Will established newspaper and magazine brands be helped or hindered by link-ups with Facebook and Apple?
The Internet era has not been kind to newspaper publishers. It has almost killed classified advertising, accelerated a decline in circulation and directed eyeballs towards a seemingly infinite supply of blogs, videos and websites.
But after more than a decade of struggling to keep up with disruptive technology, a glimmer of hope has brightened the pervading gloom in the industry. And with that hope comes the very source of so many of its woes: Silicon Valley.
Apple and Facebook have announced news services that could potentially create an important revenue stream for publishers, broaden their readership and - eventually - offer them a direct path to paying subscribers.
Facebook has enlisted nine publishers for its Instant Articles service, which has already launched in limited form in the United States with content from BuzzFeed, The Atlantic and The New York Times. (It plans to start the service in Europe soon.) Apple, meanwhile, has signed up dozens of publishers for Apple News - a Flipboard-style app which launches in the autumn - including The New York Times, The Guardian, The Economist and the Financial Times.
Given the industry's bruising experiences, it is perhaps natural that publishers have greeted the new services with a mixture of fear and optimism. Mr Mark Thompson, chief executive of The New York Times, points to the benefits of being able to provide its news content to a vast new audience. "We're talking about an opportunity to distribute your content at no charge at all to well over one billion people," he says. "(Facebook) has a larger population than the People's Republic of China."
But there are concerns that Apple News and Facebook Instant Articles - which are not paying for the content - will chip away at the notion of a newspaper or magazine website as a standalone brand to be digested whole, rather than broken up into individual stories and scattered across different apps. The services could "dilute (publisher) brands as destination sites and... boost the platform brand", says Mr Gordon Crovitz, a media adviser and former publisher of the Wall Street Journal.
Publishers have also privately voiced concerns about the power Apple and Facebook will wield and the potential harm the new aggregation services could cause to paid subscription models. Apple has told publishers its service will eventually include subscription capability and, like Facebook, has told them they will be able to keep all the advertising revenue they generate. But neither company has ruled out changing this arrangement in the future.
Facebook and Apple have a shared aim: increasing the amount of time their users spend on their services, which are increasingly being accessed via smartphones. Smartphones have become the dominant way to read news: this year will mark the first time that smartphones were responsible for 50 per cent of news consumption, up from 25 per cent in 2012, according to Mr Ken Doctor, an analyst with Newsonomics.
Almost a third of US adults read or watch news on Facebook, just under half the 64 per cent who use the social network, according to data from the Pew Research Centre published in September. This compares with 8 per cent of US adults who find their news on Twitter.
Driving Facebook and Apple's interest in news "is the arrival of the smartphone as the primary access point for many readers", he says. A publisher who has had negotiations with both companies puts it differently. Facebook and Apple have "finally woken up to the fact that news has value on mobile".
Two of the world's biggest technology companies identifying value in a sector written off by many other investors would normally be cause for celebration in an industry that has lately not had much to cheer about. In the US, combined newspaper advertising revenues from print and digital sources tumbled from close to US$50 billion in 2005 to US$20 billion last year, according to the Pew Research Centre. In that period, digital advertising revenues on newspaper websites increased from US$2 billion to just US$3.5 billion.
Circulation has not fared much better. In the US, audited circulation has fallen as much as 50 per cent for some large daily newspapers in cities such as Miami and San Francisco since 2005, according to data from the Alliance for Audited Media.
The picture is similarly bleak in the UK: The Sun, the biggest-selling UK newspaper, has lost one million readers since 2008, according to figures from the Audit Bureau of Circulation, while other tabloids and broadsheets are also selling fewer copies. In the past 12 months sales of daily UK newspapers fell 7.6 per cent to an average of a little more than seven million.
Most large-circulation dailies have introduced paywalls to replace revenues lost by falling print sales and advertising, but with limited success. The New York Times has close to one million digital-only subscriptions, for example, while the Wall Street Journal has amassed 724,000 paying digital readers.
But Tribune Publishing, which owns 10 daily titles, including the Los Angeles Times, Chicago Tribune and Baltimore Sun, had just 67,000 paying subscribers across its portfolio at the end of the first quarter, according to a company filing.
While publishers grapple with the transition to digital, appetite for online news is soaring on social media. The trend is epitomised by the growth of free sites such as BuzzFeed which specialise in viral content. "Search is less prevalent and social apps become much more prevalent in content discovery," says Mr Thompson.
For years, Google News "dominated outside discovery of news online", says Mr Doctor. Publishers chafed at its strength and market power but "now they have a new source of traffic" - Facebook Instant Articles and Apple News - "that has more promise of monetisation".
Other news apps, such as Flipboard, have failed to break out as a niche. Will Facebook and instant articles fare differently?
DEMAND FOR NEWS
Facebook is well established in referring its users to news sites. Google is the top referrer online and was the source of about 41 per cent of all Web traffic between January and February this year. But social media, led by Facebook, is eating into its lead, generating about 36 per cent of traffic referrals, according to Parse.ly, an analytics provider.
Almost a third of US adults read or watch news on Facebook, just under half the 64 per cent who use the social network, according to data from the Pew Research
Centre that was published in September. This compares with 8 per cent of US adults who find their news on Twitter.
Facebook wants to increase the time its users spend on the platform: news lures people back to its mobile app more frequently and encourages them to linger there for longer. However, stories that link away from its news feed to other sites take additional seconds to load. "People don't want to wait that long so a lot of people abandon news before it has even loaded," Mr Mark Zuckerberg, Facebook's chief executive, says.
Instant Articles was created to solve this problem. The format shows the whole article on Facebook's site, rather than directing the reader to the story within a mini-browser in the app.
"Each second counts," says Mr Michael Reckhow, Facebook's product manager for Instant Articles. "Speed is the most important feature you can deliver in a mobile experience." Facebook has the tools to make the articles load up to 10 times faster by simplifying the complex network requests, which news publishers do not have, he says. The new format also allows for more photos and interactive elements without reducing speed. "Facebook's users... are sharing more and more links to news articles."
Facebook has signed up nine publishers to Instant Articles; Apple has several dozen, ranging from The Economist, Politico and The Daily Telegraph to magazines such as GQ, Vanity Fair and Marie Claire. But not every publisher has jumped on board.
News Corp, which owns a large newspaper portfolio, including the Wall Street Journal, The Sun and The Times, has not signed up to either scheme. News Corp's chief executive Robert Thomson says the initiatives hark back to the "archaic AOL-style walled garden" of the Web 15 years ago.
Providing content to these news services could be damaging to the identity of News Corp's individual titles, he suggests.
"Egregious aggregation takes various forms and there is no perceptible purpose in allowing our identity and our yields to be drowned in a stream of content. Our journalism is outstanding and has a commercial value, so why would we allow that immense value to be undermined in formats that commodify content?"
Yet for other publishers, the prospect of reaching younger audiences - readers who may not be inclined to ever shell out for a digital subscription - trumps any doubts. "If you think that these digital users are unlikely to become subscribers the fact that you can monetise them through advertising becomes a victory in itself," says Mr Thompson of the New York Times.
The services should allow publishers to offer another dimension to their ad sales packages, according to Mr Doctor of Newsonomics. "If you are the New York Times and you do a deal with Ford and put together a US$400,000 campaign for them you can put the ads on NYTimes.com, you can put them in your news apps and now you can put it next to New York Times stories on Facebook. There's more distribution and a larger audience but (thanks to Facebook) that audience will be younger."
But there are other lingering worries for publishers. Technology companies are doing more than merely being a conduit and platform for news and advertising. They are encroaching on to the territory of newspapers and magazines by becoming journalism practitioners, hiring people to make editorial judgments about story selection and placement.
Apple recently began advertising for editors to work on Apple News, part of a push to offer the same kind of personalisation in news that it is striving for with its new Apple Music streaming service. A recent job ad said it sought journalists with "newsroom experience" able to "recognise original, compelling stories unlikely to be identified by algorithms".
Twitter, too, is hiring journalists. Its so-called Project Lightning, which is set to be launched in the autumn, will present the news that already floods the messaging platform in a way that makes it easier to find. The company is establishing its own editorial team to select the best 25 to 30 tweets on particular topics.
It is unclear how Facebook and Apple will set their own editorial policies: like Facebook, Apple has not yet clarified whether it would distribute stories about its own activities, for example. This raises important questions for publishers, says Ms Emily Bell, director of the Tow Centre for Digital Journalism at the Columbia School of Journalism in New York.
"Journalism has always had an independence of production and distribution," she says. "But we're moving away from that for the first time." Publishers are "becoming dependent on a power structure they should be reporting on".
It all adds up to a Faustian bargain for an industry that has few other options, she says. "There's nothing transparent about these platforms. But you don't have much of an option but to embrace them if you want to reach an audience and remain relevant."
A version of this article appeared in the print edition of The Straits Times on July 04, 2015, with the headline 'The future of news: Stop the presses'. Print Edition | Subscribe
We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused. Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs.