Ben Thompson Has A Blind Spot
Ben Thompson is incredibly smart. If you don’t already subscribe to his newsletter Stratechery you’re missing out. Ben is so smart that often it takes years to realize just how prescient his points of view are. Case and point, his article “Popping the publishing bubble” correctly predicted the current situation publishing finds itself in (or found itself in pre-COVID). If you haven’t read the article, do so now. I’ll wait.
In this one post, Ben accurately diagnoses how, in the move from print to digital, previously aligned incentives between publishing and advertising got fucked. Where in the print world journalists and advertisers both wanted to entice the largest number of readers, in a digital world the audience bifurcated into “readers” and “potential customers”. He then correctly predicts that advertisers will abandon publishers for Facebook (and other social platforms) because it offers them the chance to reach the exact people they want (and not just the middle of the Venn diagram).
[[source: https://stratechery.com/2015/popping-the-publishing-bubble]]
What’s so wild to me is… he predicted all of this five years ago.
As you can imagine when I saw that Ben had written an article on Big Tech and Media [$$$] it shot to the top of my reading list. I wish I could give the same effusive praise as above but frankly… I think he’s wrong. I also think he’s reached the limits of what he can predict/understand. It’s pretty clear he, at best, has a casual understanding of how the media business runs. Let me break down his article and logic and see where we end up.
Should Big Tech Pay News Publishers?
It’s the core question in the article Ben is responding to (Ben Smith’s NYT article here). Should Big Tech have to pay publishers for their content?
If there is a spectrum of the possible answers to this question, Ben Thompson is an extremist in his belief. He doesn’t just think that the answer is “no” he believes:
“…any sort of rational evaluation would suggest that money should flow in the opposite direction. Google and Facebook direct traffic to publishers…”
For as complex as much of Ben’s thinking is on other topics, to me his thinking around content is too simple. First, he seems to think distribution is the ONLY reason journalism held “a monopoly on reader attention” and since the internet brought distribution costs down to zero that content becomes interchangeable. Furthermore, he is very tech-brain when thinking about content. One piece of content is the same as any other, just like one byte is the same as any other byte. Facebook has user-generated content, therefore Facebook doesn’t need journalism.
The first nuance he seems to miss is that good content imparts value to a reader at a multiple of bad content. I’m reminded of a very famous Steve Jobs quote (just substituted the word “post” for “person” and “writer” for “player”).
“I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1. Given that, you're well advised to go after the cream of the cream. A small team of A+ players can run circles around a giant team of B and C players.”
If the distribution method was the creator of a monopoly and all content on the internet is of similar (low) value… why do we still have the wall street journal, new york times, and washington post at the top of the food chain? There’s something more at play.
The next is interesting for someone so smart he’s making a hard to defend point. If Facebook should, in fact, be paid by publishers for the rights to distribute their content then Facebook would demand it. That’s show business baby. If it made more economic sense to charge pubs, they’d do it in a heartbeat. So then why would Facebook take the bad end of this trade? Are they bad negotiators?
Maybe because they know (I’m positive they’ve run tests) that if you give users ONLY user-generated content in their news feed those users stay less often. Because that’s what this is all about. Attention.
Facebook is an attention economy masquerading as an identity economy. This is why parasitic publishers like Diply, TheSoul publishing, politically-polarizing sites, and other low value “aggregator” types FLOURISH on Facebook. They’re like content flippers. They aggregate low-value content, add a small amount of highly tested attention grabbers, and arbitrage the cost with the FB ad payment. Profit.
But I’ll go a step further, Facebook knows for a fact that all content is not alike. If all a user saw was UGC, attention-flippers, and winger politics they’d slowly stop using. Quality journalism is the (minute) loss leader that makes this whole thing work. We’re the glue. It lends credibility. It gives people something to talk about and share that isn’t a baby picture or a screenshot of an Instagram post of a tweet.
And that’s what my stance is. Facebook needs, 👏N👏E👏E👏D👏S, quality journalism. And with all Big Tech companies, they do a great job of providing publishers the bare minimum investment required to keep us around. They are arbitraging us.
[[Side note: Ever notice how your RPMs on FBIA are always as good or better than your mobile but *just barely*? Publishers would be well served to pay attention not to where big tech is doing poorly but where they’re doing well, but just barely. Big Tech makes its margin on just barely. Just barely is what a perfectly optimized system looks like.]]
So yes. They should pay us for the privilege. If publishers were any good at collective bargaining we would have pressured Big Tech already. But we aren’t. Some regulators are getting wise to this game though and looking to step in. Good on them.
The funny part is Ben seems to logically understand all of this… he just hasn’t figured out a way to amalgamate it with his tech-based worldview.
I am a big believer in the importance of journalism — I rely on it for every post I write
See! You do understand, there’s a hierarchy in content!
Identity
So my worst fears were realized. Friday’s newsletter got a great reception. I got a lot of positive feedback. But it was all the same “This is great. I can’t add anything to it. I need to do some studying”.
I have some meetings with identity vendors this week and Erik and I shot a couple of identity-related podcast episodes this weekend so look for those in the coming weeks.
Shameless Self Promotion
Check out Erik and I’s newest episode of What Happens in Adtech. This week we talked to Scott Messer about SPO, DPO, and PADs among other things. Scott also showed off his extensive zoom background collection.
We also offer an audio-only version of WHIAT on Spotify and iTunes. Subscribe!
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Ok, that’s all for me. Have a great day, or don’t. I’m not the boss of you!