Publisher Monetization Briefing: May 28

Welcome back to your weekly briefing on how publishers are building sustainable businesses. This week...

Should publishers license to AI?

OpenAI now has the right to ingest and surface content from over 60 individual publications via licensing agreements with a growing list of major global publishers, including News Corp, Axel Springer, Financial Times, Dotdash Meredith, Le Monde, and Associated Press.

Publishers partnering with OpenAI so far have positioned their deals as wins for their businesses and evidence the generative AI firm fairly values access to their content, but not everyone is convinced those relationships are in publishers' best interests in the long run.

Media companies are making a huge mistake by licensing to AI, The Information’s founder Jessica Lessin argued in a contributed piece for The Atlantic last week. “Publishers should be patient and refrain from licensing away their content for relative pennies… It’s simply too early to get into bed with the companies that trained their models on professional content without permission and have no compelling case for how they will help build the news business,” she wrote.

Given that OpenAI and other generative AI platforms have already used publishers’ content to help train their large language models without permission, licensing deals are effectively designed to “absolve them of the theft” and “amount to settling without litigation,” she added.?

It’s easy to see Lessin’s point. Technology companies have for decades used content to help grow their audiences and platforms, and many would argue they’ve done so without adequately compensating creators and rights holders. But although shunning AI could be in some publishers’ best interests long-term, it may not make sense for all.

“I think the analysis is different for the big generalists,” Business Insider founder Henry Blodget wrote on X. “The $250mm News Corp just got from OpenAI is extremely meaningful. And if, in 5 years, the deal sucks for News Corp, they can cancel. If News Corp just said “no,” meanwhile, the future might happen without them. This way, they get paid (a lot) to experiment. Also, OpenAI will be fine with or without News Corp (and, frankly, any other news orgs)... So I think News Corp is smart to take the money and play ball for a while.”

For publishers mulling the possibility of their own AI licensing deals, several key questions are now emerging. But before publishers begin unpacking the minutiae of AI licensing contracts, they may want to consider on a more philosophical level if they’re prepared to take a backseat to the needs and priorities of large technology companies again as the AI era emerges, what alternative options could look like, or if they realistically have little choice but to “play ball” at this point.

Publishers double down on subscriptions as broader challenges mount

Major publishers say they’re stepping up their focus on subscriptions as a core revenue driver as monetizing their audiences via other means – such as advertising and commerce – becomes more challenging. Many believe robust subscription revenue is becoming increasingly important for maintaining viable businesses as the media landscape shifts quickly around them.

Toolkits asked senior executives from 28 individual publishers how focused their companies are on building subscription revenue now compared with last year. Seventeen said their focus has increased, 11 said it’s about the same as it was 12 months ago, and none said their focus on subscriptions has decreased.

The Toolkits Show: How useful are Google’s AI Overviews anyway?

On the latest episode of The Toolkits show:?

It’s been a week since Google launched AI Overviews. Accuracy issues are already cropping up, with search results producing misleading or false information, such as exhorting users to eat glue or rocks. Being able to “trick” AI into giving up false information doesn’t make the feature useless, though, and linking to dubious or inaccurate information isn’t anything new for Google. What’s not clear at this point however is if users even want AI-generated content in their search results, or if tech companies are forcing it on them before it’s ready for prime time.

The bigger question for publishers is how AI Overviews cite the sources they glean information from,?bringing up thorny issues around plagiarism, attribution, and fair use. Publishers with strong brands may ultimately find that having their content discovered or surfaced via AI overviews is good for business. But for those purely focused on attracting clicks or traffic, that may not be the case. ?

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The Washington Post hopes new monetization approaches will aid a turnaround

Will Lewis, The Washington Post’s newly-appointed publisher and chief executive, began laying out his turnaround plan for the company at an all-hands meeting last week. “To speak candidly, we are in a hole and we have been for some time,” he told staffers.?

Details were lacking, but part of his plan for getting the company out of that hole involves new ways to charge audiences for access to its content, Lewis said.

Among the proposed new revenue approaches are “flexible payments,” which were described as “frictionless payments” that would target “likely untapped” audiences. The Post has already experimented with a product it calls “Limited Pass”, which offers access to a limited number of articles per month for a nominal financial commitment. Readers in the U.K. have been offered access to 4 articles per month for a price of ￡1 every 4 weeks, for example.

The company also plans to introduce two new subscription tiers called Post Pro and Post Plus, targeted specifically at working professionals and its most engaged consumer audiences. “We think that we’ve been a one-size-fits-all organization for too long, so we’re excited to create a new set of consumer and professional products that better meets the needs of our multi-faceted audiences,” said Karl Wells, the Post’s chief growth officer.

The company’s renewed emphasis on subscriptions isn’t surprising. As we detailed last week, many major publishers say they’re stepping up their focus on subscriptions as a core revenue driver as challenges for their broader businesses and business models continue to mount.

It’s clear The Post faces an uphill battle, however. Its traffic has declined 50% since 2020 and its digital revenue has declined 14% since 2021.

News Corp strikes licensing deal with OpenAI

News Corp and OpenAI announced a multi-year licensing agreement for News Corp’s news content which is worth up to $250 million over five years.?Through the partnership, the pair said OpenAI has permission to display content from News Corp titles in responses to user questions and to access archives to help train its large language models.

OpenAI will receive access to content from News Corp’s major news and information publications, including The Wall Street Journal, Barron’s, MarketWatch, Investor’s Business Daily, FN, and New York Post; The Times, The Sunday Times and The Sun; The Australian, news.com.au, The Daily Telegraph, The Courier Mail, The Advertiser, and Herald Sun; and others.

The partnership does not include access to content from any of News Corp’s other businesses, and it also includes a?guarantee that News Corp content will not become available via ChatGPT immediately after it is published.

Building resilience in the evolving news and media landscape

Accompanying its new report on Building Resilience, FT Strategies is hosting a free webinar. Expert speakers will guide you in finding your diversification 'frontier' and implementing best practices, with examples from the Financial Times and other leading news and media organizations. Register now. ?

Vox launches subscription program to diversify beyond ads

Vox launched a subscription program that will give members access to exclusive content including newsletters, a digital magazine, and a monthly bonus episode of “The Highlight Podcast.”?It's currently advertising subscriptions for $5 a month, or $50 a year. As we detailed last week, many?publishers say they’re stepping up their focus on subscriptions as a core revenue driver as monetizing their audiences via other means – such as advertising and commerce – becomes more challenging.? ?

Google threatens to pause Google News Initiative funding in U.S.

Google is warning nonprofit newsrooms that passage of a new California bill would jeopardize the firm's future investments in the U.S. news industry, Axios reported. Hundreds of local news publishers have received support from Google-funded programs in recent years, including those designed to help them build revenue through subscriptions and other direct audience streams. ?

Could Google down-rank publishers who decline to use Privacy Sandbox?

Some publishers are concerned Google could penalize them in search results if they decline to use its new Privacy Sandbox online advertising system, which is scheduled to come online in early 2025. So far the search giant has not offered any assurance that declining to use Sandbox, the Google-controlled system which will replace publisher cookies on Chrome, won’t impact search rankings. ?

Digital Markets Bill passed in the U.K.?

UK regulators could force technology companies to pay for the news content that appears on their platforms?after the Digital Markets, Competition and Consumers Bill was passed by the UK Parliament last week. The bill also includes stricter rules around publishers' subscription practices, however, including?stipulations that consumers entering into subscription contracts online must also be able to end them online. ?

AI Overviews breaks search giant’s grand bargain with publishers

Google has gone too far by including AI summaries in search results pages, argues consultant David Buttle. Leveraging publishers' content without sending them referral traffic -- and limiting their advertising revenue in the process -- breaks its "bargain" with publishers, he argues.

More from Toolkits

Original reporting is table stakes for publishers in an AI world: Publishers are recognizing their futures hinge on the ability to uncover new information and contextualize and present it in ways that AI cannot.

The Financial Times reorients its business around ‘global paying audience’: The new approach is designed to help grow direct audience revenue beyond its core journalism offerings and across its broader portfolio of products and services.

LinkedIn allows publishers to bake pre-roll ads into organic video content: A new program called Sponsored Editorial Content lets publishers stitch pre-roll ads into their organic video content on the platform.

‘Lifting all boats’: Publishers explore total revenue optimization: Publishers are thinking carefully about how monetization opportunities should be prioritized to extract as much revenue as possible from their audiences.