The findings of Pew Research Center's 2016 report on the state of news media don't add any clarity to the confusing state of the digital media industry. The findings conclude what content farms have already accepted as the blueprint for success in digital media: The industry-wide pursuit of infinite scale has left online media dependent upon social platforms like Facebook to drive traffic to content.
While online content companies have attempted to diversify traffic with efforts into newsletters, trending meme aggregation apps, and chatbot development, the reality is that popular social platforms are the main beneficiaries of content creation. The internet is populated with premium content by premium online media companies, making the tech firms that spread those companies' messages and aggregate their content for users to discover get even richer.
Digital media companies can create insightful, innovative, immersive content, but they are ultimately competing for the same display advertising dollars spent on the internet that are primarily being given to Facebook, Google, Twitter, Yahoo!, and Microsoft.
The Pew report cites growth in digital advertising, which one could assume means a feast of profits for big box content farms. But some of the most-trafficked, highest revenue-earning content farms aren't very profitable. Huffington Post broke even on about $146 million in revenue in 2014. NBC Universal's investments in Buzzfeed and Vox are notable examples of digital native websites that are buoyed by external investments. "For some digital publishers," the report concludes, "a quest for scale has resulted in annual revenue estimates in the tens of millions of dollars, bolstered in some cases by venture capital funding. Yet there is little evidence that many of these sites are profitable."
Despite the growth across digital ad spending in 2015, Pew reported that online media companies weren't the ones getting rich from content populating the internet. In 2015, $59.6 billion was spent on all digital advertising, up 20 percent from 2015. According to the report, five technology and social media companies (Google, Facebook, Yahoo, Microsoft, and Twitter) "continue to dominate the digital advertising market, accounting for 65% of all revenue from digital advertising in 2015, or $38.5 billion out of $59.6 billion."
This is why digital media is so interesting—there's no clear way to make it profitable
Buzzfeed's estimated $170 million in revenue in 2015 seems an inconsequential slice of the pie, like there must be better ways to make more money on the internet rather than generating content. There's a common trend of digital media companies diversifying into production of video entertainment, rather than rely on display advertising. This is why digital media is so interesting—there's no clear way to make it profitable, so we are witnessing companies throw ideas against the wall until "the next big thing" emerges as a way out from the impossible display advertising model.
The Pew Report focuses primarily on the relevance of news, reporting, and journalism, and there's barely any trend to indicate that reporting the news has a place in digital media. With the heavy reliance on social platforms, digital media companies value CONTENT over news.
Digital media companies create content, but that content isn't as valuable as a mechanism to reach eyeballs like Facebook. Beyond existing as a great controller of content, the value of Facebook lies in defining what society even considers 'news.' The idea of a thoughtfully reported piece verified by rigorous editorial standards on the internet is already obsolete, and that is by design. The future of content consumption has already been envisioned by Facebook, and Facebook will make it easier for humans to consume digital media within its own platform.
Despite growing audiences and growing revenue, journalism won't be saved on the internet. That's why it's so difficult to trust any brand touting values of "storytelling" and #longform immersion into their content.
There are a few media industry-wide assumptions that were validated in the Pew Report. Television is still king. Journalism and traditional newsrooms are dying. Print is flailing. Mobile views outpace desktop views. As digital media continues to mature, the assumption might be, "Online content creation isn't profitable."
Theoretically, if the digital media space isn't massively profitable for digital media companies, you'd assume that venturing into niche, unprofitable, experimental ideas like good old fashioned news reporting would be worth the risk. However, many smaller-scale, local digital publications are moving to a non-profit model, sourcing donations, subscriptions and foundation-funding to keep the news in their community alive.
The future of journalism is not for profit, no matter how news finds you. News is just a subgenre of content, and it's already hard enough to make content on the internet profitable.
Read fallen content farmer Carles.Buzz's "Life on the Content Farm" series here.