAI to use content from News Corp’s extensive range of news publications, including archives, to answer users’ queries and train its technology.
In a note to his employees last Wednesday, News Corp chief executive Robert Thomson said the deal acknowledges the demand for premium journalism. “The digital age has been characterized by the dominance of distributors, often at the expense of creators, and many media companies have been swept away by a remorseless technological tide. The onus is now on us to make the most of this providential opportunity”.
But what does all of this mean for the Advertising industry? What are the benefits, and what is the risk to ad revenue if traffic is pulled away from publisher sites and onto OpenAI platforms?
A mutual benefit
According to Dr Rob Nicholls, senior research associate at the University of Sydney School of Media and Communications, Art, Communication and English, the deal appears to benefit both News Corp and Open AI and has the potential to impact both businesses. “The deal is similar to those struck by OpenAI with each of the Financial Times in the UK and Axel Spring, which publishes Politico.”
“The effect of the deal is that funds flow to News Corp without any additional costs to that business. It also resolves a potential copyright infringement lawsuit (which is the approach being taken by other media outlets),” Nicholls told B&T.
“From OpenAI’s perspective, it entrenches that the company’s position as a smaller Generative AI start-up will not be able to match this deal. It also improves the credibility of OpenAI outputs as journalist-generated content can be labelled and prioritised over material scraped from social media”.
The Future Of Content
Adam Krass, chief digital and data technology officer at UM Australia, told B&T that the deal represents a significant evolution in how content is valued and monetised, underscoring a broader shift away from a traditional advertising revenue model based on clicks and cookies to more direct compensation for content creators through licensing agreements.
“As digital advertising confronts the decline of third-party cookies, evidenced by studies like those conducted by Garrett Johnson and the ongoing evolution in ad targeting technology, publishers are seeking more sustainable revenue models. The ineffectiveness of traditional click-based attribution, which often fails to capture the true impact of various advertising channels, further complicates revenue generation in a cookie-less world. This has led to a search for more reliable metrics and methods that can better capture the real value provided by content creators,” Krass said.
According to Krass, the deal has the potential to pioneer a new revenue model where content creators are directly compensated for AI technologies’ use of their content. As the role of AI in search evolves, the focus shifts from generating clicks to providing direct answers, reducing the reliance on clicking through multiple links—this can be seen in AI integrations across platforms like Google and Bing.
“The transformation of search engines and the growth of AI-first platforms like Perplexity AI demonstrate a market shift towards delivering immediate, concise, and directly useful information to consumers, bypassing traditional search result listings. This shift reduces the utility of click-based metrics for measuring the value of online content, making direct deals between News Corp and OpenAI more attractive and potentially more lucrative for content providers,” Krass told B&T.
“The move by News Corp could serve as a model for other publishers, pointing towards a future where the value of digital content is recognised through direct compensation, aligning monetisation strategies more closely with the evolving capabilities and roles of AI in digital consumption and search. However, we, as consumers, should have concerns about the smaller independent content creators and publishers. There’s a risk that their ability to deliver diverse and meaningful ideas could be compromised in a landscape dominated by major players. This underscores the need for careful consideration of how such models affect the broader ecosystem of content creation”.
For Kellyn Coetzee, national head of AI and insights at Kinesso, there is a huge opportunity for publications that are “barely sustained by the current ad model”. “With major AI companies buying up large publications, Bezos, these AI giants may inadvertently save journalism, albeit at the social cost of owning the narrative,” she told B&T.
The Risk
According to Nicholls, there is a risk that the partnership will see News Corp content aggregated by OpenAI and ultimately reduce advertising revenue. Still, the extent of this is currently unknown. “It is likely that there will be a delay between any story being published by News and it being available to OpenAI. That is, News Corp has almost certainly provided access to the archive rather than the news. The delay between the two may only be a matter of a few days”.
For Coetzee, fewer clicks to sites is not new, but it is something brands have been dealing with since 2020, with the introduction of Google zero-click formats, answer boxes, and feature snippets. “In the face of SGE (Search generative Experience, or overview as Google is calling it), we will see a far greater impact to traffic to a site from 20 per cent to 60 per cent drops,” Coetzee said.
Despite this, Coetzee believes that brands need to pay attention to the deal’s far-reaching implications. “This deal will enable Open AI to confidently step into the search arena and pose a legitimate threat to the likes of Google and Perplexity,” she said.
“In the background to all this, Open AI is also working on tools that help identify content created by AI, which is a symbiotic gesture for both publishers and major AI companies alike and getting us ready for what comes next, which is Open AI’s very own big step in to search arena,” she said.
