'The crisis of content economics'

21 March 2016

Online platforms such as Google and Facebook are increasing their share of the Australian ad market, and are increasingly the go-to distribution platforms for content created by publishers. This is causing a “crisis of content economics” according to an op ed penned by former AdNews editor in chief Paul McIntyre, who is now part of MCN, in today's media section of The Australian.

As publishers face ever-squeezed margins and diminishing ad revenues as users increasingly view and access content on alternative platforms, there is an ongoing debate around whether Google and Facebook should pay those creators for the content they distribute.

“It seems outrageously disingenuous that one half of the global tech-media duopoly that is crunching professional content economics is now holding itself up as one of the white knights or journalism,” wrote McIntyre in response to a news article penned by the media section editor Darren Davidson.

In an interview with The Australian, Google's head of news products, Richard Gringas, who was in Sydney last week at the AdTech conference said that Google should not consider paying publishers a fee for the redistribution of content, although he did admit that “the mobile web was in crisis”.

Gringas asserted that the “value exchange is there” online, despite upward pressure on publishers who are seeing less and less revenue for content that they invest in.

Davidson points out that in all other channels licensing fees are paid to content creators whether it be Spotify to music companies, Cable operators and broadcast networks to movie and TV studios, or cinemas paying Hollywood studios to distribute movies.

McIntyre continues: “Facebook and Google are behaviour-altering platforms … but they got there by not paying for any of the content that keeps their aggregation pistons pumping. They’ve also convinced everyone that they never should pay for that content while simultaneously extracting huge licks of advertising.”

The article points out that while content created by publishers, newspapers, TV studios are among the highest in terms of engagement on Facebook and Google – the organisations investing to create the content are seeing an ever smaller slice of the revenue associated with it - something that makes the business of content creation – and publishing - unsustainable.

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