"Generative AI is altering the very heart of the publishing industry: the creation of content, which means that the value chain is altered as a whole, hence its disruptive nature."

The Generative AI Revolution

The rise of the platforms meant for the media – which attended almost as mere spectators – a profound transformation of the value chain in terms of distribution and marketing. Now, Generative AI is altering the very heart of the industry: the creation of content, which means that the value chain is altered as a whole, hence its disruptive nature. We are therefore facing, more than a transformation, the “deconstruction” of the industry.

Three Levels of Adaptation

In order to successfully face this new scenario, three different levels of action must be taken, where adaptation is essential. Industry, organization and professional environment. 

The industry level

At the industry level, the media must establish medium and long-term strategies to help them negotiate advantageously with the large technological platforms that dominate the market. Historically, the relationship between media and platforms has been uneven to say the least. With the arrival of new companies owning AI models, the scenario becomes even more complex and uncertain. 

We are witnessing two strategies. On the one hand, media that bet on suing the companies that own AI tools that, in their opinion, make fraudulent use of their content, as is the case of The New York Times with OpenAI or more recently Forbes’ complaint to Perplexity. On the other hand, bilateral agreements between the big groups (Axel Springer, Associated Press, News Corp, Vox Media, The Atlantic, LeMonde and Prisa) and Open AI are being signed. Little is known about these agreements, except for official communications and some leaks to the press. 

According to these reports, the AI company would use its content to train models in exchange for financial remuneration – which could be in the double digits for periods of three years (millions of dollars). In addition, according to the published information, a select group of publishers (Preferred Publisher Program) would be offered advantages to give them preference when users interact with ChatGPT.  

Due to the lack of transparency about the agreements, it is difficult to foresee the implications for the industry as a whole. It would be interesting to know, given that the agreements are advertised as exclusivist, the opinion of the national agencies and commissions in charge of overseeing and ensuring market competition.

The organization level

At the organizational level, it is crucial that media companies have a clear and decisive strategy for the incorporation of AI. This process must be led by specialized and responsible teams, whose objectives must include the development of specific usage guidelines that reflect the strategic lines. This includes determining which platforms to use, how to manage the data and anticipate contingency actions in the face of potential risks that may arise. Currently, many organizations use AI in a dispersed manner, which increases potential risks. Establishing a clear, centralized strategy can mitigate these risks and maximize the benefits of AI.

> Innovating with AI, the impressive work of Aftonbladet

The individual professional level

Finally, professional level, or how to adapt to the arrival of AI as an essential tool for the development of any intellectual work. In this sense, AI should be seen as a tool that helps to increase efficiency and not as a replacement for journalists. The use of Gen AI should be understood as an assistant or co-pilot – Microsoft is to be congratulated for the choice of name for its tool – that allows to be more efficient and reduce time in processes of little value, or that, due to their complexity, entail a lot of focus and intelligence. Tasks that can be automated, such as transcriptions, text translation and the identification of patterns in large volumes of data, will free journalists to concentrate on the analysis, interpretation and contextualization of information, aspects in which AI – at least for the moment – cannot compete.

Digital journalists vs traditional journalists

But what is most surprising is that for organizations and journalists, AI is seen as a transformation support agent that puts value on traditional skills.

For almost two decades, digitalization has met with opposition from certain journalists who, due to their own difficulties and/or disinterest, rejected or placed (in some newsrooms they continue to do so) obstacles to the transformation of organizations. The requirement to have a minimum of digital skills to adapt to the transformation had divided traditional newsrooms into two main camps, in many cases at odds: digital journalists and “traditional” journalists.

It is true that some great journalists with poor digital skills have been lagging behind in the face of the arrival of more digital profiles, even if they were brilliant editors.  AI can be an internal energizer because it will help these digitally challenged journalists to focus on what they do best: good journalism, relying on AI for the other functions. 

> Bringing AI to a 400 year old media group

The risks of AI

While AI offers many opportunities, it also presents significant risks. One of the most prominent is the phenomenon of AI hallucinations, when AI tools generate incorrect information or even invent data. This is particularly dangerous in journalism, for which accuracy and veracity are critical. Therefore, constant human oversight and protocols to correct any errors that do occur are essential.

Another risk is the possibility of plagiarism, both conscious and unconscious. AI models are trained on huge amounts of data, much of which comes from unfiltered content extracted from the internet. This can lead to the creation of content that might intentionally or unintentionally infringe copyright. The media must be diligent to ensure that AI-generated content is original and respectful of intellectual property.

An uncertain future

The three levels analyzed are closely interrelated, and companies must have a cross-cutting AI strategy that gives coherence to the three axes described above. 

Gen AI has the ability to redefine the journalism industry, creating new avenues for interaction and personalization with audiences, as well as optimizing business models. However, taking advantage of these opportunities requires a strategic and ethical approach. The media must invest in training and in the development of new skills among their professionals to adapt to this ever-evolving technology.

In conclusion, Generative Artificial Intelligence represents a powerful tool that can transform journalism, provided it is used carefully and responsibly. Media that manage to effectively integrate AI into their processes will be better positioned to face the challenges of the future and take advantage of the opportunities that this technology offers. Digital transformation is already AI transformation.

We cannot end without mentioning what is already one of the most controversial and relevant topics today: the need to be transparent with the public, which requires reporting when and how AI is used in content creation. This includes clearly noting whether an article or part of an article has been generated by AI. Transparency is not only a matter of ethics, it is, above all, fundamental to maintaining the trust of readers, so weakened in recent times.

Pepe Cerezo, digital monetization consultant and specialist in digital journalism and new business models, set the scene at The Audiencers' Festival in Madrid, sharing his research on the state of subscriptions and digital reader revenue models given the end of the open web. 

As expected, 2023 was a year full of concerns and doubts. Between all the economic uncertainties and major changes in the digital world, including the end of cookies as a way of identifying and tracking readers for advertising revenue, it was a challenging year. And let’s not forget the eruption of generative AI and its consequent impact on the digital ecosystem, especially in the media. 

Now, here we are in 2024, and it’s shaping up to be a pretty pivotal year. We’re seeing the open web slowly but surely losing ground to “walled gardens” (registration walls and paywalls all round), and with the demise of third-party cookies and increasingly strict consent regulations in the EU, first-party data is becoming the cornerstone of publishers’ advertising models. Alongside this, a need to consolidate subscription revenue streams to support advertising and secure a sustainable business model.

As for Chat GPT and generative AI, there’s little doubt that it will transform the industry as much, if not more, than the advent of the internet did. Beyond offering new experiences in personalization, distribution and monetization, generative AI also changes the very nature of content creation and production in every format – text, audio, image and video.

What’s more, thanks to AI, the very way we handle information is changing. Content and data history is becoming a fluid, ever-changing stream of information. This shift is going to completely reshape production, distribution and monetization in ways we’ve never seen before. Sure, some people are talking about an AI bubble, but in the mid- and long-term, its game-changing impact can’t be denied.

Last year, we also saw a slight slowdown in subscription growth, which raised some questions about where reader revenue models are headed.

Despite the difficulty of driving double-digit subscriber growth in this context, publishers have to think about how they can be more efficient, refine their metrics and learn from more mature industries like video streaming platforms. 

You see, the slowdown in new subscriber growth after the pandemic led to an increase in promotional offers and expensive marketing moves, which naturally bumped up subscriber acquisition costs.

And it’s all interconnected in the subscription ecosystem. More offers and trials might draw in new subscribers, but this can also lead to higher churn rates when the trials end, and that affects our lifetime value. If we solely focus on getting more paying users, over time, the business will become weaker, frustrating initial prospects.

That’s why it’s essential to keep an eye on the efficiency of operations, keeping track of the Average Revenue Per User (ARPU) and the relationship between Customer Acquisition Costs (CAC) and Lifetime Value (LTV). The lower the acquisition cost and the higher the ARPU, the better the LTV, and the more profitable those users will be. Because not all subscribers are the same, which means that measuring them in aggregate, as we have been doing, serves as a vanity metric but is not very effective for evaluating the operation of our business. In this way, obtaining first-party data helps us to get to know our readers better and better.

In the new scenario of the end of the open web, any formula to get users to register becomes vital. To this end, the media have to bet on all possible ways: registration walls, promoting mobile apps, sending out newsletters and alerts, and of course, pushing subscriptions.

In less mature markets, the “conversion war” will probably continue, but the focus will turn to attracting the most profitable and loyal users.

Subscriptions are still a work in progress, but they’re a key part of diversifying media business models. They’re not just important for the revenue they bring in, but also for the freedom they give us from advertisers. Plus, they help us build our own walled gardens with high-quality first-party data.

So, as we move towards the end of the open web, the media needs to double down on creating valuable spaces for their communities, offering high quality products and services, and reinforcing the value of their brands in accordance with their mission and values. The future lies in it.

Digital Monetization Consultant and specialist in digital journalism & new business models, Pepe Cerezo has more than 15 years experience in the industry. Previously head of research & digital strategy at Prisa, he now works with Blue Engine Collaborative, WAN-IFRA and has authored multiple books, including the latest release, Deconstructing the media: How to adapt communication companies to the digital environment (available to purchase now).

The current publishing context

The media are suffering the consequences of a perfect storm. In the midst of a digital transformation era, still not over the effects of the pandemic, publishers are now faced with an uncertain and highly inflationary economic environment caused by the war in Ukraine.

These successive crises are irreversibly accelerating both the speed of and need for change.

And, although digitalization has been transforming newsroom design and layout for years, work processes and dynamics haven’t adapted at the same speed. Against this backdrop, a new management model is needed to meet the challenges facing the publishing industry.

Having said this, the role of tech teams and systems shouldn’t be undervalued. Uncertainty and instability has led publishers to seek partnerships, unlikely a few months ago, in the hope of making up for the shortage of editorial, tech and financial resources. Smaller or more economically challenged publishers have had to (and will continue to) explore the possibilities of collaborating, even with their former competitors, in favor of a common goal.

This acceleration process towards greater digitalization of the newsroom, together with a demand for revenue diversification and a move towards business partnerships, requires publishers to offer a wider variety of products and services – a new approach that has come to be called product thinking. Over the past 30 years, large tech companies in the Silicon Valley have worked with this product-focused mentality, understood as that which solves a user problem and is capable of generating business. First it was hardware companies, like Hewlett-Packard, then the Internet – eBay, Paypal, Google, Facebook – and now the media.

From User Experience to Client Experience

The transition towards digital reader revenue streams requires product-orientated structures. Not only does this represent a conceptual change but also an entire organizational transformation.

During the early phases of newsroom digitalization, companies were betting on the incorporation of digital transformation managers (CDO).

But, in this new context, native companies are betting on product managers (PM). Little by little, their role as architects of project development is consolidating, ranging from strategy and conceptualization, to execution, monitoring and commercialization.

PMs have therefore become a fundamental piece in the management of internal change.

It’s a PM’s role to establish structures that respond to reader needs at every step of their experience on your site, materializing in a clear understanding of the products and services offered throughout each and every area of the company. Given that a good digital experience is essential for converting readers into subscribers, and when working to retain these users over time (or even when allowing them to leave if they wish), this organizational change is essential for success in the new digital revenue environment.

New leadership for times of uncertainty

One of the novelties posed by this phase of digital transformation falls on the management teams that have to rethink their management model and, therefore, the search for new leadership.

Traditionally, journalistic organizations have been supported by vertical hierarchies with a strong degree of presidentialism. But the increasingly remote work environment requires a new form of leadership in which authority weighs less. Leaders in this new arena are obligated to foster collaboration, transparency, and communication.

Cultural change is one of the fundamental pieces needed in this process of adapting to a digital environment. In particular, managerial teams will have to learn to cope with the different demands of remote teams, including horizontal hierarchical relationships, flexible hours, as well as adapted performance indicators that differ from those established to date.

Covid certainly opened up this era of change, but it seems that the current context will likely accelerate this process, forcing those at the top of organizations to adapt. Because the experience and good practices of the past no longer ensure success in the new, more uncertain and volatile paradigm.

No less important than the change at the top is the need to reinforce and empower middle managers, a fundamental piece in the new scenario that will help the upper management layers (mostly made up of profiles in the wake of traditional management) in the digital transformation process. These teams will require and demand new organizational processes, made up of young teams with more horizontal hierarchies and persuasive leadership. In remote-working environments, trust relationships and result-focused KPIs prevail. It seems inevitable that, faced with this new scenario, many publishers will need to regenerate the upper part of the organization, both as a catalyst to promote digital culture and to accommodate talent from the middle layers.

For their part, non-management teams, primarily made up of millennials with a stronger digital culture, will demand new working conditions. In this way, internal communication becomes relevant as a vehicle to align the different areas of the company. Communication from management should be direct and regular, making it clear why certain decisions are made, reassuring teams and avoiding uncontrollable alternative information, preventing distractions and an unfriendly work atmosphere. All this with the aim of extending company values.

Ultimately, more horizontal models will be imposed, with performance indicators oriented towards efficiency. In the same way, projects for improvement and professional growth will be established where promotion trajectories are encouraged. Transparency will be inevitable if the company’s talent is to be retained.

In this sense, human resource departments will have to adopt a new role, with a notable digital leadership component. The so-called change management areas, or change offices, in addition to the usual responsibilities, will have to face new ones such as:

• Provide technological resources (equipment, wifi)

• Favor teleworking conditions (ergonomics, health and psychological support, etc.)

• Advanced coaching dynamics

• Design of new performance indicators

• Establishment of a professional roadmap within the company

• Internal communication

• Continuous training opportunities (sponsoring internal training and promoting and advising on self-training)

More efficient processes and workflows

Although there are organizations that have been implementing agile project management methodologies for a long time, especially in the technology area, it is still not the norm in most companies. The goal is to focus on providing a rapid response to user needs. It’s about providing the market with minimum viable products and services that are subsequently validated and enriched thanks to user feedback. That is why it is important to listen to them.

Organizational management has to rethink axioms that were thought to be unshakable. Given the widespread opinion that the success of the company lies in the people, in an increasingly changing and uncertain environment, it’s these processes that will make the difference between companies that can adapt and those that cannot.

Promote brand attributes

Finally, the digital brand should not only be thought of as a visual identity, but as a complete experience in and of itself. For almost a decade, the search for audiences have been directed at the platforms that needed to respond to algorithms before satisfying the demands and needs of readers. In this way, brand attributes have gradually become blurred. It’s now necessary to reinterpret (or revise) the relationship that companies have with their audience.

If you want to convince readers to subscribe, brand communities need have solid and differential attributes to stand out from the crowd. This requires a brand strategy and architecture for all channels, including the incorporation of new, specialized profiles.

In short, the media are situated in a land of intangibles. But a well-developed branding strategy brings competitive positioning to life and works to position it as a “something” in the minds of your projects and clients.