Some reflections on the Reuters Institute 2016 Digital News Report (II)
The Reuters Institute Digital News Report for 2016 is not happy reading for news organisations. A ‘perfect storm’ has hit traditional news companies and new digital players as consumers move to online platforms and digital devices for their news. The widespread use of ad-blockers, said to be much higher amongst the under 35s, is threatening both traditional online news providers and their new all-digital rivals. Also, the number of people willing to pay for online news is very low—under 10% in the English-speaking world. The results include missed financial targets and layoffs in print publishers like UK’s Independent and online news organisations like Buzzfeed and Mashable.
The contract between consumers and online publishers—you get free news and we show you ads—is under pressure. A quarter of consumers in the U.S. and Germany use ad-blocking. In France the figure is 30%, and in the UK it is 21%. Ad-blocking on mobile devices is lower but the Reuters Institute believes that it is likely to rise. Publishers are resorting to other strategies, like the use of branded content. Often outsourced to organisations like Taboola and Outbrain, this mimics regular news and so avoids ad-blocking.
The issue is acute for traditional news organisations mainly because the Internet has reduced barriers to entry to the industry. They have responded by paying more attention to branding their online platforms as sources of reliable news and, either charging for access to them or requiring users to create a free account. This helps them capture consumer information that, in turn, helps them sell online advertising. The current online news industry is segmented into paid subscription services offered by the likes of The Economist and The New York Times, free online subscription services offered by the likes of Mail Online, and, soon, the BBC, and content offered entirely for free by organisations like Buzzfeed and The Guardian.
What does the future hold? Getting around ad-blockers is a big challenge for news organisations. Ad-blockers are a consumer response to ads that are sometimes annoying and irrelevant. Or, rather, annoying because they are irrelevant. But if consumers wish to continue to enjoy free news then they will need to be persuaded to provide more data about themselves. Otherwise they will continue to see advertising that, like an annoying friend, offers unwanted company at inappropriate times. Consumers will likely be offered the opportunity to give news platforms more access to their online shopping preferences, purchase history, and even opinions. In turn news providers will need to ensure that targeted advertising designed on the back of this data really is relevant to consumers. They will also need to reassure consumers that their data is safe and will not be sold to less scrupulous third-parties.
The evolving relationship between consumers and online news providers will depend upon improvements in technology. The use of Artificial Intelligence will help news organisations and advertisers on their platforms to better understand consumers, possibly to a point where consumers will experience a highly personal online service. This begs other questions. Will this ‘personal’ service extend to news that is selected entirely according the consumer’s own preferences? It will depend. Consumers are less likely to wish for tailored news on ‘hard’ than ‘soft’ news platforms. As discussed in the post below (Dalai Lama picks Jeremy Corbyn as Successor) consumers are attracted to mainstream ‘hard’ news platforms such as the BBC and The Guardian precisely because they offer professional first-hand reportage and high quality analysis. They generally trust hard news organisations to break new stories. As the Reuters Institute 2016 Digital News Report suggests consumers are able to tell the difference between ‘hard’ news even when they find it less interesting and ‘soft’ news such as celebrity gossip that they may find more interesting.
The challenge for consumers and news providers is to live without ad-blocking. There is every reason to think that advanced technologies will improve online news services to the point where consumers no longer believe that ad-blocking is necessary.