In this week’s Subscription Publishing Briefing:
Publishers experiment with their own AI-powered chatbots
Publishers remain nervous about the impact generative artificial intelligence could have on their business models, but some are developing their own features using the technology in an effort to grow engagement with their audiences and add value for paying subscribers.
A handful of publishers are now using their content and data to “train” proprietary chatbots, which they hope will present opportunities for audiences to interact with their editorial output and brands in new and more dynamic ways. Why should audiences stop at just reading a publication when they can chat with it or put it to work on their behalf, the thinking goes.
Last week, travel industry news publisher Skift launched an AI-powered chat function called Ask Skift, which it says was trained using 11 years of content from its archives including daily news stories, analysis, research reports, and more. The idea, according to CEO Rafat Ali, is that Skift’s audience of travel professionals will turn to the chatbot for quick answers to industry-related questions, to easily surface facts and data points from Skift’s reporting and research, or even to help analyze competitors’ strategies and tactics.
Google’s new AI search experience could significantly reduce traffic to publishers’ sites
Google unveiled a significant overhaul of its search service last week that will bake AI-generated responses directly into search responses. Based on the demos showcased by Google, the new interface will result in “blue links” to third-party sites being displaced and pushed down the page to make way for a prominent box featuring AI-generated content instead.
If rolled out widely, the new “Search Generative Experience” could drastically reduce the volume of traffic Google sends to some publishers’ sites, as users would be provided with the majority of the information they need directly in search results pages without the need to click through. When SGE answers a question it does offer links to several of its sources in order to “corroborate” the copy it’s generated, but it remains to be seen whether those links will drive meaningful traffic to source websites.
Not all search queries will spark an SGE answer. AI-generated answers will only appear when Google’s algorithms think they’re more useful than standard results, the company said, and sensitive subjects like health and finances are currently set to avoid AI interference altogether.
Depending on exactly how – and how frequently – SGE appears in search results pages, some publishers could find their downstream traffic is impacted more than others. Those that publish relatively commoditized content and information could see more significant changes than those exploring more complicated and nuanced topics, for example. When it comes to highly-original and unique news and information, it remains to be seen if Google will simply poach it and repackage it for searchers, or direct them instead to its source material.
It’s early days, but publishers’ fears around generative AI tools offered by major platforms are understandable. As far as users are concerned, AI-driven search could provide a far superior experience to clicking through to publishers’ sites hunting for nuggets of information in amongst a sea of autoplay videos and content recommendation ads. AI search will also add the ability to draw from and condense multiple sources, potentially negating the need to click through to multiple different sites in order to reach a consensus.
Google’s search overhaul also adds interesting context for its recent push into paywall and subscription monetization tools. While SGE certainly poses a threat to publishers’ business models, Google of course still requires access to their content in order to fuel its AI responses. Google will need to ensure publishers are compensated for granting it a window into their content one way or another, and helping them generate revenue via subscriptions could enable it to do so.
NYT continues to grow subscribers as advertising revenue dips
The New York Times added over 190,000 paying subscribers during the first quarter of 2023, but digital advertising revenue fell nearly 9% on a year-over-year basis, the company announced on Wednesday.
NYT has amassed over 9 million digital-only subscribers, but growth has slowed over the past year. It added 387,000 net new subscribers in the first quarter of 2022, and 240,000 in Q4 2022, by comparison.
Although subscriber growth is becoming more challenging, the publisher’s subscription business continues to prove more resilient than its advertising business as economic instability persists. Its total revenues grew 4.3% during the quarter to reach $560.7 million. Subscription revenues increased 6.9% to $397.5 million, while advertising revenues decreased 8.6% to $106.2 million in the same period.
“While advertising continues to experience near-term, cyclical challenges, our bundle strategy is gaining momentum, engagement metrics are strong, pricing initiatives are taking hold and we are slowing cost growth,” said Meredith Kopit Levien, the company’s president and chief executive officer. “Our strategy was purpose-built to give us multiple growth levers, and we are confident that we are on the path to becoming a larger and more profitable company.”
As we’ve documented previously, converting and retaining subscribers has become increasingly challenging for publishers across the board over the past two years as consumers and businesses pull back their spending and hunt for opportunities to cut down their expenses.
But despite these challenges, publishers continue to report that their subscription revenues are holding up well overall and remain relatively well-insulated as other revenue lines such as advertising and commerce slow more significantly and/or become more costly and cumbersome to operate.
Also worth noting:
- The New York Times is getting around $100 million from Google over three years as part of a broad deal that includes the Times’ participation in Google News Showcase and some other Google platforms. The move is notable in its timing given Google’s upcoming AI search overhaul.
- Barry Diller, the chairman IAC, has joined forces with News Corp and Axel Springer to fight what he’s repeatedly described as “destructive” AI.
- French language news publisher Blick says comments and raffles helped it acquire 600k registered users.
- The Verge published a great post-mortem on Google’s Accelerated Mobile Pages initiative. Google promised to create a better, faster web for media companies with AMP, but the standard ruined the trust publishers had in the internet giant, it writes.
- As digital technology advances, distinguishing between signals and noise is becoming more challenging. Media companies must focus on developing strategies that allow them to differentiate themselves and their messaging, so they can send signals that cut through the noise and resonate with audiences, argues Jason Kint, CEO of publisher trade association Digital Content Next.
- U.K. publishers say subscriptions offer the most potential for growth over the next few years, according to a survey by AOP.