In a Post-Advertising World, Who Runs the News? You.

The pivot to subscriptions is not just a necessity for publishers; it's a boon for readers.

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Good morning, members of the Medialyte Extended Universe, and welcome to another edition of the only newsletter that is a registered organ donor. Let’s get cracking.

On Thursday, Variety published a report detailing news from the headquarters of Vice, whose marketing arm has asked advertisers to review their policy on block-listing (we are no longer saying “black-listing,” f.y.i.) certain terms.

When advertisers add a word to their block-list, it means they refuse to advertise on pages that include that word. Generally, advertisers make these decisions to ensure “brand safety,” meaning they want to avoid readers drawing associations between their products and certain unsavory concepts. This is an understandable, if eye-rollingly dull exercise in capitalist tail-chasing, but marketers are going to market.

Vice, however, pointed to several brands’ decision to block-list words such as “Black Lives Matter,” “George Floyd,” “protests” and — in one case — “black people.” Because so much of the national discourse is currently situated around those concepts, when advertisers refuse to advertise on pages containing those words, they demonetize massive swaths of content. Case in point: Vice found that “content related to the death of George Floyd and resulting protests was monetized at a rate 57% lower than other news content.”

To say nothing about the moral implications of brands declining to associate their products with antiracist coverage, this tactic has dramatic implications for many publishers’ bottom lines. Reputable news organizations feel compelled to cover the pressing stories of our time, many of which currently center on race relations, yet in doing so they risk losing money.

Companies like Vice find themselves faced, then, with the unpleasant task of having to decide between continuing their coverage at a financial loss, or discontinuing that coverage in order to make ends meet. Given the financial pressures publishers continue to face due to declining ad revenues, the repugnant option of letting advertiser demands sway editorial coverage is less unlikely than you might think.

Do you decline to cover the latest protest become Proctor & Gamble will refuse to run ads alongside it? This is not an abstract Sophie’s Choice for publishers, but rather a real-life decision that they make dozens of times a day.

This reality is one of the reasons publishers are increasingly pivoting to reader-generated revenue sources, such as subscriptions. It’s not the main reason, by any stretch of the imagination, that publishers are putting up paywalls; the main reason, as we’ve discussed, is the evaporation of digital advertising for anyone not named Facebook or Google.

It is, though, a pertinent reason, and it speaks to an interesting shift in dynamics on the business side of the media industry. In short, in a business model whose main source of revenue comes from advertising, your real customers are your advertisers. For more than a century, the business schema of news media generally looked like this: Publishers attract an audience of readers through their content, then advertisers pay publishers to list their advertisements next to that content.

As a reader, you were essentially a proxy of exchange, a good bartered and sold. Publishers attracted you, and advertisers bought you. If you liked what you read, all the better! But publishers danced to the tune that advertisers whistled.

This system has pros and cons. Pro: Readers pay very little, because advertisers subsidized the cost of news production. Con: Publishers were pressured by advertisers to keep their content as neutral as reasonably possible, thereby attracting as large of an audience as reasonably possible.

(To be sure, the push and pull between editorial and advertising skewed much more in favor of publishers. That sense of revulsion you feel at the sight of sponsored content is universal. People don’t like feeling like they’re being marketed to, even if they constantly are.)

Now, though, with the rise of a subscription-based revenue model, that dynamic changes: You, dear reader, have become the paying customer, and therefore it is your opinion that matters most. Like Julia Roberts in “Pretty Woman,” now that you have the money, you have the agency.

But before you hit publishers with a “You work on commission right? Big mistake. Huge!” and flip news media the bird, consider this: Most journalists are much happier writing for a paying reader. As you might imagine, such a dynamic improves coverage in a number of ways.

For one, it makes coverage into much more of a two-way street. In a subscription-based business model, journalists serve readers and only readers. (Conversations about editorial obligation, i.e. “meat and veggies” reporting, notwithstanding.)

This relationship leads publishers to ask with much more frequency, “What do our readers want covered? What do they consider valuable information? How can we serve them in a way so critical that they will pay for that service?” These questions are the bedrock of a healthy news relationship.

It also eliminates the problems caused by block-listing terms. By removing advertisers from the equation, reader-revenue models give publishers more freedom to cover the news that their readers really want. Journalists can listen to reader feedback and look at user analytics to determine what subscribers want to read, and then produce more material in line with their desires.

It also dramatically diminishes the “don’t bite the hand that feeds” mentality that has always lingered in the back of editors’ minds. If one of your key advertisers gets caught in the midst of a scandal, do you cover it and risk losing revenue?

It sounds like a predicament plucked from a seedy noir-mystery novel, but it happens all the time. When Michael Bloomberg ran for president, his eponymous media company received orders to simply not cover his role in the election, as if that were possible. And just earlier this year, the editor-in-chief of The Hollywood Reporter resigned in protest when executives tampered with the publication’s coverage to avoid upsetting key business partners.

A subscription-based model circumvents these problems almost entirely.

Of course, there is a larger conversation to be had here about the impossibility of true objectivity in any coverage. So long as someone pays the bills, there is potential for a conflict of interest, whether that bill-payer is Proctor & Gamble, a non-profit think tank or your mom’s credit card. Both for-profit and not-for-profit media get their money from someone, and that someone would probably prefer to avoid negative coverage.

But that’s a topic for another article.

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Some good readin’

— This very cool interactive article from The New York Times detailing the spread of Covid-19 in the U.S. from its very beginning.

— Will next month’s boycott of Facebook ads finally sway the social giant to start policing its content? No, but do it anyway.

— In memory of Anthony Bourdain, whose birthday was Thursday, here is my favorite article about him. The ending might make you cry.

— The diversity problem in tech is hideous; Black executives hold just 2.7% of top roles.

— My new employer Business Insider has become the go-to source for the latest on the Bon Appétit drama, and it’s only getting juicier.


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