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Avoid the Predicted Digital Meltdown -- Part I

Posted on Tuesday, April 30, 2019 at 12:23 PM

Pundits are sounding the alarm about a digital meltdown. How can you safeguard your publication?

By William Dunkerley

Last year a New York Times headline warned readers of "The Looming Digital Meltdown." Now, in April, Editor & Publisher brings things closer to home with its headline: "Digital Media Meltdown" (emphasis mine).

Googling around, you can find a lot of meltdown stories connected to digital. Columbia Journalism Review focused on one publication in particular with this: "BuzzFeed and the Digital Media Meltdown."

This furor certainly deserves the attention of all magazine publishers.

What's wrong with digital media? What can be done about the alleged impending meltdown?

Emarketer.com took that up in a story titled "Dealing with the Media Trust Meltdown" It explains:

"The entire digital ecosystem is in crisis -- a crisis of trust. From issues of brand safety associated with the murkiness of programmatic, audience-based buying, to growing cries of 'fake news,' to undisclosed sharing of consumer data by unknown middlemen, to a slew of personal data breaches across the Web, consumers have lost trust with marketers, media publishers, and social platforms."

Medium.com sums it up simply: "Digital Media Is a Wasteland."

Job security is already at stake. BuzzFeed's "meltdown" cost a lot of people their jobs. It was "depressingly grim," reported E&P, adding that many in the industry viewed it as "yet another sign the promise of a digital media oasis was nothing more than a mirage."

MSNBC host Chris Hayes recently mused on Twitter, "What if there is literally no profitable model for digital news?"

While Emarketer.com focused on trust and integrity, the Times story highlights the role of privacy and security. This has been a topic in the news with regard to Facebook and related user concerns about privacy. But the Times homes in on possible technical precipitants of a meltdown. "Modern computing security is like a flimsy house that needs to be fundamentally rebuilt," the article reports. It also comments on the impact of technically intrusive advertising practices. The scripts that are used "wreak havoc as they try to track your activity online." They slow down the online experience for the users by making their computers process the scripts.

So what's ahead for magazine publishers?

PriceWaterhouseCoopers (PwC) has analyzed the prospects. It reports, "Magazine circulation revenue will likely fall particularly sharply, as consumers favor free content... Consumers have proved reluctant to spend money on digital magazines."

We're now seeing many online publications putting up paywalls. If PwC is right, that may not be a good move. Micropayments for individual articles may be more consistent with the online culture. Users have already accepted the practice of making small expenditures for iTunes and similar services.

The PwC analysis deals with the global magazine market. In some emerging economies digital may not have gained the strength that's seen elsewhere. That may skew the PwC outlook in a minor way. Nonetheless, the statistics PwC presents show much greater strength in print than one would gather from mainstream news reports.

Comparing print and digital revenues from 2015 through projections for 2020.

Many of the claims of digital growth are deceptive. For one thing, a lot of statistics are couched in terms of growth as a percentage. A large percentage increase in a relatively small number can leave you with a number that is still relatively small.

E&P adds that "the large majority of those [digital] advertising dollars are being spent on search (Google), social display (Facebook), and video display (dominated by YouTube, which is owned by Google). All told, Google and Facebook sucked in slightly less than 58 percent of all digital ad spending in 2018, with Amazon coming in a close third with about 4 percent."

Google Trends provides some additional data that casts a shadow upon the boastful predictions for digital publishing we've seen over the past several years. We researched the terms "digital advertising" and "print advertising." While the results don't report on revenue, they are representative of trends in the interests of online users. That's adds an element of context.

What we see from 2014 to the present is a definite downward trend for print advertising and clear upward movement for digital advertising. Note, however, that both curves, when averaged over the past three years, show that things have leveled off.

Online interest in digital and print advertising from 2004 to the present.

The interest in advertising that's plotted above isn't magazine advertising alone. It includes all forms of digital and print advertising.

There's more to this story.

In Part II we'll pick up on the specific trajectory of magazine advertising. We'll delve into the business factors that make magazines vulnerable in a digital meltdown. And we'll conclude with recommendations on how to avoid being hurt by the impending meltdown that's rumored.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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