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Why were large publishers spared by Amazon’s affiliate fee cut?
A few months ago, Amazon shocked the publishing industry when it announced it was cutting the affiliate fees it pays out to websites for a large cross section of product categories. This is the very industry that, in an effort to diversify beyond display advertising, had invested heavily in ecommerce verticals in recent years, and many digital media companies were no doubt hopeful that affiliate sales would help make up for the losses they were seeing in advertising and events. After all, what better time to sell stuff to consumers over the internet than when they’re trapped inside their homes?
Digiday recently confirmed that some publishers with more direct relationships with Amazon had received carve-outs. Unlike the rest of us, these publishers’ affiliate fees remained untouched, regardless of the product category.
Why? Well, let’s consider the three publishers named in the Digiday piece: CNN, The New York Times, and New York/Vox. Is it just a coincidence that these three outlets have significant influence within the political space at a time when Amazon is being threatened by a range of politicians and regulatory bodies that span from Elizabeth Warren to Trump?
Maybe! But I don’t think I’m dabbling in conspiracy theory by asking the question. I’m not the first to notice that, as regulatory pressures mount against Big Tech, companies like Google, Facebook, and Amazon have suddenly shown a lot more interest in sharing revenue with the media industry.
Many tech executives, either rightly or wrongly, think the increased scrutiny they’ve received from press outlets in recent years -- what some have labeled the “techlash” -- stems either explicitly or implicitly from journalists’ belief that the tech platforms pose some kind of threat to their careers. By opening up their wallets and paying publishers to appear in a Facebook news tab or investing hundreds of millions of dollars in local news, these tech companies are perhaps betting that the engendered goodwill will result in fewer damaging investigations and scathing op-eds.
Who knows if that played into Amazon’s motivation here, but it surely fits within the larger trend that I’ve written about in the past in terms of how major platforms discriminate against independent creators while favoring mainstream media companies. At any point a tech company can yank away your distribution/revenue and hand it over to a mainstream outlet that did nothing to earn it. Amazon’s cut to affiliate fees is a stark reminder of how unfair this system truly is.
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Differentiating content in the time of limitless scale
Ben Thompson published an article that takes an interesting historical look at the rise of various mediums that include newspapers, magazines, TV, and the internet. What I found most fascinating about the piece was its explanation of how newspapers’ value propositions changed as new mediums entered the market. In the early 1900s, Americans got almost 100% of their news from their local newspapers. The rise of monthly national magazines suddenly exposed readers to larger, national stories that weren’t as closely tied to the daily news cycle. The emergence of TV allowed millions of viewers to get a compressed digest of that day’s news each evening, causing a sharp decrease in evening editions of newspapers.
Now consider how the internet has flipped all these separate mediums on their heads. Back in 1990, you consumed The New Yorker, New York Times, and CNN for entirely different reasons. The New Yorker provided the lean back experience when you wanted to go deep on some esoteric subject that wasn’t necessarily tied to the news cycle. The New York Times conducted investigative reporting and broke news. CNN allowed you to watch talking heads battle it out and discuss the news that had broken in The New York Times earlier that day.
Today, the internet renders these distinctions meaningless. The New York Times’s video department produces a lot of content that could otherwise run as a segment on CNN. The New Yorker publishes content that reacts to that day’s news in a way that it never could during its print-only days.
So what does that mean for publishers that want to differentiate their content in order to attract paying subscribers and premium advertisers? Thompson argued in his piece that it’s forced outlets to double down on servicing niches. In some cases, a niche may be a specific topic -- politics, tech, sports -- but it can also be a point of view. Fox News covers a broad array of news, but it does so in a way that specifically caters to older conservative males. It’s probably not a coincidence that a lot of the major media companies to emerge in the last decade -- Vox, BuzzFeed, Vice -- haven’t shied away from embracing strongly partisan views at the expense of “view from nowhere” objectivity.
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I have a secret Facebook group that’s only promoted to subscribers of this newsletter. I try to post exclusive commentary to it sometimes and have regular discussions with its members about the tech/media space. Go here to join. [link]
Facebook's News tab isn't available on desktop and seems to be pretty well buried on mobile. I doubt that most publishers will see much of a boost in traffic from it in the near term. [link]
Some interesting insights here about how slight tweaks to wording and pricing can help grow subscriptions and reduce churn. [link]
"Alibaba’s technology ... allows the audience to watch a live stream, chat with other viewers, and select and pay for a product—all at the same time." Bloomberg reports on the merging of ecommerce and live streamed video. [link]
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