Media executives used yesterday's Epidemic Response Select Committee to criticise government for advertising with Facebook and Google instead of them. Lurking behind the anger and appeals for help was a stark admission: their revenue model can't last.
Photo: RNZ / Supplied
If there’s one point the media executives at yesterday’s Epidemic Response Select Committee kept hammering, it’s that the government should stop advertising with Facebook and Google.
They made a moral and an economic case for doing so.
Sinead Boucher said the government was enabling the spread of conspiracy theories, fake news, and misinformation by choosing to spend its money on social media. She pointed to the viral hoax that 5G spreads Covid-19, which has been shared widely on Facebook.
“The spread of that kind of fake news is being enabled and funded by the institutions and businesses that advertise on those platforms, the government included. And it’s the news media that’s devoting its resources, through its journalism, to exposing those lies,” she said.
TVNZ’s Kevin Kenrick said that by spending money on social media, the government was helping to financially cripple the media industry it hopes to save.
"When you have an industry on its knees... the first thing you need to do is stop scoring own-goals,” he said.
Media commentator Gavin Ellis bluntly accused social media giants like Facebook of stealing the content produced by media, using it to generate engagement, then putting that same media out of business by taking its ad revenue.
“I know of no other industry where you can steal something and not only get paid for it through advertising, but then get the government’s backing as well.”
They made a strong case. But lurking behind these arguments was a hint of desperation, and perhaps even some admissions of defeat.
There are compelling reasons the government, and just about every business, is spending more ad money with Facebook and Google, and less with traditional media.
The tech giants offer hyper-targeted ads at a cheaper price, and can often reach people that don’t consume mainstream media.
The media reps at the committee claimed they could compete. Their organisations can still reach a mass market much more easily than social media, which is dependent on creating personalised bubbles.
The Epidemic Response Committee considers the future of the media Photo: Supplied
Boucher said all Stuff’s properties combined had a similar reach to Facebook in New Zealand, claiming that government didn't need to use social media to reach people.
Act leader David Seymour used his last question of the day to pour doubt on that claim.
“We’ve now had at least three executives of major media organisations come and try to tell us that we don’t need to advertise on Facebook or Google in order to reach everybody. Well if that’s true, why haven’t their key account managers made that case to the people purchasing advertising already?” he asked.
The truth is those account managers were fighting what looked to be a losing battle even before Covid-19 came along.
Even if the government stopped spending with social media altogether, it likely wouldn’t really deliver a decisive boost to the books of our biggest commercial media operators.
A graph comparing newspaper revenue to Facebook and Google revenue in the US Photo: Thomas Baekdal
Most of the executives submitting to the committee acknowledged that fact, either explicitly or by implication.
Boucher said Stuff’s revenue was down 50 percent or more, primarily because Covid-19 had made a host of existing revenue struggles much worse.
“What’s really taken our breath away is the way all these issues have crystalised into a real fight for survival.”
NZME managing editor Shayne Currie said his company’s revenue was down a similar amount.
He acknowledged that NZME’s ongoing efforts to acquire Stuff would only be a stopgap measure buying time for reform to its ad-funded model. “I do think that giving us extra runway is vital.”
The smaller media companies were even more openly pessimistic. Mark Jennings of Newsroom expressed doubts the merger would substantially change the outlook for Stuff and NZME.
"I don’t think merging those two groups now is going to save them unless a lot of other things happen."
Boucher argued that taxing and regulating the tech giants would help Stuff compete for ads on a level playing field.
The Spinoff’s founder Duncan Greive had a slightly different idea. He wanted to use the income generated by a tax on Facebook and Google to directly fund local journalism.
“Facebook and Google are not simple organisations. They provide incredible value. They also do some things which aren’t that good for the public. I just think they could just stand to be taxed far more than they are, the same way other honest businesses are in New Zealand, and that revenue could fund a whole range of public good outcomes," he said.
Greive also talked up the potential of companies like Substack, which allows people to subscribe to content from journalists they like for a fee.
Its founder Hamish McKenzie recently argued the Covid-19 pandemic would be the death knell for ad-funded media. He made the case for a subscription-based model to rise up in its place.
“The country doesn’t have to fall back on an ad-based model for journalism that no longer makes sense. It doesn’t have to accept that consolidation – a reduction of options for both readers and writers – is the only way forward. It has been proven now that a focused subscription model can work for niche communities. The next step is to take that approach and then build alliances among a new generation of publishers and writers so that a rich new media economy can emerge.”
Finance Minister Grant Robertson Photo: Pool / NZME
That might be a bit hasty. Ad-funding models still work for some media - particularly smaller outlets - and are likely to persist after Covid-19.
As the committee closed for the day though, Gavin Ellis acknowledged a reckoning is coming for New Zealand's larger commercial media companies.
He appealed to the politicians for help, not because he thought it would preserve the industry in its current state, but because it would be harder to rebuild if it’s reduced to ashes first.
"We need to buy time. We can’t... re-craft the ecosystem if there’s nothing left to re-craft."
As Grant Robertson told the Epidemic Response Select Committee on Tuesday, there's only so much that government assistance can do for ad-driven companies like NZME, Stuff, or MediaWorks. He drew on a medical comparison, calling the news “a case where the patient had pre-existing medical conditions”.
In that metaphor, a soon-to-be-announced government bailout could be compared to medical intervention. It may keep the patient alive for now, but they still might not make it, and if they do, they’ll likely have to change their lifestyle to get healthy again.
