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Are Tech Giants Leading Publishers By the Nose?

Posted on Friday, October 30, 2015 at 9:58 PM

In a world dominated by app stores, have publishers ceded too much of their power?

By William Dunkerley

First print was dead -- now it's the Web too. That's a conclusion you might come to if you take seriously industry statistics. The time has come, I believe, to take these industry trends seriously and start adjusting our business models appropriately.

Are Web Audiences Shrinking?

According to Gigacom Research, "As the use of mobile devices continues to climb, the use of dedicated apps is also increasing. But is this a natural evolution, or should we be worried about apps winning and the open Web losing? Chris Dixon, a partner with venture-capital firm Andreessen Horowitz, argues in a recent blog post that we should be concerned, because it is creating a future in which the Web becomes a 'niche product,' and the dominant environment is one of proprietary walled gardens run by a couple of Web giants."

Multiple sources are reporting that mobile usage has overtaken the desktop to become the dominant digital platform. And with mobile comes a propensity to use apps instead of the open Web. Dixon says, "This is a worrisome trend for the Web. Mobile is the future. What wins mobile, wins the Internet. Right now, apps are winning and the Web is losing."

So what? What does that mean for magazine publishers? It means that if your digital publishing is Web-based, you may find yourself facing a progressively smaller audience potential. Users are looking for the simplicity of mobile apps. And that seems to be winning out more and more over the greater flexibility of the open Web.

The Pitfalls of the Mobile App Market

And therein lies our dilemma. According to Dixon, "Apps are heavily controlled by the dominant app stores owners, Apple and Google. Google and Apple control what apps are allowed to exist, how apps are built, what apps get promoted, and charge a 30 percent tax on revenues."

Their 30 percent cut of the revenue is actually the least of our problems. The larger impact is in the loss of control of our businesses. In the print segment, publishers are at the top of the food chain. They produce the content, sell the advertising, acquire audience, and have the ability to control the pace and direction of their businesses. Publishers buy paper, hire printers, and work with distributors. They all are hired product and service providers. They do our bidding.

Role Reversal: Publishers as Service Providers?

Now tech giants are turning the tables. The way they see things, publishers are subservient to them. They bring to the table enormous capability of reaching audiences. That lifts a great burden from the shoulders of the publishers. That can be an alluring prospect, especially for the non-tech-savvy publisher.

But the great capability that the tech companies have to offer is something that they could take away from the publishers at any time. If all we amount to are suppliers of content for their platforms, it means they could switch suppliers at will. Or they could branch off into content development themselves. And all that could leave us out in the cold. In the meantime the tech companies get to set the specifications for our content and are the ones who interact directly with our readers. We might not even know who the readers are. That would make it hard to stay in close touch with what they want.

This turnabout in roles may be hard to comprehend amid the glitz and power of today's technological advances. But consider this: Under our traditional business models, digital companies play a role that is comparable to the paper manufacturers in the print environment. Digital is now the substrate on which our content appears. As publishers have moved into the digital environment, digital has merely taken on the role of a paper substrate. No print publisher would ever imagine that the guys at the paper mill would sit in judgment over the content that goes on the paper. Or that the operators of the printing press would do that either. And we always have the option to switch vendors.

Role Reversal: Facebook, Google, and Apple as Publishers?

Now Facebook is offering the capability of its Instant Articles system. Google unveiled its Accelerated Mobile Pages. And Apple has been promoting its Apple News app.

Remarking about Accelerated Mobile Pages, Joshua Benton, director of the Nieman Journalism Lab at Harvard University, warns, "Yes, publishers don't have to adopt it, and yes, it's an open source project, and yes, the performance gains are very real and very substantial. But publishers can choose to adopt Facebook Instant Articles and Apple News too. The point is that this is another stop on the path to powerlessness for publishers -- another case of tech companies setting the rules."

There's little any individual publisher can do to deal with the role tech companies have charted for themselves. Presumably our national professional associations would be in high gear negotiating with the tech companies and protecting the role of publishers. But lamentably that does not seem to be the case. Several years ago we challenged them to face up to today's industry-wide challenges. But I've seen little in terms of accomplishment.

If you are a member of one of the professional associations, I suggest you exert some pressure. We all will fare better in the future if our national organizations wake up to the threat our industry faces and muster the strength to limit the power that tech giants are now wielding over us.

What do you think about this? Please let me know.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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