Data, traffic, demand, money: why decentralisation is key for the news industry

May 6, 2024
business model
The logic around data production, storage and consumption points to decentralisation as a trend. Will the AI layer push the current system into overdrive, or will new business and architecture models (or models) emerge?
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Since the news industry transitioned into the digital realm, it has undergone steady degradation, affecting all aspects. A fundamental issue is that the primary driver of the digital system - the click - does not equate to the value created in traditional media, which is attention. However, there are also economic issues. The problems surrounding the digital ad model are numerous, ranging from the depreciation of value created by content to the tacit acceptance of the fraud sub-industry. Currently, investment management in the system primarily benefits large exchange owners such as Google and Meta. Can the incoming AI layer push the current system into overdrive, or will new business and architectural models emerge?
Social networks have perhaps created the greatest Ponzi Scheme in the form of the illusion that these platforms are inherently decentralised. Events such as the Arab Spring led a whole generation to believe that Facebook was on the verge of democratising information and, as a result, their political regimes. From the hopeful naivety of the Tahrir Square protests to the grim deception of Cambridge Analytica, many were convinced that Mark Zuckerberg was the real deal, possibly including Zuckerberg himself. However, this was a carefully crafted narrative, kept as long as possible, by a global corporation, not a NGO. The world's realpolitik did change, but it veered into a much more grave stage of manipulation, disinformation, and significant centralisation.
The digital news market is 1) an example of market failure, 2) a dysfunctional business model because the model works for the massive platforms, not news organisations, 3) locked into a cage by the search and social platforms whose usage and traffic it helped to build, 4) tied to centralised patterns that are a combination of legacy media models and the current data architecture that works for the big data corporations. This is not a left-wing diatribe, just the description of where the main problem lies if the news organisations are to be truly transformed.
Advertising, which was (and still is) the archetype of revenue for news publishers, is a model that brought loads of externalities long before the Internet was even born, as Tony Curzon Price addresses wonderfully in this post about how advertising has harmful consequences for society. From market distortion to overconsumption patterns, the whole idea worked, but is bad. However, since it has been happening long before any of us were born, we accept these effects as normal, but they are not. Just like the digital economics that rule the major ad exchanges, they are enforced to allow the incumbent to optimize profits.
Consider this: what if we explore different architectures that, for instance, avoid creating bottlenecks by design? It may be challenging to envision at the moment, akin to imagining California as an island like the British Isles. However, if both consumers and providers break free from the cycle enforced by search and social media giants, the system's tension would lessen. Interestingly enough, these giants wouldn't disappear. They'd continue to profit from the services they're ideally suited to provide. Constructing such a system overnight is unlikely, and even if achievable, it would face significant resistance from incumbents. However, in the long run, a fragmented market having a fragmented distribution makes more sense.
Today, traffic has been bottlenecked by tech empires and this bottleneck is truly the pain point of the entire system. As artificial intelligence enters the market, as always, the wealthy will be better positioned to secure their assets. However, a considerable amount of randomness is unavoidable, and significant changes to rearrange the game must occur, especially if we, as a society, need to address this new layer to prevent monopolies like those in the search and social markets. Yes, OpenAI will strive to be what Google and Meta are for their stakes in the previous shifts of the game, but lawmakers must consult experts outside Silicon Valley on how to prevent another monopoly and promote a more capitalistic market, where competition is not for losers.
The arrangement of data on servers will change and the flow of data between users and businesses too. This is where the news and information industry can reinvent itself and reenter the game to foster a healthier and more stable society. When digital first emerged, the news leadership failed to adapt due to fear of self-cannibalisation, but ended surrendering themselves quietly to tech empires. This time, news corporations of all sizes and colors must “first ponder, then dare” to ensure that in the next round of the game, the industry, in whatever form or shape it may take, can negotiate with other stakeholders from a position of strength, rather than accepting a unavoidable defeat.
What does this belligerent statement mean? It means that the weakness of the news industry was a mixture of a lack of preparation to deal with an unavoidable technological shift and the fear that C-Level employees have when they need to make drastic moves that can impact their short-term bonuses. The architectures that will emerge from AI already are moving to be decentralised and interoperable. Increased volumes of data, security and privacy concerns, data-related fault tolerance and reliability, the availability of new distributed ledger technologies (like blockchain), and decentralised demand are all trends that point in the same direction. The opportunity will arrive (it’s not futurism, but simple observation); it just needs to be seized.
There is a change, a shift ongoing. New and existing news companies must boldly embrace emerging alternatives, benefitting from decentralisation to allow diverse players, and society must press for legislation to make markets strong and open. In the past, the consolidation of search and social networks would have needed a missing shift from traditional models to innovative ones. Embracing new technologies and platforms can reshape the market, but swift, immediate, strategic action is needed. Relying on outdated models will stifle innovation and lead to the industry’s decline. Sustainable business practices prioritising public trust, content integritover viewership are essential. Failure to adapt could render traditional news entities obsolete, making extinction seem a plausible risk.

© Cassiano Gobbet 2023 - 2024