In this guest post, Con Frantzeskos (main photo), CEO and founder of global digital consultancy PENSO, says the federal government’s spat with google should be viewed more as an opportunity than a threat…
Will Australia lose Google search? When traditional news outlets in Australia decided to take on the search engine, Google said it would rather remove search from Australia than work with the media on a payment scheme.
The issue: Google leverages news stories from established media brands for most of the direct and indirect benefits – advertising revenue and readers’ user data. In response, media brands petitioned the Federal Government to work out a fair way to redistribute revenue. If Google was profiting from their work, publishers felt they deserved a cut. Google followed with an experiment where links from commercial news outlets were deprioritised to show the media how important the search platform was to their traffic. A Senate inquiry on the News Media Bargaining Code is currently being heard.
The Google versus media showdown seems to completely ignore users as anything more than potential revenue, reducing them to traffic, page views and data. News sites rely on upstream traffic from platforms such as Google and Facebook. According to Parse.ly, which tracks online media sites worldwide, more than 41% of referring traffic to news publishers comes from Google search or Facebook referral.
News publishers have made limited effort to grow direct traffic and internal traffic to decrease reliance on external referrers. Also, publishers have not adequately worked out a way to monetise the torrent of visits delivered by Google and Facebook. The revenue models for media sites are blunt: advertising and subscription, a digital duplication of the print model. For a long time, Google and Facebook were just another step in the traffic pipeline. It was only when the tech brands started monetising the content shared on their platforms that media companies began to question what their share of the revenue should be.
By innovating and considering the experience of the end-user this will help news companies thrive and remain relevant among the big tech giants of the world.
This threat is an opportunity
First of all, it’s clear that news companies need to innovate and innovate fast. Their revenue models have not kept up with digital transformation and that’s why Google’s threat to withdraw makes them nervous. On the upside, when was the last time we witnessed such a united front by Australia’s news organisations? This is the perfect opportunity for them to collaborate for mutual gain. Instead of joining forces to lobby the government, publishers should band together to find a solution to place their content in front of an audience outside of the Google-sphere.
Secondly, while outlets are fearful of what Google could remove, I believe we’re looking at it the wrong way. The users in all this, the readers, are nowhere to be seen. What are the users doing? What do readers want? What are the behaviours that indicate their preference? Most news consumers start the day unlocking their phones and glancing at the top stories or opening Facebook to catch shared stories in their feed: their news diet is curated, varied and subjective.
In an advertising model, websites often earn as little as a fraction of a cent per view and rely heavily on popular content and clickbait methods to drive traffic and cover expenses for more resource-heavy, less accessed journalism such as politics and foreign affairs.
Paywalls and subscription models are off-putting for readers. If a friend recommends an article, the potential reader encounters prompts to go through an extensive sign-up process, which discourages them from accessing even that single piece of content. If they are willing to pay, they are then forced to decide if they will pay for a subscription, which is more access than they need. Marketing science shows us that for all products, light and infrequent buyers make up the vast majority of users and revenues, and are also the source of all growth. In having subscription-only paywalls, infrequent readers cannot access quality journalism, leaving the outlet to rely on subscribers.
Micro-paywalls – perhaps five cents per news item and more for premium features or interviews – and a news wallet for the reader that covers a range of different outlets would solve both problems. A system of micropayments that allows people to read individual news articles across a range of different titles would serve both the end-user and the media outlet better than either an advertising model or a subscription model.
A few years ago, Australian fintech startup TapView started reaching out to media outlets with this very idea. Fearful of losing subscribers, paywalled news outlets were reluctant to get on board and the concept stalled. Perhaps this stoush with Google is the rallying cry it needs to incentivise collaboration across the brands.
A news wallet style system caters to the news consumer of today. In a digital environment where readers are no longer loyal to one newspaper, this is a way for those outlets to gain both readers and revenue for their work without having to negotiate with platforms like Google and Facebook for a slice of their profits.
This showdown is not actually about Google and Facebook versus the media, it’s about how the media can reach and monetise their potential and existing audiences in new ways. Organisations that lack imagination tend to turn to the government for help; the rest of us innovate our way out. What will you do?
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