Just recently the News Media Alliance (formerly the Newspaper Association of America) announced a new push for relief from the antitrust laws for major publishers to negotiate collectively with digital giants Facebook and Google regarding the terms and conditions of the distribution of their content on those platforms. At the same time, Facebook announced its own plans to facilitate paid subscriptions to these major publishers through its platform. This coincidental (or not) timing demonstrates how much the legacy media crowd still must learn from its digital competition.
As a former Capitol Hill denizen, I’m hardly surprised or horrified by a major industry seeking favor with the government. And given the increasing vice-like financial pressures on newspaper publishers’ core business while demands for aggressive - and expensive - investigative journalism have never been greater, I am sympathetic to their enormous challenges. When 44% of Americans get their news from Facebook, and Facebook and Google consume over 70% of all digital advertising dollars (and virtually all growth in that space) the publishers’ prisoner’s dilemma is all too real: how do I beat these digital dominators when I depend on their audiences so heavily?
But publishers looking to the Trump Administration as a source of relief, amid the top-down jihad against legitimate news gathering, is at best misguided or at worst a ticket to a dangerous game of blackmail. Instead, I’d be doubling down on a combination of ruthless change and expedient cooperation that doesn’t depend on the benevolence of an undependable if not hostile political leadership.
The “antitrust laws” collectively refer to The Sherman Act of 1890 and the Clayton and Federal Trade Commission Acts of 1914. Their overarching purpose is to prevent impediments to economic competition whether in the form of inappropriate marketplace behavior (for example, price fixing or collusion among competitors) or mergers and acquisitions viewed as a potentially damaging to market competition. The fear of overweening market power helped drive the Obama Administration towards its all-but-official decision to oppose the merger of the largest cable company, Comcast, with the second-largest, Time Warner Cable (although Time Warner Cable was ultimately permitted to merge with #3, Charter Communications).
I wouldn’t count on a speedy resolution of this issue from the government. Blanket exemptions to the enforcement of the antitrust laws have been very rare in the 120 plus years of their existence, limited to labor unions (a decision still rued by conservatives), healthcare (carrying never-ending controversy), and sports leagues. Despite a general hostility to government regulation throughout the economy, the Trump Administration’s most prominent link with antitrust enforcement has been the allegation that it might consider using its antipathy towards Time Warner, Inc.-owned (as opposed to Time Warner Cable) CNN as leverage to undermine AT&T’s proposed purchase of Time Warner. Inc. Can you imagine the conversations seeking relief for The New York Times and The Washington Post right now?
In the meantime, Facebook, in the aftermath of a very serious antitrust fine from European Union regulators (although small compared to the whopper against Google), has offered a plan for major publishers to be able to turn Facebook readers of their content into paid subscribers. Through its Instant Articles platform users would be faced with a after they consume a certain number of articles – a very familiar model for The Times among other publishers. Publishers have been seeking this through Facebook for some time (without any antitrust exemption) and it should provide a means of driving more subscription revenue. But it will do relatively little on its own to boost advertising revenue for owned and operated publisher sites.
Publishers are strapped, but aren’t helpless in the absence of government assistance. Their innovation needs to come through pioneering new business models and relationships as much as it does through technological disruption.
They can invest in research to support a common set of success metrics that go beyond financial marketplace measures, and then adopt consistent best practices for implementing them. They can follow examples from other industries demonstrating the capacity for group action. The cable industry, notoriously bad at joint venturing, has flourished in part for decades by following the standard setting and innovations from Cable Labs. And FOX, Viacom and Turner, no strangers to brutal competition, have come together to create Open AP, a common framework of audience segments to facilitate advanced television buying across all their networks.
After decades of ruling local ad markets, publishers now need to explore local partnerships more aggressively with broadcasters, cable companies, academic institutions, foundations, and local businesses that all depend on a robust market for local services.
And finally, they’ve got to communicate their value in and to the marketplace more effectively. As my former NBC colleague Beth Comstock, longtime GE marketing guru, said recently at an advertising industry event, “You can’t sell it if you can’t tell it.” Bingo.
