Overly dependent on programmatic display revenue?
When it comes to third party monetization solutions, publishers must look beyond the commoditized display ecosystem and future-proof themselves with new monetization opportunities that deliver results.
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Twilight of the open web
The open web has been synonymous with the internet since it became commercially viable. It’s a broad term that encompasses a set of protocols for how the web would function. But it was more than protocols; the open web embraced principles of openness, interoperability and decentralization.
The open web was meant to do away with analog media’s gatekeepers and give birth to an abundance of high-quality information and entertainment that would be freely accessible. The open web led to an explosion of media businesses of all sizes and stripes, from big VC-funded digital publishing groups to niche brands, an SEO cottage industry, arbitrage plays, and a weird underbelly of made-for-advertising sites.
Underpinning all of this were format (the webpage), distribution (search) and monetization (advertising). Now, all three are under threat. As Scott Rosenberg at Axios noted, “In six years, the web is likely to be unrecognizable.”
Open web advertising is under threat. Business models are destiny, and advertising was the default option for a system that prized openness and accessibility. With a few exceptions, the “information was meant to be free” mantra was taken as gospel. The takeover of the ad system by centralized platforms created a doom loop in which the open web turned into a cluttered mess of adversarial ad models dependent on ad targeting and data collection.
Web 2.0, originally welcomed as building on these principles, started to shift the balance of power away from the open internet and to what became known as the walled gardens. It turned out that advertising was more effective with a centralized approach that collected vast stores of data. Hate on the Lumascape all you want, but all those logos have long been a testament to the enduring vitality of the open web.
What’s more, open web advertising is hard and bound to get harder, as addressable audiences dwindle with the disappearance of the third-party cookie and other changes to the digital economy in the name of privacy.
The webpage is in retreat. The atomic unit of the open web has never been less important. Pageview business models are difficult to make work, particularly if you’re not an arbitrage play. The display ad market has always been viciously competitive, but look at the areas of growth on the web: connected TV and retail media. Neither of these are the open web. But the money following into these channels isn’t materializing out of thin air – and, apologies to Mary Meeker, there’s no gap left between time spent and budget spent.
AI is changing the nervous system of the open web, aka Google. The 10 blue links era is finally ending, and truth be told, it worked well for many publishers. Google collected its taxes on traffic it spread around. The weaknesses of display were somewhat covered with the affiliate programs. The social traffic craze has led some to forget that SEO has always been the work horse of many publishing business models. If you’re going to yoke yourself to an algorithm, Google’s was the most reliable. That’s over.
AI is poised to deliver a further blow to the open web, as it floods the web with infinite content, much of it complete crap, and Google is forced to adapt its search approach in ways that are hard to see will benefit the open web. What’s more, as we see with moves from Twitter and Reddit, the prevailing winds are for publishers and platforms to move away from anonymity and free access to authentication and subscriptions. More publishers will look to “protect” their content from bots and scraping, relying increasingly on paywalls and creating a doom loop in which the open web becomes an even more frustrating experience.
I still believe there are many pockets of opportunity for independent publishing, so long as it is focused, lean and backed with a diversified business model. The hope is what emerges from all of this will be smaller but more resilient models that “give us space to cool down and rediscover our niches and subcultures,” as Noah Smith writes.
On this week’s episode of the People vs Algorithms podcast, which should post later today or tomorrow morning, Troy, Alex and I discuss the fate of the open web and whether it will join other institutions that are under strain – and what it means for those in the media business who have cast their lots with the open web.
Lawyering up. The havoc AI could cause on publishing business models has not escaped those leading these businesses. That means the most powerful will look to extract concessions from the big tech companies powering these models. “There’s no publisher out there who isn’t talking about this, discussing what it means for their place on the internet.” (Vanity Fair)
The DEI rollback is underway. Economics tend to win in the end, and the yo-yo economic and social landscape is having an impact on the many pledges made in 2020.“Like it or not, people are moving lower down the funnel, looking for performance measurement and return on sales,” S4 CEO Martin Sorrell said this week. “Diversity and sustainability, sadly, takes a little bit of a back seat. Sadly, because of economic pressures which are huge. There’s a disconnect between what CEO say and how companies are behaving.” (Unmade)
Even talent is at risk. The independent path is not without its downsides, but work for big companies, no matter the level, will be precarious. ESPN is culling its high-priced on-camera talent. Bigger the salary, bigger the target. (Brobible)
The autonomy tax. Nate Silver is now on his own, and ticked off because the brand he’s personally synonymous with is already taking steps he disagrees with. (Silver Bulletin)
It’s about the interface, stupid. “Modern business history is really a story of interface companies exploiting interface dominance,” Troy writes. (People vs Algorithms)
BuzzFeed Inc unbundled. The bet on a rollup strategy was always something of a hail Mary. Complex is still a valuable asset, particularly with its franchises and ComplexCon. (The Information)
Media as a front. The best media business models remain those that are fronts for other businesses. This appears the path for Air Mail, which expects half its revenue to come from its shop selling absurdly expensive slippers and letter openers. (CJR)
Peak subscriptions. The Instagram comedians have seen enough: “I want the sweet release of death to take me away from subscriptions.” (Tom Fell)
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