Missed our online kick-off? Recordings now available

The online kick-off of our research project was held on February 17th 2021. We have now published the recordings and a summary of the discussions concerning what it requires of news media and advertisers to reduce their dependency of Silicon Valley tech giants.

The speakers in the event were:

Lucy Küng

The kick-off started with an overview of the media landscape and its relationship with Silicon Valley, especially Google and Facebook, by professor Lucy Küng. In her presentation, “Publishers vs platforms: what is the smart strategic response?”, Küng pulled apart the competitive dynamics of this relationship and identified some strategic priorities for organizations.

Her main message for publishers was to take an offensive rather than defensive position. First of all, organizations must acknowledge the “facts of life” in a platform world:

Platforms are a gravity problem, they are here to stay.
They enjoy a growth dynamic and cost structure publishers will never share.
Social media is where the audiences are. Publishers need to find them there if they are to grow.
The platforms have set consumer expectations for product at a painfully high level. If publishers want to become significant in people’s lives as a digital product, those expectations have to be met.
Closeness to user is at a core of the platform business model – not so for publishers, who have always cherished a wall between commercial and journalistic editorial activities. This is a structural competitive disadvantage.
There is fundamental imbalance and will be regulatory intervention, but politicians’ agendas may not match the publishers’ needs.

But what does it require from publishers to play offense rather than defense and strengthen their position?

Sustainability is rooted in: creating journalism that meets needs that aren’t met elsewhere (absolute clarity on value proposition in an era of total information overload), diversifying revenue streams around that (classic advertising is in structural decline and focusing too much on that would build a structural weakness) and owning the customer relationship.
Ability to do this rests on new competencies: product, UX, data and distribution.
Platforms have fundamentally shifted competitive dynamics. Mass media have no meaningful scale and must bundle energies.
Internally, view all platform activities holistically – capture learning, find leverage.
Externally, collaborate with others. Publishers need to find a common agenda, have common demands and scope out a common way forward. Regulators need a viable solution too.

At the end of her presentation Küng emphasized that absent a strong unified voice and smart strategic agenda, the platforms will continue to capitalize on the vacuum and set the agenda.

A recording of professor Küng’s presentation will not be made available but you can download her newest book “Transformation Manifesto” which handles accelerating digital transition, for free from her website.

Petra Wikström

The Scandinavian media company Schibsted has for years tried to keep Silicon Valley at a distance. Schibsted has also been in a close dialogue with the EU commission. Schibsted’s director of public policy, Petra Wikström, talked in her presentation about the main problems Schibsted encounters with platforms and what kind of EU level regulation could help overcoming these issues.

One of the main issues is related to data and privacy in the Apple app store. When selling digital subscriptions through the app store, Schibsted must apply with Apple’s terms and conditions which are non-negotiable. This includes, for example, using Apple’s own payment system, which means that Schibsted can’t get data about people who buy their subscriptions. If Schibsted doesn’t comply with Apple’s rules, Apple can block their apps from the store.

“Apple actually takes over the customer relationship and we lose the relationship to our readers”, Wikström said.

Wikström also brought up problems with the online advertising chain and lack of transparency in it. Google is both the buyer and the seller of advertising, but also owns the main network that’s being used. The problem is that publishers don’t know what kind of fees are being applied in this network.

To reduce the dependency Schibsted has lobbied regulation on platforms. European Commission has issued two proposals for regulation: The Digital Services Act and The Digital Markets Act.

Of these two, The Digital Markets Act is especially important for Schibsted. The Digital markets act targets the largest online platforms that can be seen as gatekeepers in the markets, i.e. they are in between the business and its user. The proposal has a list of obligations for gatekeepers, and the Commission will also have the possibility to conduct market investigations to both update the obligations, but also to see whether there should be new gatekeepers designated. And there are sanctions up to 10% fines of the global turnover.

“We really look forward to the negotiations and hope that all member states will support this and that we can work constructively together with also politicians in the European Parliament to find a good proposal that then will help us in the future”, Wikström said.

Kasper Lindskow

What can media companies themselves do to reduce dependence on platforms? Kasper Lindskow, Head of Research and Innovation at Ekstra Bladet, a media brand in Danish JP/Politikens, shared what Ekstra Bladet has tried to do to break free.

In 2010s publishers have been in a situation, where they have lost control of most of the digital value chain to tech companies. The media industry has changed a lot, but publishers have changed adaptively, not strategically.

“We all have been a step behind trying to adapt to new developments instead of trying to shape them just a little bit”, Lindskow said.

The 2020s might and should be different for few reasons. Today publishers have a more realistic set of expectations to what the platforms are doing, and many have been disappointed in them. One driver for change is also that many publishers have realized that readers want to pay for content and at least bigger brands are succeeding in growing the reader revenue stream. Because of third-party platforms, users also have higher user expectations. Satisfying paying users requires publishers to innovate and create better user experiences on publishers’ own platforms. The final driver to change according to Lindskow are GDPR and new browser privacy standards that are eroding the third-party data paradigm that ruled the 2010s.

In Ekstra Bladet, they have tried to distance themselves from relying too much on the platforms. They have, for example, limited their investment in getting traffic from Facebook because the strategic dependence that it creates is too dangerous to rely on. Ekstra Bladet has also tried to offer alternatives to the tech giants in the advertising space by building platforms in collaboration among publishers in Denmark.

Thirdly, Ekstra Bladet is trying to take control of their own platform. Recently they have invested in taking back control of their own user data. They for example stopped using Google Analytics and instead built their own analytics and data collection tool. Finally, Ekstra Bladet is trying to take control over artificial intelligence and machine learning.

“It is a new area for us, but we believe it will be very important in the future, both for creating a competitive user experience, but also for creating competitive ad products”, Lindskow said.

Alexander Fanta

Alexander Fanta, journalist for Netzpolitik.org, addressed the economic relationships between publishers and platforms. He is the co-author of the study “Google, the media patron” (2020) published by the Otto Brenner foundation in Germany. The study deals with Google’s innovation funding for European media over the past years.

Google was the first tech company to directly address the innovation funding gap of news media in Europe, partly because they were accused of creating that funding gap in the first place. After French publishers had started to pressure French government to contemplate a new tax on digital advertising, Google set up a fund to help publishers pay for innovation projects in 2013. By the mid 2010, Google was under heavy regulatory pressure and they set up the Digital News Initiative. The DNI Fund and the initial fund in France became a template for all of Europe.

Later Facebook has started to emulate Google. In 2019, it set up the Facebook Journalism Project. They’ve promised $300 million in funding for financial grants training for journalists and partnerships with publishers and other organizations. During the coronavirus pandemic, the funding has increased, and now other big tech companies are also making noises about funding journalism. At the same time, the EU Commission is saying they want to start addressing the funding gap of news media in a meaningful way through various programs over the next few years.

Meanwhile, the pressure is mounting on the advertising business model, especially regarding the digital giants. Recently the European Commission opened preliminary investigation to assess the adtech business model. One line of questioning is whether Google and Facebook have a conflict of interest. Google especially is both an intermediary and a competitor on the online advertising market because it sells its own ad space while it tries to help publishers sell ad space on their websites. The European commission is also trying to bring transparency to the advertising market through the Digital Markets act.

“But of course the question is, is transparency really enough to address the problem? Or are there more structural remedies needed?” Fanta asks.

After all, Fanta whishes for more research on the economic relationship between the publishers and platforms.

“I think there’s a huge research gap on the economic relationship between the publishers and platforms, but also on what this means for press freedom. I think all aspects of that relationship deserve more scrutiny”, he said.

Riikka-Maria Lemminki

Riikka-Maria Lemminki, the managing director of Marketing Finland, gave an overview about what are the problems with technology companies from advertisers’ perspective.

Using social media is very appealing for advertisers due to low prices and wide reach, but it also has many pitfalls that concern advertisers.

According to Lemminki, one of the big issues is related to content circulating on different platforms. Advertisers are increasingly worried about what kind of content appears next to their ads on platforms. If advertising is placed next to fake news, for example, it could affect brand safety.

“Trust is a big issue in advertising and that’s why we want to be next to very high-quality content”, Lemminki said.

Besides that, advertisers are concerned about lack of transparency which is related to both data and money. Like many publishers, advertisers are also worried about how platforms use the data they collect. Lemminki also pointed out that advertisers don’t know how the advertising money is distributed and how much of it ends up to publishers.

To overcome these issues, some brands such as Unilever and Lego have already stopped advertising on social media, but is that enough, Lemminki asks.

Miapetra Kumpula-Natri

Finally, Miapetra Kumpula-Natri gave her comments on other speakers’ presentations. Kumpula-Natri is a Member of the European Parliament representing Finland and the S&D Group since 2014. She is the first vice-chair of the Special Committee on Artificial Intelligence in a Digital Age (AIDA) and commonly known in the parliament as ”Madame Roaming” and ”Digi-MEP”.

In addition to earlier mentioned Digital Services Act and Digital Markets Act Kumpula-Natri brought up the Data Act and the Copyright Act that could possibly help the publishers tackling the issued related to platforms.

Besides business-related issues, there are also concerns about how the power of platforms affects democracy and values. Questions like how to ensure that states, EU and local municipalities can reach the public when big tech companies work as gatekeepers and how algorithm-driven access to information affects the division of society are central.