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- [00:00]
Podcast Host
This podcast is brought to you by Innovid. Folks, we have our answer. There's been a lot of speculation about what the combination of Flash talking and Innovid would be called. Flashovid Innoflash. We've got our answer at Architecture Live. And it's Innovid. But not just any Innovid. It's a new Innovid innovation. Intelligence independence. The eyes have it. Check out new.innovid.com to learn more about how they're merging their ad tech stacks and shaking up the industry. That's new.innovid.com and as ever, this ad could have been an email.
- [00:45]
Alan Chappelle
Welcome to the Monopoly Report. The Monopoly Report is dedicated to chronicling and analyzing the impact of antitrust and other regulations on the global advertising economy. Alan I'm Alan Chappelle. This week my guest is Rich Cacapolo, Vice Chair of Media for dmg. I try to have a diversity of guests here on the Monopoly Report and I really haven't had the big publisher perspective on in a while. You know, we had Jason Kent on a few months ago, but even that was mostly from the perspective of the Google Ad Tech trial. So I wanted to get a better sense of how large publishers are navigating this new world where you can't necessarily rely on search traffic. So we're going to talk about publisher monetization and we're going to talk about their approach to AI and we're going to talk about how Rich thinks the landscape will develop as we look to move past all this litigation. So let's get to it. Hey Rich, thanks for coming on the pod. How are you?
- [01:42]
Rich Cacapolo
I'm well. Thanks for having me on. I really appreciate the opportunity to speak to you.
- [01:46]
Alan Chappelle
Well, thanks. I'm really looking forward to this discussion. So you and I met a few months ago when I was invited to join a small cabal of digital media nerds who get together every now and again to discuss the big issues of the day. And one of my favorite things, as an aside, one of my favorite things about digital media are these types of semi regular sit downs with all these tight knit groups where there's a lot of trust and there's sort of an implied cone of silence. I feel like those settings are where a lot of the real learning and sharing of ideas take place. So anyway, this was late last year when a lot of the focus was on Google search and the ad tech trials. And so before we get too far into the AI space, I'm curious to get your thoughts on how the Chrome Divestiture might impact news, publishers and separately the impact of potentially a divestment of all or even part of the doubleclick ad tech stack. So we'll start with that very, very tiny question.
- [02:41]
Rich Cacapolo
Well, I have to one comment on the way you describe such an august gathering of our friends and peers and others. What did you describe them as? Ad tech nerds or something?
- [02:52]
Alan Chappelle
A cabal of ad tech nerds?
- [02:54]
Rich Cacapolo
Yeah, those. We do a roundtable with publishers once a quarter. We've been doing it for nine years. I think we did one last week, it was about AI. That was our 36th. We've been very, very consistent every three months. And tell you the truth, it's some of the best time that we spend each quarter is talking with our colleagues. There are dinners throughout the months and the weeks that are even smaller groups. But it's been really valuable as industry has changed. I think when we first initiated that our perspectives were very different and then over time maybe our perspectives got a little too similar. But now we're in a good spot with AI with a lot of different opinions on how it's going to play out and how we should work on it or think about it. So it's, it's very valuable. I been doing it since I was chief operating officer, then as CEO and now as vice chair for dmg tr, parent company for media. I still find a great value in it and I know the guys, my colleagues do here too. And it also allows us, us to speak in between meetings as well. But as to your question, I always, I need to always preface this with we have litigation against Google on the ad tech case. We actually initiated some of that and it's, it's an important thing for us, but to be careful about what we say, what we want to see, whether it's Chrome divestiture or the remedies that are going to come about from the search case or what we hope come about from the ad tech cases, of which there are many. Right. The DOJ case, the state Attorney General's, our case class actions. We want to see a few things. We want to see equitable relief that restores competition in search and digital advertising. We want to see, and I think this is crucial, enhanced transparency and fair practices, including what I really hope for is a support for attribution and hopefully we'll come back to that later. I want to see that driven through the new innovation and that I think means market viability for competitors. And in the end I want to see improved revenues for the publishing industry for Those who truly invest in journalism. So whatever the remedies are to go forward on those, as long as they tie back to those sort of four key principles, then we look at it. I do have to say, and we're going to talk about this, I know in the course of the conversation, one role I see for us is the risk of bad regulation. And we're seeing a lot of regulation being discussed all around the world. And we try to play the role of what might be a negative outcome and not. And we're lucky, I'm going to repeat this, we're lucky not just for us, but for the industry as a whole. And we have owners that support that.
- [05:38]
Alan Chappelle
Yeah. You know, one thing that comes to mind for me is that, and I'm not just trying to blow smoke, given who my guest is here today, but like publishers really need to be the North Star. How do we ensure a vibrant content creation and separately journalism community? Because if those are our North Stars, I think then some of the unintended consequences can hopefully be mitigated.
- [06:04]
Rich Cacapolo
Look, for me, it often comes down to a balance of the trade offs between short term revenue or opportunities and longer term viability and sustainability. And there are peers of ours who don't have the luxury that we have based on our ownership to be able to not take the short term. I don't want to choose my words carefully, not the payoffs, but the licensing or the support that is not long term and sustainable. Daily Mail is owned by the family Lord Rothermere and it's been around for 129 years. I've known Lord Rothermere, our chairman, for 13 years. He's never once taken or changed the perspective that he wants to invest in great journalism. He wants to have a long term benefit of journalism and a real sense that journalism, an informed public, is crucial for social discourse and for democracy. So we have that. We're not owned by private equity, we don't have to go public. We have short term goals, we have budgets, we have targets, but we don't. We're not having signed deals to hit payroll.
- [07:17]
Alan Chappelle
Sure. So. So I want to talk a little bit about publisher monetization. I know we're going to focus a lot of our discussion here on, you know, AI and licensing and what's a good deal and what's a bad deal. But, but even before we get there, you know, there's certainly been changes to how publishers think about monetization because, you know, the ability to rely necessarily on search traffic is not what it was. Even you Know, three to five years ago. And so, you know, how are publishers seeing that world where now you kind of almost have to have to generate your own traffic? You know, what are publishers doing to beef up their own distribution?
- [07:51]
Rich Cacapolo
A great, great question. And I think in retrospect, as an industry, we would say that discoverability and distribution were areas where publishers lost control. Right? Go back to newspapers. Do we just accept the fact. But 129 years ago or whatever, long time ago in the, in, in England and in the US some, you know, great minds figured out how to print these things and distribute these things called newspapers. That was not easy and it's still not easy today. And, and yet we still sell a 1.1 million papers on a Saturday. I mean it's, it's just incredible. That is not an easy thing. But over time that discoverability went away. But one thing that we had at Daily Mail which was crucial by our editorial team, was a focus on direct traffic. We, if you came to our newsroom, you would see we have a real time analytical systems that are telling us what people who come to the homepage are reading. We don't look at the Google search, you know, dashboards, we don't, we can detect what's happening in social, but the focus has always been those who come to the homepage. What are they reading? Are they finding engaging content? And we, that was always our North Star because we knew that the direct traffic would see a lot more page views per visit, whereas search might be 1.2 or social might do 1.6 pages per visit. We knew our direct traffic would see considerably more tremendously well, well more in an app, which we'll see, you know, 50 pages a day, a lot more on a direct Patreon, on a desktop to the homepage. And again you go ask about the model. It was in the old days, I always joke, it was simpler, right? You had to sell papers and you sold advertising. And online, you know, it was mainly advertising. It got more complicated when it was direct and programmatic, obviously. But now, and something I did as CEO over the last three years was really diversifying that into, and this is a real question, sorry for the long lead up, what every publisher thinks about now is this mixed model of, yes, advertising, direct and programmatic, some subscription, which for some people is really important for others are a key component. There's also affiliate stuff and commerce. There's also off site things around licensing. Sometimes it's traffic back, but sometimes it's a revenue share. There's a video which I Separate out differently because of the pot that is the size of YouTube. There's podcasts, which is a smaller pot, but is meaningful for some, some people do events. We don't really do that. But now you've got a whole bunch of plates spinning. You got seven, eight different revenue models that, that you need to be balanced and depending on the publication, different shares of importance and that that's what's made it more complicated. You don't want any of those plates to drop.
- [10:37]
Alan Chappelle
So speaking of subscriptions, so you guys are based in the uk. The ICO has pretty much endorsed, maybe not endorsed, but has accepted the consent or pay model. And I'm just curious has that. It sounds like it. Maybe it hasn't changed things for you, but it must have had some impact.
- [10:56]
Rich Cacapolo
So yeah, I'm actually, again, I don't want to. That's something I think we played real well. So the difference between having consent and not having consent is significant from a monetization point of view and I think from a product point of view, if you use the content or the data correctly. We fought against that. We did not think that consent as it was being driven up by the, or written up by the ICO was the right way to do it. And so we pushed back on that and we worked with the regulators to come out with a payer consent. We always had a very high level of consent. We were worried about the way it was being done. If it was going to be like ATT would have hurt consent and dramatically and then therefore the revenue. So in the end we push for pay and consent. As long as the pricing of it is reasonable and fair and you're not gouging people, I think it's beneficial and it has, I mean, it's increased our consent. So it's good. It's a, it's both a dodge bullet and in the end a positive for us.
- [11:57]
Alan Chappelle
Yeah. One of my fears as, as Europe is in general rethinks a lot of what I'll call maybe an overreliance on consent is that, you know, well, okay, what if just spitball in here that, you know, they think, well, contextual advertising is okay without a consent, but if you want to go anything be above and beyond that, you need to get a consent and that. Because then that has an impact in terms of how publishers are able to monetize.
- [12:25]
Rich Cacapolo
Right. Absolutely right. And how it's messaged then to the user. First layer, second layer. How, you know, is it got to be done like att? I, I think one of the More interesting things is the case, I think it was in France and now Germany too, where the government's saying that Apple has to back out of att. I will be interesting to see how Apple responds to that. I would not be surprised if Apple didn't fight it that much. I think they might like the excuse of being under. Able to unravel that a little bit in a world of that we're heading into. They may, they may feel they've painted themselves into a corner of it.
- [13:04]
Alan Chappelle
Yeah, I think that's a good point and I'll just note. But by the time this podcast comes out, my understanding is that we'll see a decision in the French case. And by the way, just, just parenthetically, it's kind of funny when the French are beating the US in terms of speed and getting decisions done, but we'll just leave it at that.
- [13:23]
Rich Cacapolo
Yeah, I'll have to go. Yeah, we're going to see a couple. We're also going to see an announcement by the EU on the fines on big tech and I think one of those has to do with Facebook's payer consent model, which my understanding is probably just the price they're paying. But look, other people in the uk, other publishers didn't follow that. Now they all have. I think last week the Guardian finally moved to pay our consent.
- [13:46]
Alan Chappelle
Yeah, it seems like more and more particularly UK publishers are really jumping in there with both feet and I think that's a good discussion to be having. I think that those are good experimentations.
- [13:59]
Rich Cacapolo
And again, perfect example of. I don't think the ICO wanted to hurt the publishers. I think they, they had the right instincts in mind. But that would have been legislation that would have had unintended consequences, especially now. Look, is it perfect? I don't know if it's great. Again, we are a large publisher. We're very. We have scale, we have resources. I don't know what is done by the smaller papers or publishers. I don't think you want. This is a burden for them and they have to figure out how to take pay. And not all of them have a subscription engine. I don't assume it's an easy thing for them to implement.
- [14:38]
Alan Chappelle
And one of the things that's interesting to me as the EU looks to reform the gdpr and I know that's separate than whatever the UK is doing, but. But there is an idea of smaller entities might be subject to a different rule set, which I think conceptually makes sense. I think that if they tie scale and sensitivity of data Processed to maybe a lighter rule set. I think I can get my head around that.
- [15:01]
Rich Cacapolo
I'm with you. You think a lot about this and your perspectives on this. I agree with you. I think you go back to the user too. You don't want to. I think you got to make it understandable to the user. I think they have to understand the value exchange. I think they have to not be burdened with inconsistencies.
- [15:19]
Alan Chappelle
So I, I want to shift gears a little bit and talk about AI, because that's sort of on everybody's mind right now. I mean, we've had, you know, over the last couple of years, you know, there's certainly been a trend where, you know, in order to build these large language models, they need content. And, and what we've recognized, I think in part between what Google has learned with respect to Reddit, that premium content is very helpful as you're trying to build out these LLMs. But the question becomes, you know, where is the revenue model for the content creators? And so I would love to riff with you a little bit about there. I mean, is, is, you know, for my first question, is, is licensing, you know, the best option for, from the perspective of a, of a content creator?
- [16:04]
Rich Cacapolo
Well, there's so many open questions. I think licensing is a crucial component of the revenue models we were talking about earlier, and I think it will become an increasingly important component. That said, I don't think it's going to be offered to everyone. I think it's going to be offered to a few big players, and then I think there'll be some money thrown in a pot for, you know, industry groups that may support some of the smaller players. So another one of those cases, you know, where it may not be done equitably. What. So there's a who, what, where, why and how on the licensing, right? Is who's going to be doing the licensing? Is it a few big LLMs? Is it 50 people, you know, 50 different groups that are trying to get content or should be getting content? Is it just licensing or is there a rev share component on top of that? Right? So you think of, like my understanding of Spotify is, you know, music company is paid a licensing fee to have their catalog in there, and then there is a revenue share on a stream, Right? The debate there is, are all streams the same? And that gets into the next question of, you know, is streaming of a ujack the same as the value of streaming? You know, a sound that's used for meditation, you know, that sort of thing? That was A miss, maybe a mistake that came about that's trying to be rectified. I think in the same way there's going to be a big discussion around the value of an asset in an LLM in terms of contribution to the LLM. And that needs to be worked out. Not all things, not all content is going to be worth the same. Not all articles are going to be worth one, some are going to be worth two, some are going to be worth point seven. How that's going to be tracked, how that's going to be determined, how the deals will be structured and then the when is crucial to me. When is this going to start happening? Full disclosure. We have an investment in a company called Pro Rata. I have our board seat. They are trying to figure out an attribution model. Attribution as a service. They believe that all digital media is paid out on some sort of metric. They're trying to figure out what that should be in licensing of content, not just digital publishing, but music, film, et cetera, can be determined and be paid against based on attribution.
- [18:14]
Alan Chappelle
So one of the things that I love about what you're talking about here is that there's, you know, on the table. And look, I don't think any of us know exactly how this is going to play out, but at least what's on the table here is there's a lump sum component, but there's also a percentage component because that to me is if we could go back in a time machine 25 years ago, you know, having some skin in the game was the thing that probably in hindsight should have happened but didn't. And so it's just fantastic that that's at least on the table now.
- [18:45]
Rich Cacapolo
Yeah, I mean, think about music. I keep going back to the music, look, getting older. I've been around a while. It's, I think I've been 25, 26 years in the business now. And I have a lot of friends in music and I was in music a little bit myself. You go back to that. I, I tell a story like this, you know, people say, oh, it was, it all changed when Apple and Steve Jobs said charge 99 cents, you know, that, that. And then it became streaming, et cetera. I. That model, there's something there. The one that really rings true to me is the YouTube music model. And I go back further. I mean, music guys built MTV but didn't have any benefit from it. Right. MTV was a billion dollar network. And yeah, sure, they got promotion, but I think they look back and they said wait a second, we don't own any of that. So when YouTube came around, let alone the, you know that they thought how can we do better? And there were some missteps. I, I saw Ricky Sutton did something about Vevo the other day. I think Vivo was one of those examples of a misstep. But it played towards a path RIAA and use of a lawyer. Legal friction did something. It caused some friction. Eventually when you remember Google bought YouTube and the cleanup, they came up with a solution. The content ID recognizes the ownership of an asset and the shuts down, you know, copies of that they got there. YouTube is the example I think and in the, and there is a revenue share on that and you know, the record, the labels and the record companies make a lot of money on that. It was their second chance after mtv and I think they ended up fixing a lot of things. Now they make tens of billions and YouTube's worth hundreds of billions.
- [20:23]
Alan Chappelle
But you know, but if compared to getting nothing, yeah, getting something is usually better. And, and so, you know, hopefully the next gen will be even better. And then I feel like I have to say this as an independent musician, it would be nice if small to mid sized musicians were able to actually eke out some semblance of a living and not have to rely on touring 360 days out of the year.
- [20:49]
Rich Cacapolo
Yeah, I know a little bit about it, but I'm going to get into dangerous areas there around what the payout should be. But I like the component and let's talk about it too. One of the things about music is in the end there were only a handful of players. Right? I mean back then you had Universal, Warner, Sony and emi. Now you have the three, but you also had all the independents being sort of underneath Merlin I guess. Right. So in the end there were only. There were a handful that had to, they couldn't work together because that was too collaborative. But there was a way to resolve it for, for many labels by negotiating deals with a handful of players. I think it's a little tougher in publishing where we have so many participants and maybe there's some alignment at some point to, to remedy that a bit. I think you might see movement faster in the book publishers because there's a smaller number there.
- [21:41]
Alan Chappelle
Hey, I wanted to get your take. So just a couple of days ago Google had published the results of an experiment they were conducting over the last several months. And you know the, the headline, I know there's a whole bunch more in there, but the headline was such that, you know, in their view, their results demonstrated that European news content in search at least didn't have a measurable impact on the ad revenue for Google. And so I wanted to get your take on what's the backstory with that. What are they really trying to get at?
- [22:12]
Rich Cacapolo
I understand what they're trying to do. I think in some ways I think the study's probably done more harm than good for Google. How can they say that news has no value, but they claim they need to scrape all of it without any restrictions for AI? And that's a really hot topic in the UK right now, where there's a whole review of copyright law. That's hard to understand. How can it be worth so little according to that study, and yet need to be used for training purposes? It's sort of laughable. I think it's important to realize that Google, they have multiple internal teams with different goals and objectives. These teams, it's a big company, don't necessarily sync their work or their public statements. The team that was doing that, that did that study is negotiating payments to news publishers to comply with the European Copyright Directive. They say they did the research to refute several reports that they say inaccurately overestimate the value of news to Google. We've been involved in some of those reports. We think there's great value of news to Google as to whether the methodology was really strong or whether it was questionable. And that they only removed news from some EU sources during a particular point in time when the US and the UK were really the focus of a lot of news. I think is suggests that it wasn't a true band of news. But the biggest point, and you're the expert in this stuff, I think they proved, perhaps counterintuitively for their benefit, that they are a monopoly. Because one of the tests of what is a monopoly is that you can degrade the experience and not really lose customers or market share because of it. That's why I go back to. I think it's probably done more harm than good for Google.
- [23:52]
Alan Chappelle
Yeah, I think that's a fair point. And really, at the end of the day, this is a negotiation ploy. I mean, Similarly, I think OpenAI had issued their proposal to the White House in the US regarding screen scraping and use of content. And of course they're going to say that the value of that is de minimis. Again, it's a negotiation and they realize that in a whole bunch of forums they are having discussions around licensing deals. And if you can seed the, the community that the notion that news content is, you know, valued at, you know, 5 cents rather than, you know, 500 cents, then, you know, that helps your bargaining position, or at least the argument goes.
- [24:35]
Rich Cacapolo
Yeah, that, that's, that's the gist of it. But let's remember they don't run ads on new search results. Right.
- [24:44]
Alan Chappelle
I still think that's a pivot in waiting.
- [24:46]
Rich Cacapolo
Well said. Our relationship with Google is a complex one. I don't ever sign the malice. I think they're trying to do their job. Sometimes things that come out in discovery in the cases are surprising in some of these cases, including the ad tech one. But I think we'll get there. And I think that there's a war now, but we need to fight the war and then we need to win the peace. And they're going to become, they're an important partner, they always will be to our industry and they do support, you know, the industry as to how much and how and who. And that's got to be decided, as I said. You're aware of what's going on in the UK with the review of the AI request to change a copyright law, right?
- [25:34]
Alan Chappelle
I am, yeah. One of the things just to echo, and I think it's a really great point, is winning the piece because I think that everything can go your way. You are being the publishing industry, but unless there's a plan for moving forward after all this has been settled, I just think you're just going to be back to square one.
- [25:55]
Rich Cacapolo
Yeah. Who those players are, how many of them are, in the end, I think everybody wants to support investment in great journalism and that's going to be the test. What does it mean to be a great publisher? What does it mean to be a premium publisher or, or a valuable publisher? I think everyone's going to have to ask that question now. I don't want Google to choose the winners and I don't want to put great trust in any of the companies without the opportunity to verify that. And I think there have been some examples in the past, both in search and ad tech, where Google has chosen winners and that's something that needs to be rectified.
- [26:34]
Alan Chappelle
Yeah, great point. We talked a bit about licensing deals, but when do you think those are going to really take off? What are going to be the catalysts for licensing to really become. For really to take off?
- [26:46]
Rich Cacapolo
Maybe my head's. I mean, so we're so deep in the woods in the uk, I. One of the catalysts I think is going to be the Digital Markets act and the review of the AI copyright So in the uk, the big tech guys have asked the government to change the laws on copyright. Now this is emotional. I mean, for the UK. UK invented copyright law in 1710.
- [27:09]
Alan Chappelle
Right.
- [27:09]
Rich Cacapolo
I mean they, it became global in the 1830s when Charles Dickens said, hey, they're reading my stories in the US and I'm not getting paid. Right. So there are more people who work in content, creative content areas, film, music, you know, publishing in the UK than as a percentage of population. It's a bigger percentage of the GDP than in other countries. And what they're saying is allow us to change the law and, and access to stuff for training. That is with the opt out, which I think we all know is a bit of a joke, right? The opt out is not being adhered to by a lot of players. My sense. And there were 11,300 responses in a request for submissions about the AI law. The outcry has been significant and I don't know if you saw, but all the newspapers did the same front cover a few months ago to make it fair and the record companies were aligned. And it's. And you're seeing it in the US too. The catalyst to your question is if the government were to come back and say, look, we don't want to lose these jobs, we don't want to lose this tax revenue, this, you know, et cetera, let them access some things, this stuff for training. However, they're going to say do the opt out. And what I really want them to say is, but you got to pay the licensing when it crosses over to commercial purposes. That'll be the key. Because the use for training alone is really a hard thing to control. It will bleed into for commercial purposes.
- [28:36]
Alan Chappelle
Oh, for sure. There's no way that it can't, right?
- [28:40]
Rich Cacapolo
I mean, you know this stuff better than me. I mean, the Digital millennial Act of 1998 or whatever, it said that copyright applied. They didn't say how does it going to demonetize or how is monetization going to work. And that was worked out. I'm thinking the change here, one of the catalysts would be if the government says, look, we've got to allow them to use this for training, but they have to sign licenses because this stuff's being used commercially. And our industry does not necessarily see the future very well or work in white space very well. But the move from search to overviews, you know, from 10 links to five paragraphs is shown people what will happen. Again, we're very fortunate. Our traffic comes direct primarily, you know, two thirds of our pages, three quarters of our pages are direct. By taking out search referrals, you're tearing down a key pillar of the infrastructure of the revenue model for most digital publishers. That is shocking. What I worry about is a product that comes out that says hey Alan, here's your 10 stories of the day synthesize from 12 publishers. Your story is different than mine. That totally disintermediates us from the reader. That is a day that is not going to be five years from now. It's going to be soon, like next Tuesday or something. And that's what we worry, you know, is you wake up and you say man, everybody's going there and, and there's no traffic coming back. So that's the fear. Now I think your follow up question I don't want to put is, you know, you tell me, I mean is that the thing? Do you see that? I mean is that what we. Should we all be worried about that?
- [30:22]
Alan Chappelle
Oh absolutely. No. So the thing that was. So there's still a box that says search on google.com so like that's still there. And for 99% of consumers they don't really notice what a difference is. But it's the stuff going on behind that box that we all got to be worried about because that is changing radically and it's having an impact on not just news publishers but really the entirety of the ad supported Internet. And so that's the thing we got to be focusing on.
- [30:53]
Rich Cacapolo
Yeah, but that's just the first product. There'll be more products. I don't know who's going to create the products and maybe we need to create the products as an industry but there are going to be new products and that are going to differ. I think the more notification alert, you know, sort of model which I think might be more what happens to news. The value of content is going to be played out too. Everything evergreen, which a few years ago we thought was so great is becoming less and less valuable because allegedly it's all in the model. So if you, if your product is recipes, I'm sorry, that's kind of already in there. The question then is what's going to be valuable? It's apparently going to be rag. I don't think it's necessarily news events like there's an earthquake in mind, you know, in, you know today it's and I don't like to use the word opinion because I think that's two partisan. But the perspectives on those events is where the value is going to be. There was an Earthquake. Daily Mail says the geologist is predicting another one could come in two weeks. The Guardian saying that they had a person on the ground and this was the experience. That sort of thing I think is going to be valuable. But whether that gets pulled into a product that has taken that and provides that to the user and disintermediates those who've invested in getting those stories. Yeah, that's, that's the risk.
- [32:13]
Alan Chappelle
Well, and eventually, I mean if there's no revenue model for journalism, it's not like, you know, journalism is just going to go away. And, and so we need to figure out as these large language models are being built, you know, maybe there needs to be, you know, your source is. That is the Daily Mail. That's great. Okay, so for certain things your source is the Daily Mail because you know, TikTok can offer an interesting perspective and I will say some of the youngins are, are heading there for certain things. But if you really want to know what's happening on the ground, there are sources over the long term that you need to be able to trust.
- [32:48]
Rich Cacapolo
TikTok. I think we're the biggest news publisher on TikTok by a lot. It is unbelievable, the volume of. And it's introduced the brand to a whole new population, some of which have then end up coming back direct to see all the other stories. We do so. But they do like it and I like the way we get to represent the brand there and we get to tell stories there a way that works for users who choose to use that platform. I just want to get paid for it. I just want to be compensated for it. I want us to be rewarded for the investment that we're putting into creating that content. The question is what should we as publishers be doing to get to move this along? And we asked about what the catalyst would be. That's one. I'm hoping there's some others. There are some legal cases, there's some regulation that's coming about. I think that there may be some small funded gen AI companies that are getting a lot of money from venture or private equity that decide they want to pay for content because they don't want to spend all the money they've raised on legal fights. Goes back to the example of what I said. The RIAA was the vehicle through which all those cease and desist and all those. And after a while it just became such a burden. On YouTube they said we got to figure this out. Right? The legal stuff, it's what I call it falls into this category of what I call friction Right. Making it harder, choosing the words to scrape the sites and to take the content. There is a category of friction that publishers need to back, understanding that eventually all your content is going to be accessed. But if it's a little bit harder, if it's a little. If. You know, there are companies that are saying when they detect a scraper, they serve gibberish or they serve, you know, terms of service instead of the article. There are, you know, blocking, whether it's done at the CDN level or further down, there's, you know, just these efforts to make it a little bit harder, even if it's for a few hours. Right. And the friction is something we need to get supportive of if for two purposes. One, to strike better licensing deals and two, to create an opening for better product development. I mean, my opening, I'm saying even if the friction delays the scraping by two hours, maybe you can build a product and maybe not as an individual publisher, but as a consortium that says in those two hours, if you really want breaking news, you subscribe to this or pay us for the licensing, and we will make it easier to get the content. And as long as, you know, if our stuff's wrongly represented, we, there are.
- [35:24]
Alan Chappelle
Takedowns, et cetera, that all makes sense. And I think that's a great way of thinking about it because really, there is so much about copyright that is based on friction. Now, the friction, I know it from the record company world, and the friction in the record world was you had a couple of guys with crooked noses who would come to your office and they'd have a talk with you and that. But that's also friction. I'm not saying that that needs to be the model today, but you need to have something in place to get these companies to want to do the right thing.
- [35:56]
Rich Cacapolo
That's right. And I think there is a desire to do the right thing because again, they need to be able to scrape something in that, you know, you can't write stories unless they're stories on which to write. I need to come up with a better analogy. All my friends and colleagues say this is wrong. I don't want the analogy. I have is Dracula's castle, right? I mean, Dracula had some humans there when he didn't want to fly into town, invite somebody, and he allowed them to live. And then they, you know, he could feed on them periodically, I guess. But the lives of those humans in that castle sucked. They ate bugs and, you know, not a great example. I don't want us to be those zombie like, you Know, humans. I, I think there has to be a true ecosystem. Can you help me with a better analogy there, Alan? I'm struggling.
- [36:40]
Alan Chappelle
I like using Lord of the Flies.
- [36:42]
Rich Cacapolo
Okay.
- [36:43]
Alan Chappelle
But, but that may be because I'm essentially an ad tech guy and, and it is remarkable how quickly the world devolves into a Lord of the Flies situation the minute somebody isn't watching them.
- [36:54]
Rich Cacapolo
But what can we learn from that one, right? I mean, you know, some of my colleagues are really good on this. We, we all fed on this and we allowed the yields to drop. We all undercut each other. We all, you know, there was a race to the bottom in the auction dynamics. Same thing could happen here if we all get licensing deals and we price in different ways. If you were the creator of the overview from our content and everybody was writing similar stuff, wouldn't you just choose the cheapest source? If Daily Mail says it's, you know, X and somebody else says our stories are half X? If I were running the overviews, I would default. If all things are equal to, you know, and we're all. And people are rewriting each other's stories to that, who's charging me less? And we'll race down the least. And we'll race down to that lowest level, which says you got to create great content, you got to create exclusive content. You have to have a perspective that's differentiated. You got to carve out a brand, it comes back to a brand and a take and a perspective that otherwise is going to be a race to the bottom.
- [37:56]
Alan Chappelle
And so what I'm hoping happens is that you guys, the premium publishers, are able to negotiate deals that make some type of viable sense. Okay? So you've got those deals and you have a baseline. And then I'm probably gravitating way too close to the political here, but for, for the smaller, for the local publishers, for the smaller content creators, I'm hopeful that the government figures out what you guys did and figures out how to impose that on the really small people, because otherwise they're just screwed.
- [38:29]
Rich Cacapolo
Well said. Yeah. See a little bit of that in the ACCC's work in, in what happened in Australia. Right. Who deserve a lot of credit for, you know, leading the path. But, and, you know, there these things, they're mistakes that are made and then they can get rectified. But until we start down that path, and you know how it is, you get off track a little bit and you come back in. But we haven't started down that path yet, really on licensing, that's going to be meaningful. And in the end, this goes back to the earlier question, what does a revenue model look like for a publisher in the future? All those things that we talked about, advertising, subs, you know, video, you know, licensing, commerce, affiliate, it's going to change. I think licensing is going to be a much bigger percentage and the optimization of a whole bunch of different licensing deals is going to become a crucial skill set for publishers. Right. We give them sports. We give these guys sports two hours later. We give them news, but we don't give them photos. Here we have photos to give. You know, it's going to be in a way that is similar to the way our guys optimize ad tech partnerships.
- [39:33]
Alan Chappelle
Yep. I think we're going to leave it there. This has been a really fantastic conversation. I've learned a lot and I really appreciate you coming on Rich.
- [39:40]
Rich Cacapolo
Well, I appreciate the forum and it's always a pleasure to speak to you and I thank you and hopefully this will help move the ball down the field.
- [39:48]
Alan Chappelle
Well, good. I think it will.
- [39:49]
Rich Cacapolo
Take care.
- [39:50]
Alan Chappelle
Take care. That was a great conversation. Rich has a knack for taking complicated and thorny issues and making them digestible. Very conversational. There's two things I took away from this conversation. First, we need to keep the needs of publishers as our North Star. Even for those of us at ad tech companies, if we're not careful, we're going to kill the golden goose here. And second, and Rich used the term winning the piece to describe his approach to what's next as we move beyond all these antitrust cases and and lawsuits. I really liked that analogy. We've got a bunch of other fantastic guests coming up on the Monopoly Report podcast over the next few weeks. Please subscribe to the show@monopolyreport, pod.com or on Spotify, Apple, YouTube, or wherever you listen to your podcasts. And thanks for listening.
- [40:43]
Podcast Host
Thank you for listening to the marketecture podcast. New episodes come out every Friday and an insightful vendor interview is is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Market tv. And if you're feeling social, we operate a vibrant Slack community that you can apply to join@adtech God.com.