The disruption of media companies continues unabated with Univision's Fusion Media Group saying it will have to make substantial cuts within the coming weeks because of poor profitability. The company had made several large acquisitions over the past four years such as Gawker Media titles, and hired well-known "millennial" reporters at large salaries.
Also this week: Black Press Group sold The Akron Beacon Journal for $16 million to Gatehouse Media. The newspaper was bought for $165 million in 2006. It's a perfect illustration of how much value has been lost (90 percent) in a traditional media property in just over a decade.
It's a reminder that nothing has changed and that disruption in the media industry continues unabated. There is still no stable media business model as advertising rates continue to fall.
Also: Mozilla: The ad economy is broken and it's making the internet sick | Mark Zuckerberg: It's not hard to align Facebook's interests with user interests | On Facebook, Zuckerberg gets privacy and you get nothing | TechRepublic: Zuckerberg's testimony: 5 big questions for businesses and developers | CNET: What Facebook's Mark Zuckerberg did and didn't answer
Facebook's dominance in the news this week reflects its dominance in the media industry along with Google. These two media companies have replaced the mass media but have rejected the responsibilities to society that mass media provided as part of a social contract in keeping readers safe from toxic content and fake news.
Faux news rise
The decline of journalists and other media professionals and the rise of fake news are closely connected. Facebook and Google use AI and algorithms to promote and format fake news stories because they can't tell the difference.
Zuckerberg told legislators that artificial intelligence cannot stop fake news and it could be five years or more until it might be able to do it.
Five more years of fake news and compromised democratic elections is clearly unacceptable. Yet traditional media companies manage to do it everyday without the need for AI or relying on readers doing the flagging. They use human intelligence for the job and it gets it done.
With continued job cuts and the economic struggles in the media industry -- the rise of fake news is inevitable. That's bad news for society.
And it is not just traditional media companies that are having to run faster but also the "digital first" media companies such as Buzzfeed and others. Also, surprisingly Google.
Every time Google reports its financial quarter it announces a drop in revenues per click of 15- to 20 percent and sometimes more, compared with a year ago.
For years Google's ads have been growing less and less effective by a big margin. But it manages to stay ahead in clicks and revenues by finding new places to show ads. But this is a strategy with a rapidly narrowing future. The mobile screen is a severely limiting form factor for ads yet it's becoming the dominant consumer platform.
This constant devaluation in the ad business model is the chief driver of the economic problems in the media industry. How far can it go?
The collection of consumer data into large databases and sophisticated ad technologies have been a boon to Facebook and Google but it's taken business away from traditional media companies and it harming society.
That same consumer data is toxic outside of commerce. It leaves people vulnerable to hidden political and other manipulation. Why does your soap powder need to know so much about you?
It's only going to get worse because these ad technologies are going to become even better at targeting, they'll be more intrusive and sneaky -- and that will spark future outrage.
Targeted advertising is an adversarial business strategy
Zuckerberg has chosen a future in which he has to continually defend what will become ever more difficult to defend.
Traditional publishers have high costs in creating the right content for the ads. But why pay for ads with specialist content when targeted ad technologies allow Brands to reach the same consumers wherever they are on the web regardless of the content of the page.
It's a practice that devalues content because it is fundamentally a shotgun approach of showing more ads across low value web pages -- a practice that damages the production of quality media because the ads are worth less and less because of the lower quality of the media in a self-defeating accelerating spiral of market decline that is forcing every media business to run faster just to stay in place.
Until Facebook and Google understand their role in the media industry's problems we cannot look to them for a solution.
There are a couple of developments that could ease the pain for some companies.
- New regulations: In the wake of the Facebook scandal there is likely to be new regulations on how consumer data can be used and this could take away some advantages held by the giant online publishers.
- Plugging ad fraud: More than $16 billion is lost every year to fraud -- ads shown on spammy sites and fraudulent clicks. This cheap traffic is used by advertisers to bolster their numbers but it is money that traditional media companies should pursue because it is their loss.
Overall, the economic trend continues down and there is no solution in sight. I'm constantly puzzled why more people are not alarmed by this. I've been obsessed with these issues for more than 15 years. It is the most fascinating puzzle we face and it is key to so many aspects of our society that we value and we need for our shared success. The future is what we say it will be. Jaron Lanier writes about "Who owns the future?" Who has a say in the future will be more important and our media is how we have a say. It is how we think about things as a society and how we decide. We need a healthy media sector -- we don't have it.
We have a mass media that is run by algorithms and by people who don't even recognize that they are running a media company. Zuckerberg told the legislators that Facebook is a tech company and builds technology solutions.
We have seen the damage that an unrestrained digital media --edited by algorithms and open to exploitation by hidden agents and agendas -- can do and we've only just begun.
Things will get worse until we solve one of the most important problems created by the Internet. How do we produce high quality media and trusted information so that we can make the best decisions possible? Garbage in -- garbage out -- we see this everyday and it is getting worse.
A sustainable and growing media business model is a vital and fundamental building block of a strong society, imho. And we still don't have it.
Related and Previous Coverage
The Edelman Trust Barometer survey has uncovered an "unprecedented crisis of trust" in the US and huge falls in 22 countries -- fake facts take the blame
Even the darlings of new media such as Buzzfeed are struggling as online business models shrink ad revenues faster than record growth in audiences
Almost $100 billion less in the first nine months of 2017 - Europe's Brexit issues might be to blame says report
Tech experts are struggling with the problem of fake news distribution -- time to ask some media professionals
Facebook's founder and CEO Mark Zuckerberg single-handedly faced the music for two days of criticism on a world stage. Zuckerberg took it personally and meant it. He doesn't share.