If the recent numbers are any indication, there is a bloodbath in digital media this year. Publishers big and small are coming up short on advertising revenue, even if they are long on traffic.
The theory of digital publishing has long been that because people are spending more time reading and watching stories on the internet than other places, eventually the ad revenue would follow them from other media types. People now spend more than 5.5 hours a day with digital media, including three hours on their phones alone.
The theory wasn’t wrong. Ad dollars have followed eyeballs. In 2016, internet-ad revenue grew to almost $75 billion, pretty evenly split between ads that run on computers (desktop) and ads that run on phones (mobile). But advertising to people on computers is roughly at the level it was in 2013. That is to say, all the recent growth has been on mobile devices. And on mobile, Facebook and Google have eaten almost all that new pie. These two companies are making more and more money. Everyone else is trying to survive.
In a print newspaper or a broadcast television station, the content and the distribution of that content are integrated. The big tech platforms split this marriage, doing the distribution for most digital content through Google searches and the Facebook News Feed. And they’ve taken most of the money: They’ve “captured the value” of the content at the distribution level. Media companies have no real alternative, nor do they have competitive advertising products to the targeting and scale that Facebook and Google can offer. Facebook and Google need content, but it’s all fungible. The recap of a huge investigative blockbuster is just as valuable to Google News as an investigative blockbuster itself. The former might have taken months and costs tens of thousands of dollars, the latter a few hours and the cost of a young journalist’s time.