Publishing Economics: Facebook, European Expansion, Ad Blocking

Analyzing the latest publishing economics, with news from Business Insider and a very interesting new entry for print magazines

The volatility of publishing economics will be mitigated with a multiplatform strategy built on repeatable best practices. That is one of our core principles, and a big part of what the Mequoda Method is built on.

Still, it’s worth it to monitor the trends priming the pump of publishing economics, and Digiday certainly has us covered in that department this week. Let’s take a look at a few of their latest articles!


Magazines Must Get a Grip on Publishing Economics, Says One CEO

Do the challenges facing media companies come down to a lack of understanding of publishing economics? According to Cheat Sheet CEO and co-founder Damien Hoffman, the answer might be yes, as he explains in an interview with Digiday.

“Let’s get some perspective because sometimes the digital world needs an ol’ fashion analog analogy to wake up from the Matrix: Collectively spending millions of dollars to produce free videos for Facebook (or any platform) is the equivalent of wholesalers or manufacturers giving Amazon or Walmart free products,” Hoffman writes.

“In which universe does this make any business sense? Only the one where VCs and strategic investors with FOMO are subsidizing the costs, then spreading FOMO to publishers who are not receiving this form of welfare, who then keep the flywheel spinning for the platforms’ cash flow statements. Therefore, technically speaking from a financial perspective, Facebook Video is reallocating capital from pension funds and institutional investors to Facebook’s balance sheet, where VCs, strategic investors and publishers play the role of conduits. Let’s be clear: We can’t blame Facebook. Mark Zuckerberg and his braintrust are tasked with figuring out ways to best monetize their assets. So, why should they do anything differently if publishers are willing to supply free content via the crowdsource model? Facebook is merely shrugging its shoulders and saying, “Well, if you don’t care about unit economics, sounds good to us!”


Publishers’ International Aims Reflected in Business Insider Expansion

U.S.-based but Axel Springer-owned Business Insider is pursuing an aggressive European expansion, Digiday reports.

“A lot has changed in the 18 months since Business Insider made its 2014 U.K. debut. The U.S.-based digital media company has seen its U.K. traffic grow from 2 million monthly uniques to more than 5 million monthly readers, according to comScore. It beefed up its London staff from 11 to 35 people and generated “triple-digit growth” in advertising revenue. Oh, and the publisher was also bought by German digital media powerhouse Axel Springer for $343 million (£235m) — a deal which has since prized open the door to further aggressive pan-Europe expansion,” Jessica Davies writes.

“Business Insider makes most of its money from advertising, but like all publishers, it’s diversifying revenue streams. So far, that has come in the form of its subscriptions-based research unit BI Intelligence, which has been exported to the U.K. It costs $2,495 (£1,707) to access BI Intelligence currently for a year.”

To Block Ad Blockers Is a Delicate Art: Here’s Why

Confronting readers with the realities of ad blocking programs is an action item for digital publishers, but how to go about it? Digiday has a great piece on the subject.

“Lots of anti-ad-blocking pop-ups read more like a publisher acknowledging defeat than anything persuasive,” said Matt Paddock, general manager at agency Grow.

“I’d like to see publishers go further and show a totally honest message that says, ‘While we’re finding other ways to make money, we need to ask for some of yours.'”

Facebook’s Impact on Publishing Economics, Via a Digiday Story in … Print?

Digiday, the authority on all things digital, is now producing a print magazine. Pulse’s first cover story? How publishers are faring in the era of Facebook dominance.

“It may seem like a honeymoon period for publishers, as Facebook and other platforms seem to be more attentive to their requests lately. Snapchat has made it easier for publishers to get exposure to their brands there. Facebook has created more avenues for publishers to sell advertising on Instant Articles. Apple has put promotional muscle behind its news aggregation app, Apple News. But for all that, publishers still are making a lot of content for platforms with uncertain payoff. Facebook still doesn’t have a business model by which publishers can monetize their video there,” Lucia Moses writes.

“Sure, by publishing their stories as Instant Articles, publishers get to give readers a clean, fast-loading experience, which theoretically improves the chances they’ll come back. But in addition to the fact that Facebook controls the ad terms, publishers get scant information about their readers on the platform, such as how much time they’re spending with articles and what sites they visited previously. But they probably have little choice. All this is happening against a backdrop of uncertainty about how publishers — traditional and new ones — will fund their editorial operations at a time of declining digital ad rates. Publishers are rightfully trying to offset their dependence on advertising with e-commerce, subscription revenue and events, but few publishers have been able to make those meaningful sources of revenue. No wonder publishers see no choice but to submit themselves to the platforms.”

Are your publishing economics adding up? Tell us about any challenges you’re facing in the comments!

To read more about publishing economics and other industry news, visit Digiday.


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