Reader Revenue Top Stories
5 mins read

Should news publishers get in bed with Amazon?

In its 15-year lifespan, Facebook has spawned adversarial relationships with countless companies, politicians, and even its own co-founders, but perhaps no industry has garnered more distrust for the social platform than digital publishers. In fact, publishers now cite their experience with Facebook as an allegory for why one should always beware large tech platforms bearing gifts.

By now, the story of how Facebook almost single-handedly upended the digital media industry is well-known. After the platform tweaked its algorithm earlier this decade to favor news publishers, those same publishers completely transformed their approach to distribution. They hired out teams to manage their Facebook pages, spent hundreds of millions of dollars on sponsored posts, and produced thousands of hours of native video. Headline best practices were rewritten and entirely new verticals were launched. And during this entire period, venture capitalists invested billions of dollars in news startups that used their hockey stick growth to claim they had their fingers on the pulse of Millennial consumers.

And then just as quickly as it started, the music stopped. Due to a number of factors, the company’s impact on the 2016 elections being one of them, Facebook decided it wanted to pivot away from news, and so it rolled out algorithm changes that favored content from your friends and family over pages run by news outlets.

The changes were catastrophic for many media companies. Some shut down completely. Others went up in fire sales at fractions of their earlier valuations. Thousands of journalists were laid off. And the fallout continues; just this month, Disney announced it had written off its $400 million investment in Vice — an investment it now considers completely worthless.

This entire experience has engendered a fair bit of skepticism in the news industry toward any large tech company that expresses interest in partnering with media companies. So it’s been interesting to watch the reaction this week to news that Amazon has approached publishers with offers to fund their expansions into new regions.

The details, first reported by Vox’s Peter Kafka, are still vague, but it seems like Amazon wants to provide upfront payments to outlets like The New York Times and BuzzFeed so they can launch new product-recommendations verticals outside the U.S. These new verticals would presumably review products and services that cater to non-U.S. audiences and include affiliate links to Amazon.

With the digital advertising market collapsing, publishers have placed significant bets on product-recommendation content in recent years. In 2016, The New York Times spent $30 million purchasing The Wirecutter, an ecommerce site that recommends the best product in hundreds of categories. Media companies that include BuzzFeed, Vox, and New York have all launched product recommendation sites, and almost all utilize Amazon affiliate links, which allow them to take a percentage of each purchase when a reader clicks on a link.

So, given the roles Facebook and Google played in siphoning away both attention and money from news publishers, do those same publishers face similar risks getting in bed with Amazon?

Viewed one way, you could argue that Amazon’s goals are more aligned with publishers, and it isn’t in direct competition with them. Unlike Facebook and other social platforms, Amazon’s commerce site doesn’t serve as a destination for content consumption, and publishers, for the most part, aren’t attempting to act as retailers. Amazon won’t play a major role in a news publisher’s content distribution, nor will it have the ability to cut that distribution off.

One could even argue that, because Amazon CEO Jeff Bezos owns The Washington Post, he’s directly incentivized to not harm the media industry. Arc, the publishing platform WashPo is built on, has been branded as a SaaS product and is being marketed to publishers, both national and local, as a best-of-class content management system they can license. Surely, Bezos wouldn’t undermine his own customer base?

But that’s not to say there aren’t causes for concern, both with Amazon’s affiliate program and publishers’ increasing reliance on ecommerce revenue in general. There are significant ethical quandaries that any publisher must grapple with when deploying affiliate links. For instance, do you recommend e-retailers that provide the best price and customer experience, or the ones that generate the best payouts for publishers? There have been documented cases where bloggers have recommended products without disclosing to readers that the companies behind those products had offered higher affiliate fees than their competitors. In an interview last year, Wirecutter’s director of revenue told me that the site publishes its recommendations regardless of whether an affiliate relationship exists, and it always chooses the retailers with the best prices and customer service.

Then there’s the problem of relying on Amazon itself, a tech behemoth that regularly shifts its business strategy without much warning. Publishers were irate when Facebook constantly changed its own priorities over the years, choking off both distribution and advance payments, and there’s nothing to stop Amazon from doing the same with its affiliate fees.

In fact, there are plenty of instances in which this has already happened. Earlier this decade, Amazon shut off its affiliate program for bloggers who lived in states that introduced new sales tax laws that directly targeted e-retailers. Affiliate marketers in those states saw their income streams wiped out, virtually overnight. And then in 2017, Amazon restructured its affiliate payments, setting different rates for various product categories. If you created content in a niche that saw its affiliate fees lowered, you saw an immediate hit to your income.

Also, while Amazon’s commerce website isn’t attempting to act as a media company at the moment, it is now competing more and more with publishers on one front: digital advertising. It currently has the third-largest share in the digital advertising market and is quickly eating into Facebook and Google’s market share. By sending more and more traffic to Amazon via affiliate links, publishers are strengthening Amazon’s value proposition to advertisers.

Of course, the more news reporting is subsidized by non-news, the more executives at these publishers ask themselves why they’re funding this expensive news gathering in the first place. Ecommerce verticals won’t pay for investigative or adversarial journalism, at least not directly. There aren’t many affiliate links you’ll be able to insert into an article about a local school board meeting or an investigation into a police shooting. One reason many publishers have placed more emphasis on paid subscriptions lately is because it generates revenue for the types of stories that advertisers usually shun. Product review sites, when run ethically, provide a public service, but their contributions to journalism are limited.

Will publishers take Amazon’s upfront payments, assuming they actually materialize? Probably. But they should do so with the understanding that Amazon views this arrangement as one of thousands of experiments it’s conducting at any one time, and it operates on the assumption that many of those experiments will fail. Any partnership between a publisher and tech platform should be made with a contingency in place for the day when that partnership ends.

Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

Download WNIP’s comprehensive new report—50 Ways to Make Media Pay—an essential read for publishers looking at the multiple revenue opportunities available, whether it’s to reach new audiences or double down on existing super-users. The report is free and can be downloaded here.


Related posts