"the short end of the stick"

Tuesday, May 12, 2020

In my evolving thinking about the press publishers right and the question if online information aggregators should somehow subsidise news media producers, one of the most difficult things to describe accurately is the nature of the shift of advertising business from media producers to aggregators. Describing this shift is easily misunderstod as an argument that aggregators are somehow ‘taking away’ ad-revenue from media creators. This is of course not what is happening (no business is entitled to revenue of whatever sort).

However the fact that advertisers have moved much of their business from media creators to aggregators is real and it is causing real problems for them. Over at Stratechery, Ben Thompson eloquently describes this dynamic:

This is the same idea behind nearly every large consumer-facing web service: Netflix, YouTube, Facebook, Google, etc. are all predicated on the idea that content is free to deliver, and consumers should have access to as much as possible. Of course how they monetize that convenience differs: Netflix has subscriptions, while Google, YouTube, and Facebook deliver ads (the latter two also leverage the fact that content is free to create). None of them, though, sell discrete digital goods. It just doesn’t make sense.

This model is pretty good for consumers: they get access to an abundance of content for a set price. It’s great for the Aggregators: because they have so many consumers, the suppliers of content are forced to accede to the Aggregator’s terms, even as Aggregators are best placed to serve advertisers. That is another way of saying that it is the individual content maker that is getting the short end of the stick.