Ishmet Davidson, the CEO of Media24, has said that he doesn’t see online advertising alone sustaining journalism any longer, as tech titans Facebook and Google continue to gobble up the lion’s share of online ad spending.
“If anybody thinks that advertising is going to save the day, I really don’t think it is going to.”
Davidson was speaking during News24’s Future of News Summit on Thursday. Earlier News24 announced the launch of a subscription service from 8 August at a cost of R75 per month. Breaking news will remain free.
According to News24, the new subscription service will give readers access to “additional investigative and in-depth journalism, as well as a range of informed opinions, analysis and views on news, politics, sport, business and lifestyle”. Readers will also have access to City Press, You, Drum and True Love magazines’ digital editions.
“The fact of the matter is that, as things stand right now, Google and Facebook gobble up somewhere between 85% and 90% of online advertising in the country. I may seem a bit bitter about it, and that is probably because I am.
“The fact is that all of that money goes out of the country,” said Davidson.
Davidson said fighting Facebook and Google at their own advertising game in the hope that revenues would pick up was unlikely to be successful, he added.
The oversupply problem
Dele Olojede, the chairperson of AFAR Media and the founder of Africa In the World, said that the traditional model of news – where advertising contributed between 80% and 85% of costs and circulation the remainder – was finished.
There is no way to get people to easily pay for news, he said, as they could get similar news from a thousand other sources.
Olojede said that for a subscription model to be successful, news organisation had to deliver quality products that that cannot be found elsewhere, something that was “more easily said than done”.
Burn the boats
Michael Jordaan, the former CEO of FNB and the founder of Montegray Capital, said that to thrive today media companies needed to cut their ties with the old ways of doing things and “jump into the new world as completely and mercilessly as possible”.
He foresees that the media industry will follow a similar arc to that of the video and music industries, who took in knock when physical sales started to plunge, but later took advantage of streaming by offering new products.
“In the end good content will remain king,” he said.
Media companies, he said, should look to the example of Hernán Cortés and “burn their boats” to force themselves to survive in the new world. – Fin24