Are Aggregator Apps A Lifeboat For Publishers or Just Another Legacy of A Dying Business?

Aggregation is a foundational organizing principle of the media business. Newspapers were the original aggregators on a local and national level, bringing together content types across news, business, sports, arts, comics, games, classifieds, etc. Magazines bound together text and images into a unified book, often reflecting the sensibilities of a single, highly-opinionated editor. 

Cable later assembled an infinite array of linear video, providing an overwhelming amount of choice, where every interest had an outlet. The cable bundle is now collapsing on itself, burdened by high prices and a lack of technological innovation. (With streaming fees increasing quickly and seemingly no end to the challenge of figuring out where to watch any given movie or TV show, every passing day makes cable feel like a better deal, both by ease of use and cost per minute of available content.)

When the growth of the internet required a central navigating device, Google established search as the most profitable aggregation play of all time. In some ways, Large Language Models connected to the internet are the ultimate aggregators, bringing together all accessible human knowledge, whether they have the IP rights or now.  

In the last fifteen years, internet protocol, mobile phones, and social platforms, have left us with a new suite of aggregators that have established dominant or must-have positions by content type. Digital video = YouTube . Short-form video = TikTok . Images = Instagram . Streaming TV/Film = Netflix . In the realm of news and publishing, no such dominant aggregator ever emerged. It may be that Google search is the equivalent for most people who want as little friction as possible in finding content about a specified subject, but don’t care who provides it.

The question of what role news aggregators play in the future of media came up in a recent New York Times obituary about the death of the social platform era of media, which I wrote about here. In the NYT article, Ben Smith, the editor in chief of SEMAFOR , noted that “intermediate platforms like SmartNews , Apple News, and Flipboard were becoming more important to publishers, as readers looked for a combination of authoritative journalism and the option of multiple sources.” As I noted in the last post, I was a little surprised by the idea that these apps and experiences, which have been a feature of the internet since early web portals (remember Lycos and Excite), represent a lifeline for a disrupted industry. But in a world of fewer potential partners, where the biggest gatekeepers have turned their back on news, perhaps the role of aggregators will be more meaningful. After all, you can’t dance at the club with folks who have already left.

At its core, the news aggregator category offers publishers two main opportunities to: (1) squeeze margin out of existing content and (2) lure users to O&O platforms.

Excluding portals that have always hosted 3rd party content in their own templates, most aggregator apps start out by pursuing the second path, scraping sites or RSS feeds for content previews, with the full content displayed on the respective publisher website via an in app browser. Some reader apps also cache articles, removing ads in the process and robbing publishers of revenue, to immediately serve the content to users. I understand the intention here, as everyone hates ad-heavy, slow-loading mobile web sites, but I have always viewed these caching features as ethically questionable at best and theft at worst. Some aggregators allow publishers to block content from appearing in apps this way, but most creators look the other way as the traffic juices audience numbers and, fingers crossed, ultimately leads to building a direct relationship with some of these users via increased brand affinity or a newsletter sign-up. 

In an effort to provide a uniform user experience and scale revenue beyond ads placed between previews, most aggregators eventually move to natively hosting full content, which is monetized via programmatic ads (or in rare cases via direct sales) with revenue shared with the content provider. For premium publishers with effective direct sales teams and a diversified revenue strategy, this revenue is typically a fraction of what they would earn on their O&O sites, though that is changing as programmatic eats more and more of premium display revenue. Off-platform revenue, however, provides a much higher margin profile as it comes without any of the associated infrastructure, sales, or other costs. In my estimation, news aggregators can contribute a single-digit percentage to a premium publisher's top-line revenue, but the category can provide a more meaningful boost to profitability. 

Reader apps typically promise, though not contractually, that a publisher will see a large boost in traffic when content is hosted natively in app. Operators must then make the calculation of whether or not the increased revenue is worth the lost traffic, onsite monetization, and associated data capture. In working with partners on deals to move to natively hosting content, I always tried to bring as many of our onsite tools to their apps, including Google Analytics tags, affiliate links, post article promotion of additional brand content, and newsletter sign-up prompts. Some news readers allow publishers to sell the inventory on their content, but few premium sales teams I know are in search of more mobile display inventory and the ad ops headaches are often not worth it in any case.

The biggest challenge to the news aggregation model, let alone its growth, is the same one that is hanging over the media business generally: AI and Large Language models. Ensuring content doesn’t end up accidentally or otherwise in LLMs is particularly concerning as it relates to Microsoft and Google, but preventing this use is important across the board as smaller players look to exploit publisher content to create new revenue streams or businesses. According to Troy Young on a recent People v. Algorithms podcast, Apple looking to license archival content from publishers for use in its LLM. It’s not clear that Apple is doing this because they need to or they are just trying to carve out higher moral ground; perhaps they are also trying to insulate themselves from future lawsuits. In any case, any publisher with a syndication business should be doing a legal audit of their contracts to make sure they are protected from their content leaking into LLMs.

The debate around news aggregators inside media companies has historically centered around whether or not off-platform distribution cannibalizes onsite audiences. Provided that SEO concerns are controlled for via canonical links, I’ve not seen evidence that syndication erodes audiences. There is no doubt that with off-platform consumption, publishers lose the 1st party data associated with a direct visit and, as noted earlier, the relative off-platform monetization on a per user basis is significantly lower, at least for premium publishers. But I’ve always believed that there is some audience that is never going to visit your website directly and many that don’t know your publication exists. So the question is: do you want to serve and monetize that audience or forgo them entirely? As AI threatens to undermine search and the associated traffic referrals, targeting audiences in environments where they have declared an interest in news and information may become an even more central part of the answer.

Of course, broadly distributing full articles makes little sense for brands that create truly differentiated content, whether long-form features (ala The New Yorker or The Atlantic) or B2B/professional-focused content and data (ala Puck or Politico Pro), monetized via high-priced subscriptions. For those publishers, getting as many visitors as possible into their funnel repeatedly and withholding access to content until users relent and subscribe is the challenge. Anything that allows user to get around the friction that is hitting a paywall undermines the business. That said, content creators with enough content volume can distribute a highly-curated feed to select partners as part of organic efforts to build a subscriber funnel. The New York Times pursued this path at one point, providing the day's top stories to Apple News, which it pulled down in June 2020. “We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else,” Mark Thompson, the Times’s CEO at the time, told his own paper. But most folks aren’t the Times and, for those brands, syndication can be viewed as content marketing with an underlying revenue stream. AMC Networks has pursued this strategy, licensing shows to Max, with the hopes of promoting its competitive service.

I used to maintain a folder on my iPhone filled with the flotsam and jetsam of news reader apps. I went back to check them out as I was writing this article and noticed that a number are no longer active, including News360 (acquired) and TopBuzz (even ByteDance can’t win them all). But many survive, and new ones get launched periodically, usually by wealthy tech dudes who think their success positions them to save the news business.

Below are my high-level, incomplete thoughts on the biggest players in the space. I tried to bucket in tiers ala Bill Simmons’s basketball rankings:

• Tier 1 - OS Integrators - Apple News, Google News
• Tier 2 - The UnDead - MSN, Yahoo / AOL
• Tier 3 - The Survivors - Flipboard , SmartNews , NewsBreak , Opera News
• Tier 4 - The Innovator - Artifact

The OS INTEGRATORS

• APPLE NEWS: Apple News is the biggest news aggregator app with at least 125MM MAUs as of 2020, the last time (at least I could find) that Apple publicly reported users data. It's an impressive number for the category, but when you consider that Apple had 1.5BB active devices at the time and prominently leverages its surfaces to promote Apple News, the low penetration speaks to the audience challenges of news apps. For publishers, Apple News can be a meaningful audience source, but revenue is challenging with poor ad monetization driven partly by Apple’s privacy policies, which as noble as they may be, drag down already low mobile display CPMs. Yes, Apple News is a well-lit environment with high quality content, but it wasn’t a surprise that most sales teams have a hard time selling the inventory, which I often described as our lowest value units: static mobile display with highly limited addressability, targeting and tracking and specs that didn’t match onsite inventory. CPMs and fill rates for Apple News were even worse in Apple's non-US markets. Far more meaningful from a revenue perspective for participating publishers is Apple News+, the service’s subscription tier combining magazines, a couple daily newspapers, and some premium digital products. In my experience, revenue from News+ was by far the biggest contributor in this category, though growth has been harder to achieve in recent years. Apple recently raised the price of News+ 30% from $9.99 to $12.99, which tells me that Apple needed to raise prices to drive growth and it is confident that the product is relatively sticky with its small user base. Even at $12.99, News+ is a good deal for magazine enthusiasts. Whether or not it is a great deal for publishers trying to build direct-to-consumer businesses is less clear. The Wall Street Journal is a News+ partner, having likely made the calculation that the vast majority of its subscribers want a standalone WSJ experience (via print or app), expense a subscription, and don’t view News+ as a substitute. I’ve seen little evidence that News+ is cannibalistic, but it does add to consumer confusion and few can outmarket Apple. Still the dollars are high margin and removing content once on the platform is a tough choice for profit-starved publishers.
• GOOGLE NEWS: Like Apple, Google drives distribution of its news reader, Google News, via its Android mobile operating system, but most publishers support Google News for access to the real estate it occupies in Google’s core search experience. It has often been difficult to get a clear picture on the impact of Google News and I confess that even after all these years the Google news ecosystem, including News, Newsstand, Discover and Showcase, is something of a mystery to me, especially how these pieces interact. For years, I’ve been unsuccessful in getting Google to help me better understand this dynamic. The biggest mystery for many is Discover which has surged in importance as a traffic source for many publishers; when Conde asked Google for additional information to understand the product, even high-placed search experts in the company struggled to provide answers and suggested that only a handful of employees actually knew how Discover worked. 

The UNDEAD

• MSN: MSN has declined significantly in importance and revenue to publishers over the years, but the continued role it plays is nothing if not a tribute to the power of default settings; Edge (formerly Internet Explorer) comes as the default browser on Windows-devices, and with it, a search bar and MSN as the home page. Monetization on MSN took a major hit when Microsoft outsourced sales to AOL years ago and the site can feel like an automated ghost ship to partners with formerly robust editorial and partner management teams eliminated in rounds of cuts. Another MSN-take away: older users are highly desirable when it comes to the business of clicking on the abundant content recommendation ads on the site.
• YAHOO: The Robin to MSN’s Batman, an appearance on the Yahoo homepage drives significant traffic and revenue to publisher content. But the site has declined in importance as a syndication partner with challenges to its brand, ownership, and ad platform. For a long-time, Yahoo refused to provide publishers with canonical links for search authority, which caused publishers to pull their content all together or come up with workarounds like delaying delivery of content to ensure search rankings were not impacted. AOL, also under the Yahoo umbrella, played a more limited, hand off role in the content distribution ecosystem, but was an interesting partner nonetheless; for a time HuffPo was the most important aggregator under the AOL umbrella. With new leadership and PE ownership, Yahoo feels energized, though how 3rd party content fits into its strategy is unclear.

The SURVIVORS

• FLIPBOARD - Flipboard is the OG news aggregator native app. Give credit to Flipboard CEO Mike McCue for sticking it out. I still remember all the hype surrounding the launch of Flipboard, which Apple’s Steve Jobs helped promote. At ESPN , we were pressured to do a deal because The Walt Disney Company CEO Bob Iger reportedly used the Flipboard app on his iPad to catch up on the news in the morning. Flipboard's original deal had the most complicated mathematical formula to govern payments that I have ever seen (a close second is Tony Haile ’s Scroll). Poor Gus Gostyla who had to explain it to potential partners. It also helped birth one of my business development truisms, that if you need complicated algebraic formulas to explain the revenue potential of a partnership to your bosses, you’ve lost. I guess Flipboard has survived by maintaining a clean interface and intuitive navigation. But because Flipboard moved away from hosting content natively in their app and instead largely refers traffic to publishers, I think of them as more an “set it and forget it” audience development tool than a revenue play.
• SMARTNEWS - Though it has never achieved the same level of penetration as in its native Japan, SmartNews may be the most important non-Apple player in this category and is another app that has shown surprising longevity. I’ve never loved the SmartNews UI, but they forced their way into the conversation when they started to appear as a top traffic referrer after their U.S. launch in 2014. The SmartNews team is well-intentioned and experienced (Hi Bernie Davis !), but I’ve long had a fundamental issue with their app, which for non-partners, provides a “Smart” view of content, which removes ads to rapidly load content (to be fair, Flipboard also does this, which I think is equally sketchy). I wrote about this approach and the tradeoffs above. For a few years now, the company has focused on doing direct deals with publishers to natively host content in their app, which it has monetized via programmatic ads, though the SmartNews announced they would start directly selling ads in Oct 22, which hopefully can raise revenue paid to publishers.

• NEWSBREAK - Another contender for the most important news reader app, Newsbreak claims a monthly audience of 50MM users, though that number seems pretty high to me. The company has differentiated itself by focusing on local news, which means it contains lot of content from local TV and radio sites. I don’t like the quality of Newsbreak’s ad experience and can’t say I’m a regular user of the app, but when I do open it, I usually discover locally-relevant content I don’t find on my own. I particularly like their map feature, which shows news and crime information based on location.
• OPERA NEWS - Not to be confused with the Metropolitan Opera’s in house magazine that ceased publication in November after 87 years, Opera News is a prominent player in the news readers space, mostly in Europe, where the company has leveraged its popular Android browser to drive downloads and usage. I’ve found the Opera team a little difficult to work with, but they can be useful to find audiences outside the US.

The INNOVATOR

• ARTIFACT - When Instagram founders Kevin Systrom and Mike Kreiger launched Artifact in January 2023, I thought the last thing the world needs is another news reader app backed by rich guys who think they have the solution to the problems plagued by the media business. Artifact has since scoped out a more ambitious vision of helping users organize links to anything around the web, though I haven’t found that product to be particularly compelling and I’m skeptical of their ability to become a category-defying hit. I like some of Artifact’s features, like AI article summaries and the ability to follow a specific writer’s content across publishers and brands. But I’m less impressed with the quality of its AI audio or the attempts at gamification, like promoting usage streaks ala Snap Inc. It’s my understanding that Artifact has yet to roll out a revenue program with publishers, so the app will occupy a tertiary audience development role until they can grow a user base to match the early buzz.

Wow! Congratulations if you made it to the end of this very long post and thank you for reading! If you want to discuss content syndication, news aggregators or any of the topics in this piece, message me or visit MountProspectPartners.com to learn more about our services.