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Summary:

Some publishers seem to feel that Flipboard’s business model is based on taking advantage of their free content, but the company argues that what it really wants to do is help them stay in business

There’s been a kind of lingering tension between online publishers and Flipboard ever since the service first launched in 2010, but that tension broke into the open last week, after Talking Points Memo founder Josh Marshall said that he thought Flipboard and similar services were a “scam” against publishers — and that he would no longer be putting the full version of his content on those platforms.

Marshall’s views about the relative merits of playing ball with such services seemed to strike a chord in the online media business, judging by some of the comments on Twitter and in the comment section of the post I wrote about it — although he has somewhat tempered his views about the “scam” aspect of these services in an update he posted after speaking with Flipboard founder Mike McCue.

In a way, the existential questions that Flipboard raises for publishers are similar to those raised by paywalls: In a world where content moves about in all directions, and can be duplicated or aggregated willy-nilly by anyone with a website, how do media companies keep the lights on? As Marshall put it:

“I do think these services, as they currently exist, are bad for publishers. We give them the entirety of our product — news stories, updates, posts, what-have-you — in exchange for a notional thing called exposure, brand awareness, blah blah blah [but] you can’t eat ‘reach’ and we can’t pay salaries with ‘brand awareness'”

There’s a good Flipboard and a bad Flipboard

Flipboard

The problem is that there are several different Flipboards: there’s the one that users (including me) love because it allows them to essentially create their own magazine out of RSS feeds, Twitter lists, Facebook and Flickr pages, and pretty much anything else that comes along. Then there’s the Flipboard some publishers see: the one that takes their content and reproduces it without their permission. And finally, there’s Flipboard’s own vision of itself, which is as a partner for media companies, not a competitor.

One of the biggest issues for Flipboard when it comes to making peace with publishers is that its reach currently exceed its grasp. It wants to help more media companies monetize their content — the way it is already doing for a number of magazines, including some Conde Nast titles (although Wired and the New Yorker stepped back from the service last year) — but it is still a relatively small company, and doesn’t have the kind of infrastructure it needs to run an ad network.

Presumably, that’s one of the things that it will be doing with the $50 million in funding it just raised. And Marshall said his latest update that he is willing to reconsider his withdrawal from the service if Flipboard figures out a way to offer him the same kind of advertising-related income it says larger partners are getting:

“McCue says they’re currently working on a new product/sales channel that will be able to scale that success down to smaller, more boutique publishers. Publishers like TPM… He says they’re also working on ways of allowing publications to use their subscription authentications through Flipboard. What I told him was that if and when these new features or monetization routes become available we’d probably come right back.”

A potential solution to freefalling ad revenue

The biggest selling point for Flipboard is that content that appears inside the app looks great — in many cases, better than it does on the publisher’s own website — and that includes advertising. It looks very much like a printed magazine, which is kind of the whole point. McCue’s pitch is that this allows for a form of large-scale display ad that very few online publications are doing, and that this will help take advertising back to what it was in the good old days of magazine publishing, which will ultimately result (and allegedly is resulting for some) in sharply higher revenue.

Advertising

The fact that monetizing online content is a struggle is not news, and as the price of online advertising continues to fall, that struggle is not getting any easier. The reality is that one of the main factors that made print-based advertising so profitable — the fact that there was a scarcity of newspaper and magazine pages, and no other cost-effective way to reach those audiences — is gone forever. There is no shortage of webpages on which to put an ad, and so the immutable laws of supply and demand continue to push the price of online banner ads lower and lower.

On top of that, Google and other web giants have gotten advertisers hooked on “programmatic” advertising, which is driven by keywords and click-throughs, which has also put pressure on traditional ad prices. This in turn helps drive some publishers to try and accumulate more and more pageviews.

So the media business is suffering from two interrelated problems: one is the fact that their content can no longer be contained in nice, tidy packages, and the second is that the primary method of monetizing that content has literally disintegrated before their eyes, with no end in sight. Flipboard takes advantage of the first of these factors — as many other similar services do — but it also holds out the promise of helping publishers to solve the second.

But the reaction from publishers like Talking Points Memo shows that the company still has a lot of work to do to make that case.

Post and thumbnail photos courtesy of Shutterstock / violetkaipa and Shutterstock / Eldorado3D

  1. Journalism and publishing is a tough, tough business

  2. Two sides to every story. It Really depends on whether you are a publisher or consumer. Totally agree that as an end user (I am one) Flipboard is useful and looks great. as someone who also has a dog in this fight (running a social mag platform) we are asked similar questions by brands / partners / friends

    In my view it’s down to the platform to prove it can bring in the ad dollars or other forms of revenue (clickable commerce, affiliate partnerships, subs) to make everyone happier – ending in a better product all round

  3. Shooting down those that find your content useful and your customers is never good business. As a content publisher (website) and a writer, I need revenue to survive. If you don’t want aggregators to use your content, don’t call them “scammers” and don’t provide them the content. Don’t provide RSS feeds, don’t allow it in your terms and conditions, etc. If the world was perfect, we’d all have milk and honey and be happy. The internet as the public knows it (post Berners-Lee) has been around for barely 20 years. If Marshall hasn’t figured out the revenue issues with his business model yet, don’t blame Flipboard if they are providing a pathway. Comments such as “you can’t pay salaries with brand awareness” probably come as news to the folks at P&G or General Motors.

  4. Since Flipboard is fundamentally an outsourced layout design the answer is to bring it in-house with a similar design, which is not hard.

  5. Carlos Lamadrid Tuesday, October 22, 2013

    Mathew,
    Great article. BUT, let’s look at this statement: “The reality is that one of the main factors that made print-based advertising so profitable — the fact that there was a scarcity of newspaper and magazine pages, and no other cost-effective way to reach those audiences — is gone forever. There is no shortage of webpages on which to put an ad, …”
    The reality is that not all online content is created equal, so advertisers need to keep this in mind and good content on the web I think gets lost with all the shit out there. An advertiser should keep this in mind and not lump it all together. Advertisers need to get smarter about how they buy the web and realize just like all media there are different benefits to each kind of online content. They need to get away from buying by the numbers.

    1. Not all online content is created equal, but to focus on advertising being about content is to sustain a media fallacy. Advertising is not about content – it’s about audience. You’re not selling the product or service to the article that it appears next to, but to the person reading it. In the days of old media, there was an absolute and exclusive relationship to content and audience; if you wanted to reach an aspirational audience with income, you advertised in publications with high-value content. That established the correlation between advertising and content. Nowadays, with personalisation and tracking, you can reach the aspirational audience anywhere, not just on the WSJ, but anywhere. You can filter out the riff-raff and target your ads to a specific audience. The content context in which your ad is placed is incidental.

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