Digital Essays 2017: Finding the money for publishers – by Michel Malkoun, chief operating officer, DMS

The question is not about whether or not to publish on platforms, but how to do so in a profitable, sustainable way that allows publishers to retain overall control of their strategies.

The objective of the publishers is to educate, inform, inspire, challenge and entertain.

Readers’ relationships with publishers have radically changed over the years. As platforms have made access to information seamless and everywhere at any time, the readers have expanded their exposure from one or two trusted sources of information to an always-on, always-connected relationship. Great news for readership in general, but not so much for individual publishers per se.

The concept of “verticalisation’’ to “horizontalisation’’ of media is becoming clearer and clearer. We no longer live in the TV ecosystem or the print ecosystem. Everything is converging, and what used to be a typical print player is now getting video money, and a typical radio player is now getting digital money, and so on.

As the whole media ecosystem is facing disruption and every player is re-thinking their business model, retaining a sense of focus and clarity is the biggest challenge for publishers to remain profitable. Publishers are reacting in different ways. Some have clear visions and others are experimenting.

Diversification of revenues is a must for publishers’ survival. An early attempt to defend against declining advertising revenues came in the form of paywalls. While a few exceptions among publishers made a successful model from this strategy, the majority couldn’t. Others have turned to creative solutions or native advertising. The recent development in publishers’ quests to find quality journalism is introducing micropayments, enabling readers to buy one or more pieces of content at a time without the need to commit to a full-on subscription. The challenge of adoption is scalability.

Publishers on their own cannot create scale, and if they remain alone they will not be able to compete with the big platforms.

So one of the strongest winning cards for publishers is their content card. The platforms realised quickly that in order to fight fakeness, increase attention time per article and keep the engagement high they need publisher content. At what cost would a publisher trade this card? What I have started seeing happening could cost publishers their raison d’être, and publishers could easily go down the slippery road of becoming production companies for the platforms.

Historically, though, platforms experiment, and if the content experiment fails in 2018 they could quickly move on and forget about these billion-dollar investments. So the big question is, where will publishers who sold their content soul to platforms be in 2019?

It wouldn’t surprise me if we start seeing historically competitive publishers coming in together and building cooperatives, where aggregation of content happens within the publishers’ ecosystem and not the platform ecosystem.

As advertisers start buying audiences and not content as a proxy for eyeballs, it will become the norm that publishers need to work together to create a competitive pool of data that drives the right content message to right audience.

Revenue streams from ad sales are no longer sizable enough for publishers to sustain their premium offerings. Therefore, they need to work together and diversify their revenue streams to reduce their high dependency on ad sales.

In advanced global markets such as the US and the UK, we are witnessing greater consolidation between publishers, who are coming together to get through this transformation. These consolidations could take on different forms, ranging from pure mergers and acquisitions to exclusive products and markets. This could include publishers within the ecosystem, or TV houses buying into print or the other way around, or a telco buying a TV network. Overall, this is a model we need to watch very closely to determine its potential benefits and applicability to our own market.

Developments in the US and France should give us a lot of inspiration, where Verizon bought AOL, AT&T is closing on Turner very soon, and Altice Telco has bought Teads and is moving to buying TV stations in Europe.

The need for multiple players in the new landscape is a must to bring back equilibrium to the game.

The scene has been polarised by platforms for so long that a lot of injustice has been created within the individual publishing world.

Big changes should happen at the highest level of the ecosystem, in order to create viable competing options for the publishers.

If this is to happen, opportunities will be abundant for the publishers, where the quest for cross-platform measurement becomes a reality as we will have the ability to link the data to a household single source. The real meaning of personalisa- tion becomes a reality fusing mobile data with interests and preferences, household income with purchasing power and intent.

Until then, publishers should resist sliding into losing their voice and becoming pure content producers to platforms, while staying profitable. Easier said than done.