Peretti made some interesting points in an interview with TheNew York Times. However, a shakeout isn’t likely to help online publishers get a bigger cut of ad dollars shared with Facebook and Google.
The so-called “duopoly” dominates online media with a combined market share of 58% of U.S. digital ad spending, per eMarketer. Their strength isn’t an accident, given the billions they’ve invested to achieve a global scale and build giant warehouses of consumer data to help advertisers reach highly focused audience groups.While Facebook and Google thrive on abundant user-generated content, they also have partnered with digital publishers to provide news and entertainment to their audiences.
BuzzFeed, Group Nine, Refinery, Vice and Vox Media are among the companies that distribute content on Facebook and Google’s platforms in exchange for a cut of ad revenue.
“If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti told the Times.
In the past few years, digital publishers have missed revenue targets, cut staff and sought to develop revenue from ecommerce. Merging may help these companies wring some costs, such as payroll, out of their income statements, but it’s unlikely to help their combined top-line growth.
Jessica E. Lessin, founder-editor-in-chief of The Information, said it’s a mistake to think that building scale will give digital publishers advantage against two giants with thousands of software engineers and advanced technologies like artificial intelligence.
“Publishers should double down on what they are excellent at and what tech companies are crummy at: unique, exclusive, can't-get-anywhere-else content,” she wrote on LinkedIn. Lessin’s digital publication has been built on subscription revenue, a business model that compels publishers to deliver exclusive, value-added news and information that justifies their fees.
Subscription revenue also helps digital publishers to avoid being too dependent on Facebook and Google, which can kill off online viewership with adjustments to their algorithms.
This week, BuzzFeed added a paywall that gives readers exclusive access to newsletters and other content for $5 a month.
Facebook and Google have shown a general disdain for ensuring quality content appears on their platforms, which has allowed misinformation and propaganda to proliferate almost unchecked. Brands have had to worry that their ads are showing up next to objectionable content from hate groups and foreign adversaries.
When it comes to quality content, Peretti appears to agree with Lessin on its importance in the age of fake news. “Having some bigger companies that actually care about the quality of the content feels like something that’s very valuable,” he told the Times.