Smartphones have drastically changed the way we consume news. And mobile news aggregators are the new winners of this race. But while offering an RSS feed, and in some cases, the full content without the publisher’s consent, is helpful to the end-user, it elbows news sources out of the value chain. So while our news consumption is at an all-time high, media companies are still suffering. Offering a wide choice of content via a RSS feeds is a very powerful offer for the end user, it goes against a fair share of the value for the news provider. Worst, the latest app technology provides the opportunity to republish the full content without publisher consent.
Thanks in large part to news aggregation applications, we are spending more time than ever reading the news. And because this content crosses cultural, gender, and generational lines, the evolution goes even faster. The news industry is going through a complete “mediamorphosis,” with massive changes to platform, content, user habits, distribution, and monetisation.
RSS feeds on desktop have always been powerful traffic generators. For a western news publisher, 40% of the content comes from RSS displays in search engines (1). In US, Yahoo News, the number one news site on the desktop, traffic from RSS feeds can make up to 50% of the traffic. This approach brought global satisfaction to the media, despite the level of dependency (2) it represents on search engines and aggregators. Nevertheless, recent lawsuits and intense lobbying in Germany, Spain, and France against Google show a concern for the way the value chain is shared.
NEWS AGGREGATORS ARE GAME CHANGERS
On mobile, News Aggregators are the new players, and are taking the lion share of this new market. In fact, 5 of the top 10 news applications on the Apple or Google application store worldwide are held by those players. The number one key success factor is the ability to grab a wide selection of content, and the easiest way for them to do so is either to crawl the web or take RSS feeds. While this approach may be viable on the desktop (because it directs users directly to the source), in the application eco-system it is a complete scam of the value provided by news publishers. Josh Marshall from TPM raised the point a year ago (3). In an excellent and recent Huffington Post article, Matthew Hussey broadened the analysis(4).
For the news sources it does not give them the opportunity to value their content. A test run on the News Republic application (the company I run) shows that the click-through rate to read “next” is at best 5% for a media company like USA Today, and less than 1% for most organizations, including top national brands. The average is below 1%. This low click-through rate to the news source robs publishers of the ability to value and monetize their content. Furthermore, the quick news bites that consumers clearly prefer on their smart phones indicates the larger challenges facing long-form journalism. But the most concerning element is that news aggregators, through a monetisation pages before and after the main article, keep 99% of the value chain.
NO BLAME ALL GAIN
As a confirmation of the “broken window” theory, in the last 3 months, a series of new applications have appeared on the market. Thanks to their in-house technology, they grab the full content from the web and offer it for free through their application. You can now read the New York Times and the Wall Street Journal for free. With this new approach, news aggregators keep 100% of the value chain despite not producing any of the content themselves.
The mind-blowing part of it is that it works. News organizations are letting applications reformat their content and use it for free without any complaints, and stores feature those applications.
BUILD AN ECO SYSTEM
Media groups have no other choice than to build a sustainable eco-system. News aggregators answer to a strong demand from the customers, proven by their rankings on app stores as well as the consumer usage stats of the last three years A partnership, including a revenue share, is the most appropriate one to maintain a level of content quality and massive distribution.
But creating an ecosystem starts by recognizing the value of the partners and respecting them. If new news aggregators do not want to go this way, the unique solution for the media will be to take the legal path like they did with Zite in 2011 (5). By not reacting, media groups will continue to suffer, and see their value chain more and more challenged.
News consumption has never been so high and continues to grow. It is the duty from all the actors of the industry to embrace this opportunity, build a sustainable and respectful eco-system, and continue to be the pillar of civilisation and the democracy all over the world.
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(1) Reuters Institute Digital News Report
(2) Monday Note