Current States - Advertising, Attention and the News Media

I can not seem to get away from talking about the economics of the intersection between technology and media. On the train when I am on my phone I get articles sent to me on the topic. I get coffee with mates and we brainstormed ways to overcome it, but lets face it technology is the future and maintaining someone's attention IS money.

A lot of the information and functionality of the internet is free. Do not believe me? Think cloud storage, email and browsing software. Apart from paying your internet service provider for the access, most things on the web is pretty much free in the Western world. For the Western world this is great because a functioning and healthy society needs news media and investigative journalism which they can get through the internet. I do not think that this is a particularly novel idea nor a contentious one. But living in the world right now, without universal basic income, means that we need to pay people to do that journalistic work. Something that costs money - payscale currently says that an average journalist wage is 53k. The problem is to have a news networks means that you need to pay the journalists, then the accountants, lawyers and all other support staff; this is expensive.

I probably started becoming aware of the wider world and issues through VICE magazine. Whilst I do not read it any more it does have some love from me due to the nostalgia value. Recently though they expanded too fast and now are struggling with growth, leading to layoffs. At the point I was into it, VICE media was a behemoth and the other new media plays (Vox, Mashable, BuzzFeed) were meant to take out the incumbents (NYT, Washington Post & Fox). This was by appealing to millenials and being fully digital they should have had lower overheads. But looking back on it, the incumbents have seemed to win (only with consolidation though).

The answer probably lies in reputation and how people expect news media on the internet to be free. Firstly on the idea of free: people do not want to pay for things on the internet. We do not pay for email, social media and YouTube: we do not pay for lots of games (Fortnite anyone?) and so why would we want to pay for news media? This is the issue that news media is having; people do not want to pay for it, and even if they do they do not trust it. Whilst part of the trust issue can easily be thought of by the lies and manipulation of the media, the other part of the trust issue comes from them needing to game the attention of people - to sell ads. Ads make the internet work and pay for the services on the internet. Make no mistake, the reason that Foxtel is having trouble in Australia right now is that Stan and Netflix their biggest competitors do not have an ads based model they are content and subscription only, they do not need to sell eyeballs - although that leads to their own problems. They also got into the demand based streaming service business model before Foxtel. Netflix needs subscribers, like Foxtel, only they do not sell ads. A look at Foxtel right now shows that they are limiting and stopping ads especially on their premium sports channels. We are now expecting a more premium service across all mediums on the internet - ads feel cheap.

Let us quickly think about BuzzFeed. They perfected the listicle and the "clickbait" article. The licticle being a journalist article presented in a list and clickbait being content made to create clicks and links to it - to sell ads. We do not trust BuzzFeed because of those two features but with them it helps to draw eyeballs and ultimately advertising. The Financial Times and the Wall Street Journal can create a paywall that people will want to pay for to cross, but can a site like BuzzFeed? Maybe. What makes them popular is what makes them a poor news site as they have become entertainment and clickbait outlets. So we need to think about the media again, how can a news media company on the internet make money when the internet makes information free? I am not so sure and it seems others are not sure either. So we see a trend in consolidation for the industry. The economics of digital media show that online ads are not worth as much as the ones in the physical newspaper and we know physical circulation for a number of publications is falling.

To think more about the payment issue it is useful to think of the one-click buy button that Amazon has. The Amazon one-click buy button is an amazing piece of technology, and was actually patented. Generally the movement in consumer technology has been the taking away of the abstractions to get to simplicity. That is why the one-click buy is great. It takes away all steps to buying something on the Amazon webstore. The more steps you have to buying an item the more likely at each step you will start to regret the purchase and not complete the purchase. But in comparison to news media, for entertainment media and for products that are shipped to us we are happy to pay for it. So we do not want to pay for news media except in our attention. It is generally easy and free to have access to the news. Why would I press the support buttons at the bottom of The Guardian articles and go through that process.

Wikipedia citing Thomas Davenport and J. C. Beck defines the concept of the attention economy as:

Attention is focused mental engagement on a particular item of information. Items come into our awareness, we attend to a particular item, and then we decide whether to act (2001).

This is how the internet of media has been made. Amazon, Google and Facebook all sell ads that take our attention. The saying goes: if it is free the consumer is the product (although this is not really as black and white as it is made out to be). These giants have made us - the consumer - the products and sell our attention to their clients. This is not new information. This is what DRIVES news media. The selling of ads to the eyeballs to their websites. But ads alone cannot sustain the news media. The rise in adblocking software is unrelenting. Google's new versions of their browser Chrome will now have their own built-in adblocking software. Bad quality adverts, malware and better user experience is driving this trend. This is another big issue for news media. If it sells access for information behind a paywall it needs a strong reputation but many people will not want to pay for it. Possibly one of the harshest catch-22 in the modern world.

But this shows us why the one-click button is so powerful. In a world where we do not want to pay for services online, where we want design and user experience to be simple and seamless our attention is limited. Therefore any removal of steps is important. The news is no longer a good that needs to be sent to us, nor is it entertainment (link). They sell us information and that is not tangible, it is commoditized and feels like a chore to read. We do not want to give it our attention. We do not want to pay for it. This issue is driving all online media at the moment, but mostly news media.

The takeaway: you cannot rely on attention if you sell a commodity. You must always try to create a brand that people will pay for.