Exploring the connection between tech titans and news

Worrying about business models used to be the preserve of strategy gurus and management consultants. Nowadays, even journalists are in on the act. Not because they suddenly think business models are sexy but because it has become a matter of life and death for their trade, particularly in the West.

Every new monthly report on audience figures or quarterly statement on profit and revenue injects a fresh dose of paranoia in the newsrooms and boardrooms of media companies, particularly those that still depend on dead trees for a living. The inexorable march of digital technology is upending the twin pillars of the business model for newspapers and magazines: subscriptions and advertising. Western consumers are voting with their feet, as well as their fingers, and switching their loyalty from newsprint to touch screens, where content is more a la carte than prix fixe, but at least it’s cheap if not free. And where consumers go, advertisers follow, thus compounding the misery of publishers.

The latest annual survey of the state of affairs in American news media from the Pew Research Center, a self-professed “fact tank”, offers a sobering glimpse of the future for the news publishing industry. As more and more people get their news from smart phones, tablets and aggregator apps, publishers now face the prospect of not only being abandoned by their readers and advertisers but also being gobbled up by the 600-pound gorillas moving in on their turf: the Googles, Apples, Facebooks and Amazons that increasingly mediate every little aspect of our digital lives.

A snippet from the Pew report: “Already in 2011, five technology companies accounted for 68% of all online ad revenue, and that list does not include Amazon and Apple, which get most of their dollars from transactions, downloads and devices. By 2015, Facebook is expected to account for one out of every five digital display ads sold.”

Most news publishers have discovered that, in comparison to the tech titans or even their own fledgling Web 2.0 rivals, they are pretty flat-footed when it comes to making the transition to digital. So, increasingly, news publishers are likely to jostle with each other to find comfort in the embrace of a Google or an Apple. As the Pew report has noted, “there are already signs of closer financial ties between technology giants and news.”

This irrevocable trend of news publishers getting into bed with one or more of these algorithm-powered behemoths from Silicon Valley has profound implications, and not just for publishers and journalists. But that’s a story still being written. Thus, as they say in the news business, we’ll just have to watch this space.