Is there a future for Digital Publishers?

I dedicated most of my career working with content creators and I was lucky enough to take part in some of the transformative moments that the industry has experienced. In less than 20 years, I saw the decline of the print business, the rise of mobile as a computing platform, the advent of ad blockers, a myriad of clumsy legislation attempts to protect user privacy and at last, the race to search supremacy. It is definitely a lot to digest but at the same time, in my mind the principles that regulate publishing remain fairly unchanged over time. To make sense of all of it, I think of digital publishing as an ecosystem of bees, flowers,? and sunlight, where each element is intertwined and essential for its existence.

• Publishers are the flowers, producing nectar (content) that attracts bees (readers). They provide what makes the ecosystem vital and diverse, offering something of value to the bees that seek it out.
• Advertisers are the rainfall. They provide the vital energy that flowers need to grow and flourish, enabling them to keep producing nectar and keep attracting bees.
• Readers are the bees, drawn to the flowers for nectar (content). They move through the ecosystem, spreading pollen and helping flowers (publishers).

If any one of these elements is removed - the flowers lose their water supply, the bees stop visiting, or the flowers stop producing nectar - the ecosystem will cease to exist. Similarly, every time a new technology hits the industry, I assess its value against its ability to preserve the ecosystem's health.?

For the purpose of this article, I will use the bee analogy to explain how past events affected the industry and to cast my predictions on what will happen in the next 5 years.?

Publishing started as a backyard garden.

Until the early 2000s, the publishing industry was similar to a backyard garden, an oligarchy of few flowers (publishers) getting all the water and a limited inflow of bees (readers). The market was dominated by a handful of newspapers that monopolized information, dictating the narrative in a way that shaped the public opinion and the culture of entire countries. Content was written by intellectual elites, often influenced by political affiliations and their corresponding ideology. Readers paid to access news publications that they felt closer to their political beliefs and that was accepted as the norm.

First Wave of Disruption: INTERNET put an end to the oligarchy of news.

With the rise of the internet, the publishing industry underwent its first major disruption. For the first time, information was democratized and decentralized, allowing anyone with a computer to publish content and reach an audience. Google is single handedly responsible for building the first functioning digital aqueduct. With an efficient piping system, their search engine transformed backyard gardens into flower meadows. Suddenly, the entire world (bees) could access this explosion of content (flowers) and the news industry became an open ecosystem no longer in the hands of a few players. Without any shadow of doubt, Google has been the key enabler to make information free and accessible to all.?

I refer to those years (2000 - 2012) as the publishing renaissance, with the rise of thousands of new publishers producing diverse content that was available to all. Readers enjoyed the freedom to consume news content free of charge, powered by a new type of advertising: programmatic advertising. Programmatic advertising introduced the ability to track and measure the effectiveness of ad campaigns for advertisers, and that meant that advertising budgets were no longer assigned to few, print publications. Instead, investments started to be distributed more evenly across a wider group of publishers based on the audience that those publishers actually reached.

Advertisers thrived in this new, digital world. They could finally reach a wider and more targeted audience, which was way more efficient than spending money without knowing exactly who they were addressing and why. Programmatic advertising was transformational for thousands of digital publishers, yet it felt like an earthquake to incumbents (traditional publishers) that suddenly saw their pie fractionated into a number of slices that they no longer had access to. Democracy has its price, and oligarchs are typically those who have more to lose from the process.?

The democratization of news was far from being all sunshine and rainbows. For a while, free content funded by ads worked just fine. However, easy money encourages free riding and that is precisely what happened. A plethora of bad actors emerged onto the scene producing unhelpful content that was made for advertisers (MFA) and not for actual readers. As crabgrass, MFA sites infested the meadows draining water from flowers and the truth is, that continues to be the case till this very day.

At the same time, advertising technologies advanced at an incredibly fast pace. Suddenly, it wasn’t just ads directed to a specific audience but ads tailored to the browsing habits of readers, to the point that ads started to feel a little creepy. The idea that advertisers could optimize their ad campaigns based on the user’s browser history was the second contributing factor that led to the second wave of disruption in the publishing industry - the rise of ad blockers.?

This disruption started in 2012 came as a devil in disguise. Taking advantage of this general sense of frustration towards MFA sites and intrusive advertising, ad blocking gained traction with the promise to protect readers from bad ads. While a free web with no ads was a really enticing offer to readers, it was not so much so for good publishers who progressively lost approx 20% of their advertising revenues.

Every time a new technology promises a disproportionate advantage to a single actor within the ecosystem, it threatens its entire existence. That’s precisely why I consider ad blockers as one of the most harmful innovations that the publishing industry has ever witnessed.

Third wave: The race to search supremacy

As I said, Google’s search engine and other distribution platforms like News and Discover have been instrumental in creating the publishing ecosystem that we know today. Yet, over the years traditional news publishers have been Google's fiercest critics, in a relentless witch hunt to hold someone responsible for their struggle to stay profitable in the digital age.?

Among others, the main criticism moved to Google is the use of journalistic content to populate their algorithms, without compensating publishers enough for producing and owning that content. As I described in a previous article, it is like accusing Booking for bringing new guests to your hotel and retaining a fee. The argument simply doesn’t hold. Google represents more than 70% of the total traffic that news publishers generate, as well as a significant portion of the advertising revenues. So the value exchange is very balanced, the rest is nonsense.

The advent of GenAI companies fueled this paradox even further. While traditional publishers were so focused on fighting Google to get a better value for their search snippets, GenAI companies scraped their entire websites to train LLM models and provide content to users free of charge. Going back to the initial analogy of bees, flowers and water, SearchGPT and Perplexity are yet another example of how a technology that brings a disproportionate advantage to one of the players (readers) ends up threatening the existence of the ecosystem as a whole.?

Think about it for a second. If I look at it from a user perspective, SearchGPT and Perplexity are fantastic! I can get instant, seamless access to information without having to pay for it (for now) and not even be annoyed by advertising.

My instinct tells me that when something looks too good to be true, it probably is. What’s really happening here is that GenAI companies are creating billion dollar businesses exploiting unpaid labor from content creators.

That is not only legally and ethically wrong, it is also removing incentives from publishers to continue producing quality content on the web. In this scenario, the publishing ecosystem won’t survive and if that’s the case, GenAI companies won’t survive either. So who’s going to save the flower meadows??

I’ll start with stating the obvious. GenAI companies are burning billions of investors dollars every year, they offer (almost) free content and no ads to secure market share and a better competitive position in Search. It can be relatively easy when you are up against a bunch of scattered, smaller players (see Amazon), not so easy when you are up against Google, who makes tens of billions in profit each year from a functioning business model, shares more or less the same technology and sits on a cash pile of approximately $100 billion.

OpenAI will burn $5bn in 2024 and that means that they can't stop fundraising if they want to keep feeding the fire. But how long investors are willing to wait before pulling the plug? Time will tell. One thing we know for sure is that while software businesses typically benefit from economies of scale, in the case of OpenAI new customers mean new losses.

The only way I can see to break that loop is - once again - feature ads in SearchGPT (Perplexity and others). I know, I didn’t mean to upset you. You were probably living the illusion that the future of Search was going to be ads free and now you’re told that you’re going to see ads again. Yes, that is precisely what I am saying and I am saying that because the ecosystem of bees cannot survive without water and flowers.

As of now, advertising is the only business model that can support search at scale. The reason is simple: there is only one thing that users hate more than ads and that is: paying for stuff. SearchGPT will be no exception to the universal principle that regulates the free web.?

I don’t have a crystal ball and I cannot tell you if SearchGPT and Perplexity will find their path to survival. All I can do is to share my opinion as it pertains to the publishing industry. The reality is that in a free web powered by advertising, no one comes close to Google, despite the issues that the company is facing on all fronts (legal, copyright, privacy, antitrust). They have been dealing with publishers for over 20 years and are well ahead in addressing the type of political controversy that GenAI companies are only beginning to face. That is a significant competitive advantage that we cannot ignore and won’t be solved by paying a lump sum of money to appease hundred news outlets worldwide.

If anything, my frustration over the past two years is that GenAI companies have initiated a race to the bottom in content production as well as in search, distracting Google from what they do best: curate their product to ensure that plurality of information is nurtured and MFA sites are shut down. Google is running at a ludicrous pace of 13-14 search updates a year and my feeling is that they are getting worse at their ability to contain MFA websites and to rank websites fairly.?The damage made in the last two years of search updates will take years to fix (at best) and I am not even sure that the incentives to do that are still there.

The turbolence is not over so brace for a bumpy couple of years because that’s inevitable. When the dust settles, search won’t be the same. But rest assured that even in the new world , flowers, bees and water will work hand in hand to keep the ecosystem alive.?