Search

Awards
BioScience
Brand
Brexit
Careers
Consumer Trends & Insight
Corporate Reputation
Crisis
Culture
Digital Trends
Employee Engagement
Energy
Entertainment
Financial
General
General Election
Government Affairs
Health
Innovation
Life At Edelman
Media
News
Purpose
Sectors
Technology
Trust
Women In The World
Purpose
Influencer Marketing
Integrated Marketing
Digital Design
Brand Marketing
Healthcare
Film Production
Community Management
Media Relations
Experiential
Corporate Communications & Advisory
Brand Strategy
Energy
Data & Research
Financial Services

Search

18 November 2016

The media still matters, just not in the way we thought

Written by: Ed Williams, Chief Executive Officer, Vice Chairman Europe at Edelman

Media, Technology

I spent this morning in an aiport hangar in Farnborough. It was a rather unusual backdrop for Barclays’ biannual UK leadership meeting, but an apt setting for a discussion on disruption. I was joined onstage by the brilliant Georg Ell from Tesla.

This is what I said:

Much has been written about the apocalypse of the media industry.

Newspapers are dead.

TV is dead.

Radio is dead.

Professional journalism – ha, finished!

All of it replaced by a blur of peer-to-peer social media.

Arise the citizen journalist!

Tweeting.

Hashtagging.

Instagramming.

And other verbs describing people feverishly crouched over smartphones.

Well yes, up to a point …

Let me first make a slightly counter-intuitive point.

Despite, what you might think, there is a strong and upward demand for news and journalism. People search for it, consume it, share it.

According to Ofcom, nine in 10 adults say they follow news.

Television remains by far the most popular platform for news. 67% of UK adults say they use TV as a source of news. Over 40% of people in this country only consume news on television.

Analysis by the Reuters Institute for the Study of Journalism supports Ofcom’s findings that despite the growing role of social media and news aggregators, TV news remains king.

In the US, TV still commands the majority of the population – 57% get news via TV.

The mainstream is still where most of the public can be found. It’s called the mainstream media for a reason!

But how many times have you heard people say, you can’t charge for news?

Yesterday the New York Times reported that in the seven-day period since Election Day, it had a net increase of 41,000 paid subscriptions to its news products, both digital… and print. It is the largest one-week subscription increase since 2011.

High quality, global brands, like the New York Times, The Economist, The FT, are figuring out how to monetise their content. Niche, specialist titles like London Review of Books, or Bike Magazine, are successfully charging for access too.

And while social is reshaping how we consume news (and what we consume) we are linking through the ‘mainstream’. Click-throughs from sources like the BBC continue to trump the digital native brands like Huffington Post and Buzzfeed, by 3:1.

So don’t write off mainstream media.

That said… I do want to talk about four disruptive undercurrents that are reshaping the media sector. They are:

1. The end of the old economic media model

2. How relationships with consumers and brands are shaping content

3. The shift from destination to distributed content

4. And finally, mobile, and how it’s changing the game

So, economics

I remember talking to a very close friend of mine, Mark Thompson, before he joined the New York Times as CEO. We were discussing his utter lack of experience in the newspaper industry.

Here was a man who had never worked in newspapers, wasn’t steeped in hot metal and distribution, taking over the Gray Lady – one of the most respected and prestigious newspapers in the world.

Knowing nothing, we thought… was definitely an advantage!

Mark was joining an industry with a model under enormous pressure. Ravaged by the internet, circulation and advertising have been in freefall for the better part of a decade.

A cyclical downturn in advertising; free news services emerging online; digital advertising pennies to the declining analogue pounds, and on top, Google and Facebook were muscling in on the action.

In the first quarter of 2016, 85 cents of every new online ad dollar spent in the US went to Google and Facebook. In the UK Google and Facebook will pocket half of the total digital display advertising market this year – a little over £1bn. This was money that used to go to newspapers!

Four facts illustrate the problem:

  • Tesco, Britain’s largest retailer, said last year that it would no longer be advertising in print
  • National newspaper brands reported an 11% fall in ad spend to £1.2bn last year
  • MailOnline is the world’s most successful digital newspaper. It does not break even.
  • The Independent has abandoned print entirely

Newspapers couldn’t catch a break – and it’s about to get worse. Those who’ve relied on advertising alone are about to face their biggest foe yet – the ad-blocker.

One fifth of us in this country are using ad blockers (it’s considerably higher amongst the under 35s), and the number is set to rise as one in three plan to install one.

With an economic model that is severely under pressure cost-cutting has been the order of the day. The number of fulltime journalists in America has halved since 2000. The UK has faced similar though less dramatic cuts – shrinking by up to one-third between 2001 and 2010.

The media business used to be linear. You had content, distribution and audience. Behind the scenes you had a small group of publishers, producers and programming executives making editorial decisions, but the internet disrupted that model.

Countless digital platforms have popped up eliminating the distribution funnel. But what happens when you increase the supply of a good?

That’s right, prices fall – which makes it much harder for creators to finance their work. And when you don’t deal direct, how do you charge for what you produce?

Now, it’s not all doom and gloom. If you look there is evidence of successful new models emerging out of the creative destruction. I mentioned Mark Thompson and the New York Times.

Digital revenue is now 36% of their turnover – and last quarter the digital pie grew by a further 21%. 1.3m people are now paying full price for a digital subscription. And services like content marketing – i.e. making cool, engaging stuff for brands – are adding new revenue streams to the tune of $70m each year. Revenue that didn’t exist two years ago.

There are 300,000 people that pay for digital access to the Times crossword. The game is diversification – and it is kind of working, for them at least.

So while newspapers have had to radically reshape their models, their relationship with those who consume and those who fund has changed too.  

New relationships

Social media has become the great accelerator. We used to ask ourselves: “Will the right journalist run this story?” Now, we must ask “Will people share this story?”

Journalists too ask this question and that is changing the nature of their work.

Because pictures are more likely to be shared than words, media groups are hiring producers, designers and data journalists, to produce infographics, photosets and video.

The FT’s most-viewed stories are “explainer videos” and they are focusing their content budget on short-film as a result.

But because visual content is more expensive to produce, which means media brands are more likely to take content directly from brands or partner with them to fund content.

In some cases, we are seeing the old media gatekeepers losing their power as intermediaries and becoming aggregators – hoping to drive the right economies of scale by capturing, publishing and now sharing good content quickly.

In response, brands are inventing their own media models. For example, our client Manchester City FC realised years ago, that digital technology enabled them to replace their journalist-first approach to news and content distribution, with a fan-first approach.

Now, if Sky Sports News wants an interview with the chairman, they can lift it directly from the website at the same time that the fans see it.

And so far, the public seems relatively relaxed about the fact that companies are in some cases creating the content. Last year, for the first time, “a brand I use” overtook “a journalist” as a source of trusted information about a company.

Destination to Distribution

Alongside this disruption, we are seeing a shift in how people consume news content.

Reuters Institute research finds that media organisations’ ability to “curate the news” with their homepages or running orders is declining, as more people access individual stories directly via Facebook, Twitter and aggregators like Google.

In the United States, to take one example, the percentage of people saying they use social media as a source of news nearly doubled since 2013. One in 10 now say social media is their main source of news.

Facebook algorithms have prioritised breaking news, news-related videos, live streams, and other visual content. While publishers have been stepping up their efforts to publish native formats.

And the scary news for media companies?

More of us are happier to be served news by an algorithm than a news editor according to Reuters stats, and those of us under 35 are even less bothered.

So news editors’ authority is under threat and media brands are being diluted. We’re being served content based on our preferences and those of our friends – in other words content that supports our world view.

In this world, it’s much easier to dismiss arguments that you don’t like. You don’t have to tune them out, you just don’t go to the places where you might run into them.  The algorithms do the weeding out for you.

And they’re increasingly at risk of propagating misinformation masquerading as truth.  We’re easily duped because in the news feed on our phones, all stories look the same – whether they come from a credible source or not.

Mobile

Finally, the smartphone is supercharging all the change I have described.

It’s increasing the amount of news content we consume, and the degree to which we rely on social curation to learn about the world. In just three years in the UK, the frequency with which we consume news on a smartphone has leapt by 50%.

The smartphone is now the main device for the consumption of news for almost half of all 18-44 year olds – and that percentage is going up each year.

One interesting phenomenon is how smartphones are encouraging more frequent access to news and greater social sharing. Almost a fifth of those who use their smartphone as their main source of news say they access news more than 5x a day.

Heavy users of smartphones are also heavy consumers of news. And that could be a ray of light for media organisations as smartphone usage starts to dominate PC and tablets.

In the US it’s estimated that there is $11 billion of potential local advertising that will be unlocked by mobile. It turns out that mobile could in fact save the newspaper industry.

So there you have it. Four fundamental disruptions playing out across the media landscape.

So let me try and sum this up.

The media still matters. But not as we are used to thinking. In fact, the media is still the message, but not the message we – the liberal elite – want our fellow citizens to hear, in some cases.

Fake news, filter bubbles, a squeezed middle of mainstream media cutting everywhere leaving a vacuum for misinformation.

But amid all this swirling, broiling chaos, quality journalism is still having an impact. And crucially, is finding a way to monetise what it does best. But they need you to pay for it!!

For democracy to flourish we need the news industry to flourish too.

Please update your browser.

This website requires Chrome, Firefox, Safari or Internet Explorer 9+