Third-Party Platforms


Today’s journalism environment is deeply influenced by third-party platforms, or technical systems that mediate exchanges between content producers and consumers. Those platforms have significantly altered how news is monetized, distributed, and engaged with, and have consequently disrupted key financial support mechanisms for journalism in market-oriented media systems around the world.

Many journalistic organizations have experienced what may appear to be a paradox at first sight: They now have access to a far larger potential audience than ever before through their digital distribution channels — and, in fact, often have more readers, viewers, and listeners than ever before — yet they have seen a drastic reduction in advertising revenue.

The reason for this is two-fold. The first reason is that the cost for placing an advertisement on an organization’s digital offerings is exponentially lower than the cost for placing an advertisement on that same organization’s analogue offerings. Put another way, it is a lot cheaper to place an ad on the Daily Hampshire Gazette’s website than it is to place that same ad on its newspaper. This is due in part to the fact that online audiences have historically been seen as less valuable by producers and advertisers alike. However, it is also due to the increased supply of content online. If an advertiser wants to reach a particular kind of audience offline, they have a far more limited set of media vehicles — such as the lone newspaper for an entire county and the few broadcast channels that cover that area. Conversely, there is a seemingly limitless supply of media vehicles online, such as the billions of websites that exist.

The second reason is that much of today’s advertising is managed through third-party platforms that not only govern pricing but also take a hefty cut. For example, if UMass wanted to promote its excellent Journalism Department to an international audience, it might work directly with The Japan Times to publish an advertisement in its newspaper. However, if UMass wanted to advertise on The Japan Times’ website, it may need to work with an intermediary like Google’s AdSense, which might handle all of the online advertising for The Japan Times (as well as for millions of other websites).

This is the case for many journalistic organizations today, and it comes with many implications. The most important of these is that there is downward pressure to keep ad rates low online. Specifically, UMass may reason that its goal is to reach people outside the U.S. who are interested in journalism — and it may not care if those people are found on The Japan Times‘s website or elsewhere on the web. Thus, they will use an ad-tech intermediary (like Google’s AdSense) to target their ad to a certain demographic and set a maximum price. Google’s AdSense may then allow any website visited by any user matching that demographic — based on a profile that the ad-tech company has created from different data points — to show UMass’ ad so long as a website accepts UMass’ pricing limits. (Ad-tech systems do allow for black-listing, too. This means that some websites are not eligible to show an ad if they contain certain keywords. While this is usually restricted to offensive language, it can be extended to sensitive topics, like human rights abuses. That, in turn, may discourage the production of news stories about those topics.)

All of those decisions are made by automated systems in microseconds through what is called programmatic advertising, and it often results in lower ad prices because a rational advertiser will seek to advertise on the websites that require the least amount of money while delivering the desired audience. This pushes websites to accept lower rates in order to ensure they have advertisements to serve. On top of this, those intermediaries charge the websites a service fee for each ad shown. Thus, not only are journalistic outlets receiving less money for each ad but they also receive just a portion of that amount.

It is therefore unsurprising that while digital ad spending has grown immensely, much of those gains have been highly concentrated among a few companies. Specifically, Google and Facebook alone are estimated to receive more than half of global digital ad spending, with China-based Alibaba coming in a distant third.

In short, many of the gains in digital advertising are not being realized by journalistic outlets; the uptick in online ad revenue has not come close to replacing the losses in offline ad revenue for many journalistic outlets; and many journalistic outlets still rely on their offline products for the majority of their advertising revenue, even as they have much larger audiences online. This helps us understand why some traditional media companies still orient themselves, at least in part, around media vehicles that are widely seen as being phased out along generational lines (e.g., a newspaper): Such outlets generally have more control over, and can extract more value from, their legacy products.

Distributional Intermediaries

Third-party platforms are not limited to advertising, though. In the United States, much of Europe, and elsewhere in the world, a small group of Silicon Valley-based companies — namely Google, Facebook, Apple, and Twitter — largely control the social media, web search, and mobile application platforms that audiences use to find and access news.

Because of their positions as intermediaries, those companies generally realize many of the economic benefits from news production while not suffering its costs. For example, a platform like Facebook benefits from user-generated content like its users’ posts (including any news they may break); from the fact that many people rely on Facebook to be their primary news source, via the links that are shared by their friends; and from the many journalistic outlets that use Facebook themselves in order to promote their content (often by offering portions of it for free on the platform). All of this participation comes at relatively negligible cost to Facebook, because it does not pay any of these people for the very content that makes its platform worthwhile.

At the same time, platform owners seek to avoid expensive legal and gatekeeping responsibilities by claiming to be distinct from media organizations. Put another way, they often claim to only offer neutral, technical infrastructures in order to avoid the public interest obligations that governments have historically placed on broadcasters and that society expects from traditional journalistic outlets. After all, such platforms tend to claim, they do not produce journalistic content of their own, and their platforms are governed by supposedly impartial algorithms, rather than humans, to determine what to show audiences and how to show it. Therefore, the argument is that such neutrality should shield platforms from journalistic responsibilities, or from legal risks like accusations of libel. (This is, of course, a weak argument. Their algorithms reflect the values and/or economic interests of platform owners, and the algorithms exercise a form of judgment when they promote content that is expected to elicit further engagement on the platform.)

Third-party platforms also create loyalty challenges for journalistic outlets. In the past, audiences tended to go directly to trusted outlets to find information. Put another way, they actively sought it out. Today, audiences increasingly go to news aggregators like Apple News, or they wait for news to find them on social media platforms like Facebook, Twitter, and Reddit. As users are shown an array of news from a lot of different news brands, they begin to disassociate the content from the brand itself. Put differently, researchers have found that, after reading a news story, less than half of people would remember the journalistic organization that published the story if the individual found the story on social media. (However, most people could remember which social media platform they used to find it.) In contrast, 80% of people who found that same story on a journalistic organization’s website were able to remember who published it. In short, social media platforms end up receiving more of the credit for the content published by journalistic outlets than the journalistic outlets themselves. That, in turn, reduces the worth of the organization’s brand and the incentive to produce high-quality content in order to help the brand stand out in a crowded marketplace.

The massive size of these third-party platforms — Facebook alone counts billions of users worldwide — and their structural positions as intermediaries make it difficult for journalistic outlets to ignore them. Moreover, they are difficult to displace. Such platforms are subject to network effects in which a product or service becomes more useful as more people use it, creating conditions for monopolies or outsize power. Consequently, many journalistic outlets believe they must not only have a presence on those platforms but that they must engage with audiences there, too, even as such participation further tethers them to these platforms. Put another way, journalistic outlets are forced to weigh the short-term benefits of tapping into new audiences and remaining relevant on popular platforms against long-term concerns about ceding further control over their content and processes. While more journalistic outlets have begun to distance themselves from some third-party platforms in recent years, such efforts often come at great risk.

Key Takeaways

  • Third-party platforms refer to technical systems that mediate exchanges between content producers and consumers. This includes social media platforms like Facebook, search platforms like Google search, and ad-tech platforms like Google AdSense.

  • Although digital advertising has grown immensely over the past decade, it has not come close to replacing the revenue lost from non-digital advertising for most journalistic outlets. This is due in part to different pricing regimes and the ad-tech intermediary platforms that pervade online spaces.

  • Distributional intermediaries like Facebook and Apple News have benefited greatly from the economic benefits of news production yet bear little of its costs. They have also sought to reduce their media-related responsibilities by claiming to be neutral platforms rather than media companies.

  • Although these platforms have introduced many challenges to a range of journalistic outlets — especially traditional organizations — those outlets have often found the cost of non-participation on platforms to exceed those of participation.