Traditional Media’s epic struggle with New Media

Regulating social media’s curation algorithms is symptomatic of Old Media’s demise

In a lecture delivered at the University of Cambridge, journalist Emily Bell called for regulation of social media platforms — specifically their curation algorithms — since they control free press distribution, which is critical, national infrastructure required for the maintenance of democracy. Ideologically, I understand her point and empathize with the plight of traditional media; but practically, digital’s curation algorithms are an iteration of print’s unregulated editor-in-chief.

Realistically, publishers’ modularization is no different than that of movie studios, who have been increasingly relegated to mere content production — licensing or selling distribution rights into other, specialized vendors along the supply chain.

First off, that analog (news publishers:movie producers) will prompt a number of retorts from journalism’s purists, so I’ll start by addressing a couple of them…

  1. Movie studios are producing mere entertainment, not free press
    I would agree: existentially, entertainment is a luxury item; news is a fundamental utility. As you would expect from a utility, core press coverage has been reduced to a thin margin business that’s been further commoditized by tech’s contributions to lowering the barrier-to-entry (e.g. citizen journalism/user-generated content). That’s exactly why a traditional media outlet cannot sustain an entire supply chain, and why there’s economically not a lot of room for competition. The core business of journalism is so capital intensive and so low margin that it doesn’t spin-off enough cash flow for reinvestment into downstream segments.
  2. Movie studios often sell the rights to their content, maintaining no downstream financial interest in it, which would have unintended consequences & misincentives for something as important as journalism
    I suppose someone might make that argument, but new media has already waded into substantially similar business models with sponsored content, promoted content, and native ads (concerns with which I already dispelled here). Furthermore, as with film production, publishers have a myriad of business models to pursue beyond advertorials — with suitability depending on the nature of their content. Some publishers produce ephemeral news; others yield evergreen content; some do highly-differentiated investigative reporting; others pump-out syndicated current events… and there are infinite shades of grey along the spectrum.
  3. Movie studios have multiple downstream platforms to sell-into (e.g. theaters and networks), maintaining a competitive market for their content relative to publishers being railroaded into Facebook’s monopsony
    Again, archetypal news content is a commodity. Compared to feature films, news is low barrier, low cost, high volume, and therefore low ASP. So, the prototypical movie studio and media publisher are different in this regard. As mentioned in #2 above, there are other genres of content production with different financial profiles, different distribution options, etc. Regardless, there’s an illusion of competition in traditional media anyway. That’s the great lie — the hidden-ball-trick that makes today’s media supply chain seem comparatively decentralized. 6 legacy companies control* a staggering 90% of legacy US media… but we’re going to complain about consolidation of distribution at the hands of Facebook, Twitter, Snapchat, Google, Apple, LinkedIn, Yahoo, et al?!

Journalism’s tired contempt for clickbait listicles is rooted in a number of biases. Take, for example, observational selection bias….

The BuzzFeeds of the world started as entertainment outfits. They were early adoptors in a blue ocean, a green field. They understood (or came to understand) social media distribution and virality.

From the outset, their clickbait was never a cog in the democratic process. It was never pitched or positioned as a medium to educate or inform readers on real issues, nor did it crowd-out the mindshare we budgeted for current events consumption. Clickbait never aroused the activist in us; rather, it simply entertained us. In such a way, we just reallocated the time we spent with other entertainment outlets (e.g. MTV) into clickbait-y listicles and their ilk.

In other words, from the first, BuzzFeed didn’t compete with The New York Times any more than Starbucks originally competed with The Capital Grille. Yet, while BuzzFeed was carving-out its slice of our entertainment time-budget, purists bemoaned the ‘intellectual bankruptcy of a nation & generation.’ The internet made listicles’ traffic so tangible and so substantial, whether relative to comps on other mediums or traditional media on the web.

In reality, entertainment has always had a large share of consumers’ attention. (That’s highly correlated with an improving standard of living, more so than it’s emblematic of an Idiocracy.) When a brand owns the lion’s share of consumers’ attention, it’s easier to expand into other, less trafficked verticals. In other words, if Buzzfeed already owns Entertainment (at 15% of consumers’ timeshare), then it’s almost inertial for them to commandeer News (only 4% of our daily attention span).

Dwarfing News, Entertainment owns a massive share of consumers’ attention

For what it’s worth, social media operates by the same imperialist strategy: it starts by garnering a massive share of our day, selling convenience as the value proposition to encourage an offline to online migration of our social interactions (22% timeshare); then it expands by serving us other verticals toward which we allocate less time, again playing the convenience card.

This intuitive theory also applies to the fleeting opportunity that remains for newspapers, who once cornered the market on consumer attention (which they still command, thanks to consolidation within parent companies*).

While the purists kept disregarding media 2.0, the BuzzFeeds of the world kept honing the art of virality. Eventually, BuzzFeed noticed that not only did virality’s principles apply to other media genres (like news), but incumbents also hadn’t adapted to or capitalized on the digital opportunity in any of their own verticals. So, whether those as simple as Business Insider or as calculating as BuzzFeed, up-start outfits walked-over and picked-up that idle marketshare.

Let’s digress and consider the dilemma incumbents faced. As incumbents, traditional media had an empire to maintain — from production to distribution to all of the economies of scale that vertical integration promised. For better or worse, legacy revenues (i.e. print) were capital intensive too.

Given such unique assets and high barriers-to-entry, why bother with innovation? Why lend credence to something like the internet, which rivals scarcity (that insulated the publishing industry) with abundance (that could infiltrate the industry)? Why submit to lower ASPs and ramp-up expenditures, cannibalizing margins from both ends?

In order to evolve, newspapers require an unprecedented overhaul of culture and personnel, which raises real existential questions. For example, what is an institution? Is it the name on the masthead, the people on the byline, the paperboy on his bike? Perhaps it’s a mission, but how can anyone assure the mission’s accomplished if there’s no continuity among those who carry the torch?

Accordingly, new media’s ascent is classic disruption. It’s also textbook business strategy for competing against an incumbent by modularizing and commoditizing him.

None of this is to say that demographic dynamics (i.e. Baby Boom and Millennials) weren’t a factor, and of course, consumer preference isn’t so homogenous as to be painted with such broad strokes. Nevertheless, the changes in consumers’ time allocations among verticals are marginal relative to the massive shift in the medium (online to offline). Traditional media wouldn’t be in such dire straits had they adapted to that shift, but such adaptation required some difficult, gut-wrenching decisions.

“Every really good, really experienced CEO I know shares one important characteristic: They tend to opt for the hard answer to organizational issues… Why? Because they’ve paid the price of management debt, and they would rather not do that again.”
— Ben Horowitz,
The Hard Thing about Hard Things: Building a Business When There Are No Easy Answers

In sum, listicles and journalism are not perfect substitutes, but they are competing for the same currency: consumers’ time. Regardless, the time consumers allocate to entertainment hasn’t spiked at the expense of news consumption; our entertainment budget has just been reallocated from offline to online. Same goes for our news consumption (and most other verticals).

Yet, traditional media resisted change, adapting to none of the new normal until it was too late and therefore missing-out on both the digital entertainment and news opportunities. Digital was neglected, and therefore digital verticals were inevitably usurped by the early-movers. These up-starts quickly expanded into different horizontals across the winner-take-all internet, while legacy incumbents clung to their vertical integration.

That’s why it’s convenient for legacy media to conflate blithe listicles and purposeful reporting as a means of disparaging their new competition: new media companies own the entire horizontal. You find listicles and documentaries under the same roof all the time now — much like the comics and editorials of yesteryear’s newspaper. It’s the holy grail, the only way to win a larger share of consumers’ time.

Back to the point…

Should Facebook’s curation algorithm be regulated? No, it should not be. Who knows what the future holds, but there’s no reason to regulate these algorithms right now.

You might regard tech platforms’ curation algorithms as fully-automatic (we’ll call this “strong-form” curation). Or, you might think the algorithms are semi-automatic, since humans have discretion over the factor inputs (“weak-form” curation). Or, at worst, you might even discount them as Mechanical Turks, because committees, engineers, or autocrats (?) like Mark Zuckerberg can manually manipulate what’s available for us to discover. But, even that third option — the worst case scenario — would equate media 2.0 with the traditional newspaper editor.

Coming from legacy media, these calls for regulation are hypocritical. We don’t regulate the curation of publishers’ human editors, who manually dictate what composes our media diet. (I have enough respect for traditional media’s integrity to not call its curation subjective, but it’s certainly more of an art than science.) These are self-regulating organizations, relying on a code-of-conduct. As a result, in Boston, you read either the Globe or the Herald, as each portrays the same news with its own bias and political partisanship — and feeding our confirmation biases make us feel warm and cozy. At worst, social media feeds our confirmation bias in the same way analog media always has. At best, algorithmic curation improves to balance our ideological digest with counterfactuals.

So, don’t campaign against new media under the guise of safeguarding democracy. Citizen journalism has unleashed a host of evils, like cyberbullying, misinformation, and noise; but those evils are overrun by the appreciable benefits. Social media and blogging have provided everyone a megaphone — a momentous historical fulcrum akin to the 15th century’s printing press. Such groundswells have massive, gross positive and negative consequences, but what may appear a small net benefit in the short term compounds into large social/economic surplus over the long term.

Furthermore, transparancy into algorithms’ factors will only engender gaming-the-system — something we’ve seen with SEO even though search engines’ algorithms aren’t publicly available.

Just like major newspapers before them, social media platforms are scale businesses with winner-take-all incentives. Movie production companies don’t treat the theaters and content distributors with nearly as much contempt as publishers do social media.

Disrupted journalism needs to stop biting the hands that feed. Trolling expends a lot of time and energy trying to hinder media 2.0's inertial growth (i.e. innovation), but that time and energy should be spent staking a claim in the new regime — or at least focusing on how to live alongside it.

I wrote this not to troll Emily Bell or traditional media. Rather, I wrote this because I’m a romantic who adores these institutions. I want to see them live-on, for so many reasons, but I fear that their resistance to change was life-threatening, and now their opposition to the changers is a death-sentence.

See also…

Today’s media doesn’t meet consumers’ wants and needs, so here’s a better way to listen, watch, and read: Annotote

“Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away...” 👉 http://annotote.launchrock.com

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