January 14, 2020

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This week, top digital media executives will gather at the annual Digital Content Next conference in Miami.

  • I'll interview News Corp CEO Robert Thomson and Bleacher Report CEO Howard Mittman. Axios CEO Jim VandeHei will take the stage. DOJ antitrust chief Makan Delrahim will go on-the-record.

1 big thing: 2020 and the Age of Disinformation

Illustration: Sarah Grillo/Axios

With just weeks to the Iowa caucuses, social media platforms have finalized their rules governing political speech — and fired a starting pistol for political strategists to find ways to exploit them from now till Election Day.

  • Why it matters: "One opportunity that has arisen from all these changes is how people are trying to get around them," says Keegan Goudiss, director of digital advertising for Bernie Sanders' 2016 campaign and now a partner at the progressive digital firm Revolution Messaging.

The big picture: Axios spoke with a half dozen campaign strategists, both Republicans and Democrats, as well as social intelligence experts, about what new rules solidified over the past few weeks from Facebook, Google and Twitter, will mean for the remainder of the political cycle.

  1. Ad systems will be gamed: "[D]id you know you can still buy voter-targeted inventory on Google’s AdX exchange? Those with the means or tech chops to have a seat on their exchange can still microtarget Google inventory. Is that fair? I don’t think so," says Guidiss.
  2. Custom audience target lists will remain crucial despite Google limiting micro-targeting and Facebook making it possible for users to opt out.
  3. Lies will still flourish: Because Facebook said definitively last week that it will not fact-check political speech, nor will it limit micro-targeting political ads, campaigns will leverage both freedoms to make sure the most provocative ads reach the right people, or as Axios' Scott Rosenberg puts it, candidates and groups will be able "to exploit populations' anxieties and resentments efficiently."
  4. Ad bans will set a precedent for smaller platforms: Because few ad political ad dollars were spent on Twitter to begin with, strategists don't seem too concerned that the platform has banned political ads. But they do worry about the precedent that Twitter's ban sets for other platforms, like Spotify and TikTok most recently, to also bar political ads.
  5. Creative becomes the constant: "As technology companies continue to change their advertising policies, one thing is going to remain consistent: Creative will be the differentiator that wins," says Katie Spannbauer, Director of Advertising Operations at Targeted Victory.

Read the full piece.

2. Deepfakes' shallow threat

Illustration: Aïda Amer/Axios

Facebook, TikTok and Reddit all updated their policies on misinformation this week, suggesting that tech platforms are feeling increased pressure to stop manipulation attempts ahead of the 2020 elections.

  • Why it matters: This is the first time that several social media giants are taking a hard line specifically on banning video or audio that's manipulated using artificial intelligence or machine learning to intentionally deceive users.

Yes, but: To-date, there have been few instances of true deepfakes going viral to mislead users. Rather, most misleading media that goes viral online take the form of amateur doctored images with deceptive context.

  • "Ninety percent of manipulated media we see online is real video taken out of context used to feed a different narrative," Hazel Baker, Reuters' head of user-generated content news-gathering, told Axios last month.

Go deeper.

3. Exclusive: Major investment in statehouse reporting

Illustration: Eniola Odetunde/Axios

In the next 12-18 months, States Newsroom, a nonprofit company that supports a group of state capital-based, independent newsrooms, will expand to at least 20 new states, executives tell Axios.

Why it matters: Its efforts are the latest in a string of investment into revitalizing coverage of state capitals across the country.

  • Coverage of local government and state municipalities has been hit particularly hard in the local news crisis. Between 2003 and 2014, there was a 35% drop in statehouse reporting specifically.

Details: On Tuesday, States Newsroom, which is backed by non-disclosed donors, will launch its newest local outfit in Minneapolis called the Minnesota Reformer, led by J. Patrick Coolican, who recently left the Minneapolis Star Tribune.

  • Other states that the company is looking to expand to include Louisiana, Tennessee, Kansas, New Hampshire and Montana, says Chris Fitzsimon, Director and Publisher of States Newsroom.
  • “Our funding model is a bit different than traditional for-profit and even nonprofit media outlets. All of our work is free," says Fitzsimon. "We will never put content behind a paywall or create a roadblock to readers like a subscription service for premium content. We don’t run ads of any kind."

By the numbers: To-date, States Newsroom has opened 14 news operations in states including Virginia, Arizona, Michigan, Maine and Maryland.

  • The entire company employs nearly 60 reporters and editors. By the end of 2020 they plan to have over 80 on staff between state capitals and its D.C. office. Each newsroom has 3-4 reporters and editors.

Between the lines: Most of the reporters and editors hired to work at States Newsroom outlets are veterans of the local paper from that particular city.

  • For example, States Newsroom launched the Iowa Capital Dispatch last week, led by veteran Iowa journalist Kathie Obradovich, formerly the politics editor of the Des Moines Register, where she had been for the past 16 years.

The big picture: There’s a lot of non-profit and philanthropic interest in journalism right now, particularly targeted towards state capitals.

  • AP and Report for America announced last month that it would place 14 reporters in state legislatures across the country.
  • Propublica said in 2018 that it would expand its Local Reporting Network to focus on accountability journalism on state governments and state politics.

Yes, but: As a non-profit, Fitzsimon says States Newsroom "doesn't accept corporate donations or underwriting, just philanthropic donations." While Axios research has verified that the websites run by States Newsroom are indeed independent, Fitzsimon won't disclose who the company's donors are.

4. Congress comes together to save local news

Illustration: Sarah Grillo/Axios

In a symbolic move, Sen. Mitch McConnell (R-Ky.) last week signed on to be a co-sponsor to a bill that would allow newspapers to collectively negotiate with tech giants like Google and Facebook.

Why it matters: With the Senate majority leader's support, it's much more likely that the bill will pass in both chambers and be signed into law by the president.

  • Between the lines: Many members, feeling the pressure from their local constituencies, are being urged to do something about the crisis at home with local news. But nationally, they are happy to call out major newspapers when they are critical of their policies or their party.
  • Our thought bubble: It's unlikely that collective bargaining power will do much to help thousands of struggling news outlets get paid adequately for their work on the internet, as tech companies have a long history of fighting these kinds of negotiating efforts.

Be smart: The move is part of a larger trend within a Republican-controlled Washington to de-regulate legacy industries like broadcast, radio, newspaper and telecom so that they can better compete with technology companies, instead of adding regulations to technology companies.

Go deeper.

5. HBO Max will lean into mobile viewing

Consumer Technology Association

The HBO Max team is looking at ways to make the streaming service more mobile-friendly than some of its subscription video competitors.

Why it matters: If AT&T can build an app that can successfully leans into mobile, it may be able to capture an audience that Netflix and Hulu have intentionally been less focused on, at least to date.

What they're saying: "General entertainment SVOD (subscription video on-demand) writ-large has underinvested in mobile today," EVP & GM of WarnerMedia Direct-to-Consumer Andy Forssell told Axios on stage at CES.

  • "There are phenomenal collections of short-form. If you've got five minutes to burn, I think we've got to be aggressive enough to make that a real choice versus checking your Twitter feed or whatever else that may be."
  • "We are experimenting with things that are far more social more swipey," says Forssell. "What's a good way in five minutes or ten minutes to have a great experience?

What it looks like: WarnerMedia CTO Jeremy Legg says that the company is looking to break up the traditional "endless sets of tiles" that consumers have gotten used to on subscription video interfaces with highlight features and other clips.

Our thought bubble: The second-screen opportunity for a lot of HBO content is already huge, just think about how crazy Game of Thrones Twitter can be. But getting users to develop a mobile relationship with a streaming app will be hard when the app has to compete against Instagram and Snapchat, among others.

Disclosure: Axios has a TV show on HBO called "Axios on HBO."

6. Quibi wants to reinvent mobile viewing


Quibi on Wednesday revealed a new mobile video technique called Turnstyle that allows mobile video consumers to seamlessly switch between vertical or horizontal viewing.

Our thought bubble: The tech is impressive, and one day Quibi's pending patent for it could be worth a lot, but for now, reporters want to know more about how Quibi's business is going to turn "turnstyle" into a financial success.

Quibi CEO Meg Whitman expects Quibi to be profitable in the next few years, she told Axios in an interview.

  • "We wrote a business plan that the investors underwrote to a real path to profit in the not-to-distant future," which she says will be in less than 10 years but a little more than two.
  • She also said that she thinks the majority of Quibi subscribers will probably buy the ad-supported subscription tier.

Yes, but: A new report from The Information shows that in its first year, Quibi is hoping to spend more money ($1.5 billion) that it's raised so far ($1.4 billion), which puts lots of pressure on the service to sign up lots of users quickly.

7. Rentals get an awards season boost

Data: PwC and Digital TV Research; Chart: Axios Visuals

Over the last decade, transactional video on-demand (TVOD), which are services that sell or rent content on a one-time basis, have largely been challenged by the rise of subscription and advertising-based streaming services that allow users to access hundreds of titles for a monthly or yearly fee.

  • Case-in-point: Companies like Apple and Amazon, which still sell and rent content to users, have both invested heavily over the past year in building up their own subscription streaming platforms (SVODs).

Yes, but: TVOD's big advantage, and part of the reason it's still been able to nearly double its market size over the past few years, is that those services often are granted shorter theatrical windows than subscription or advertising-based streaming services.

  • “A-la-carte platforms represent the first opportunity for consumers to watch their favorite movies once they’ve left theaters," says Cameron Douglas, VP of Home Entertainment at FandangoNOW, Fandango's streaming service.

The big picture: TVOD services like FandangoNOW usually see a bump in response to awards season.

  • For example, “1917” is seeing an uptick in Fandango ticket sales after winning the top award for Best Motion Picture/Drama at the Golden Globe Awards.

8. Record number of original TV shows created in 2019

Reproduced from an FX Networks Research report; Chart: Axios Visuals

A whopping 532 original scripted television series were created last year, according to the latest data from FX Networks Research, up 7% from the year before.

Why it matters: The new data suggests that "Peak TV" hasn't happened yet.

Be smart: The rise of streaming over the past decade can be credited for bloating the TV ecosystem, but it's also complicated it.

  • FX researchers used to show the number of original scripted series that were released by genre, but because streamers have become so intertwined with the traditional television ecosystem, that calculus no longer makes sense.
  • For example, Disney said last year that Hulu will become the official streaming home for FX content. The partnership will offer current and new FX series to Hulu subscribers when they air on traditional TV.

Elsewhere in the entertainment world, the global box office hit a record at $42 billion in 2019, despite a slight U.S. decline from last year.

9. 1 📚 thing: Silicon Valley sells

Social media companies like Facebook and Twitter have long been subjects of books, movies, and long exposés—and now it's YouTube's turn in Bloomberg journalist Mark Bergen's forthcoming "LIKE, COMMENT, SUBSCRIBE," Axios' Kia Kokalitcheva writes.

  • The big picture: Bergen’s book is the latest in a long list chronicling the tech industry’s bad behavior and reckoning with the dark side of its influence. Others whose stories have become subjects of books include Uber, WeWork, Instagram, Tesla, and Facebook.

Go deeper: Silicon Valley, get ready for your closeup