Defend Truth


Battle for the future of media — Daily Maverick’s submission to the Competition Commission

Battle for the future of media — Daily Maverick’s submission to the Competition Commission
(Illustration image: Midjourney Al; Logos: Vecteezy)

The Competition Commission of South Africa has launched a market inquiry into distributing media content on South Africa’s digital platforms and advertising technology. This is a summarised and edited version of Daily Maverick’s submission.

1. Daily Maverick’s history 

Launched in 2009 by a team of five, Daily Maverick set out to continue the essence of Maverick magazine on the web. After securing initial investments from angel investors, the plan was to monetise through online advertising.

Focusing on high-quality, feature-length journalism, Daily Maverick distinguished itself in a landscape still dominated by print media. Without legacy constraints, the publication fully embraced digital, growing its audience through dedicated online publishing and newsletters. This digital-first approach allowed Daily Maverick to navigate the tumultuous first decade, continually reinvesting in its core: the newsroom.

Daily Maverick’s “Defend Truth” mission underscores its commitment to empowering South Africans with insightful journalism to enhance public knowledge and democratic participation. Rejecting the conventional paywall model, we adopted voluntary membership to ensure broad access to its content, emphasising the importance of reach for impactful journalism.

Reflecting on 15 years amidst an evolving and contracting news industry, Daily Maverick’s journey highlights the relentless challenges and personal sacrifices of sustaining quality journalism. It’s a miracle we survived.

The media landscape’s digital transformation has intensified competition, signalling a broader industry disruption.

2. Business model choices & competition 

In the early days of Daily Maverick, the digital frontier brimmed with potential. As founders, we believed a sustainable business model would emerge as advertising migrated online, albeit not quite mirroring the lucrative print advertising realm, but close enough.

The nascent online advertising market offered only a sliver of the budgets once lavished on print, and this meagre share was largely scooped up by established media conglomerates like Media24.

For Daily Maverick, competing in this tight space was a Sisyphean task, marked by relentless challenges and financial tightropes that often saw the founders sacrificing our salaries to keep the ship afloat on many occasions. It felt like we were in a never-ending cycle of fundraising, battling from one payroll to the next.

Fourteen years later, the team at Daily Maverick has confronted the harsh reality — we now operate in a failed market.

In response, we’ve innovated and launched a non-profit arm supporting crucial investigative and climate-focused reporting. Five years ago, in August 2018, we made a pivotal turn in reaching out to our readership to join our voluntary membership programme to support our work.

The broader media landscape has been tumultuous, caught in the whirlwind of the attention economy where news outlets vie not only against traditional adversaries but also against an array of new entrants with bigger teams, more data and technology and crucially, zero cost of content production. This new information space is driven by engagement, which in turn is fuelled by content that stokes strong emotions and leads to a proliferation of extreme viewpoints and sensationalism.

In the chase for scale and cheap clicks, less “boots-on-the-ground” journalism was created, further eroding the foundation of quality journalism.

The advent of content aggregators has exacerbated the situation, with writers under pressure to churn out content at a breakneck pace, often at the expense of originality and depth. These trends have collectively undermined public trust in the media, depleted the reserves of public interest journalism, and contributed to the systemic failure of the journalism market.

Every industry gets disrupted, and every business must innovate or face the consequences. We can’t claim some kind of holy right to advertising, but we can ask questions about the practices of the dominant big tech platforms that have contributed to the market failure of journalism.

3. Cost of mis- and disinformation on newsrooms & society 

In the current digital age, the scourge of misinformation and disinformation presents a formidable challenge, particularly to the sanctity and sustainability of credible journalism. Platforms like Meta, through its subsidiaries Facebook, Instagram and WhatsApp, have become the largest enablers of this phenomenon, taking a significant toll on society and newsrooms alike.

Despite their substantial profits, these platforms have consistently shown reluctance to allocate adequate resources to combat this issue, exacerbating its impact. This is not without financial consequences and affects the viability of journalism in the following ways:

  • The spread of false information severely erodes public trust in reliable news sources, compelling legitimate newsrooms to invest additional effort in debunking, verifying and combating false narratives.
  • This scepticism not only strains the resources of news organisations but also complicates the task of growing reader revenue.
  • The burden of increased fact-checking diverts essential resources from investigative journalism and in-depth reporting, diluting the quality of news content.
  • The sophisticated advertising tools offered by these platforms can be hijacked by malevolent actors to disseminate misinformation to susceptible audiences, undermining the integrity of digital advertising and siphoning off revenue from legitimate news outlets.
  • The proliferation of cloned websites further muddies the information ecosystem, misleading the public and diverting advertising revenue from genuine news sources.
  • This challenge is compounded by the societal polarisation fuelled by misinformation, which deepens divides and makes the journalist’s role of informing and educating the public increasingly difficult.

The events of the KZN riots in July 2021 underscore the gravity of this issue. Our editor-in-chief, Branko Brkic, was part of a global task force, including global editors and social media representatives, to combat misinformation.

When the violence broke out, certain Twitter accounts were found to be spewing hate speech and inciting violence and shown to Twitter representatives on the task force. Their only advice was to report these posts to the standard channels, which resulted in no further action.

There is zero accountability and zero incentive for these players to correct their course because they profit from all these posts, and there isn’t enough competition to drive any cleanup.

The impact of misinformation extends beyond the informational realm, affecting the mental health of individuals, particularly young people. Studies and internal leaks show how detrimental social networking sites are for mental health issues like depression, anxiety and self-harm. People who suffer from these conditions are likely to have a diminished capacity for healthy engagement with factual journalism.

4. Competing with big tech

Navigating the treacherous waters of the modern media landscape, Daily Maverick has had to compete with behemoth tech and social media companies for the ever-elusive commodity of human attention. It’s a multifaceted battle, one where the scales seem perennially tipped in favour of the giants of Silicon Valley.

Ironically, the platforms that pose such formidable competition have also been instrumental in Daily Maverick’s growth. Leveraging the expansive reach of digital platforms has enabled Daily Maverick to connect with a large audience that might have been insurmountable with the resources at its disposal. This paradox underscores the complex relationship between independent media and the digital behemoths that dominate the distribution channels.

Yet, one can’t help but wonder about the what-ifs. Daily Maverick might have wielded a substantial marketing budget to amplify its distribution independent of these platforms in a more equitable market with fairer economic dynamics.

The issue’s core lies in these digital giants’ opacity and monopolistic tendencies. Their dominant market positions, coupled with a lack of transparency, have allowed them to operate with little regard for the broader implications of their actions — be it the erosion of social cohesion or the distortion of the advertising ecosystem.

Google plays such a dominant role in the advertising marketplace; it plays multiple roles and owns the ad tech stack almost entirely used by publishers and media buyers:

  • Ad Manager (the tools publishers use to serve adverts online);
  • AdX (the biggest exchange in the world that connects buyers and sellers and all manner of intermediaries); and
  • DV360 (executing campaigns).

It also owns properties (like YouTube) and channels like Search that dominate their categories.

If we liken this to a financial system or traditional stock exchange, Google would be the broker and the exchange, offering shares for sale while competing with customers.

It’s no wonder the following accusations have been made in litigation around the world:

Underlying these practices is a notoriously opaque marketplace. In multiple tests run by publishers, when buying units of advertising on their site, it was found that just 30% of the spend ends up with the seller. Google does not disclose who profits from the leakage, so further investigation is impossible.

This skewed battleground challenges Daily Maverick’s mission and raises significant concerns about the sustainability of quality journalism. As the struggle for attention intensifies, the imperative for regulatory oversight and a recalibration of market dynamics has never been more necessary.

5. Impact of digital ad fraud on the industry 

Click fraud, a nefarious facet of digital advertising, manifests when online advertisements are clicked with deceitful intent rather than genuine interest. This is often perpetrated by bots or malicious individuals, aiming to drain a competitor’s advertising budget by consuming paid clicks without the potential for conversion or to inflate the revenue of the host website unjustly.

Despite the sophisticated tools at the disposal of major tech platforms and their vast reserves of data and AI capabilities, the prevalence of ad fraud is startlingly high, with some studies suggesting that as much as one-third of all digital advertising expenditure is wasted on fraudulent activities. This scale of fraud is unfathomable in traditional financial markets, such as stock exchanges, where the trading of non-existent shares would provoke uproar.

The implications of click fraud extend deeply into the realm of digital news content distribution, presenting a multifaceted challenge:

  • Financial drain: Click fraud siphons off advertisers’ budgets, leaving less capital for legitimate ad placements on reputable news platforms, consequently diminishing the ad revenue crucial for publishers.
  • Erosion of trust: The pervasive nature of click fraud erodes advertisers’ confidence in digital platforms, potentially leading to reduced investment in online advertising, including on legitimate news sites, thereby straining their revenue streams.
  • Resource diversion: The necessity for robust anti-fraud measures forces advertisers and publishers to divert valuable resources away from content creation and innovation, impairing the user experience and stifling the growth of digital newsrooms.

For an industry at the forefront of developing virtual worlds and sophisticated AI, the ongoing struggle against ad fraud raises questions about the incentives — or lack thereof — for these platforms to address and eradicate such fraudulent activities.

Before the implementation of measures like ads.txt, which introduced an additional layer of website verification, it was relatively easy for counterfeit websites to impersonate reputable publishers and misappropriate their ad revenue.

The Guardian’s 2016 experiment highlighted this vulnerability. The full adoption and enforcement of ads.txt by demand-side buyers, platforms, and media buying agencies remain uncertain, leaving a gap in the defences against ad fraud that continues to challenge the integrity of the digital advertising domain.

6. Competition for funding among news publishers 

Traditional avenues for investment in media are dwindling, with investor apprehension towards the inherent risks in media ventures becoming more pronounced.

This hesitancy is mirrored in development finance and social impact investing, where the media sector often goes unnoticed by ESG (environmental, social and governance) investors.

The situation is further compounded by a retreating corporate advertising sector, leaving only a handful of philanthropic organisations as the lifelines for journalism, some of which are reducing their commitments or withdrawing entirely from the South African landscape.

In this constrained financial environment, competition for resources is fierce. Estimates suggest that journalism-related initiatives receive less than 5% of digital budgets, indicative of the dire scarcity of funding.

This scarcity fuels competition among local entities like Daily Maverick and international news organisations. The notion of a “winner takes all” market becomes more pronounced as the available pool of philanthropy and developmental finance shrinks, exacerbated by global crises like the wars in Ukraine and Gaza, redirecting possible funds away from media support in regions like Africa.

Alarmingly, less than 0.2% of overseas development aid is allocated to journalism, with a significant portion of this already meagre amount being absorbed by intermediary organisations, leaving even less available for direct journalism funding.

This dire situation has prompted innovative financial solutions in other parts of the world, such as the “Pluralis Fund” launch in Eastern Europe that represents a novel approach to journalism financing, blending grants, development finance and retail bonds to provide low-cost, sustainable funding for news organisations facing market failures similar to those in Africa.

This backdrop of financial adversity and innovative responses in other regions raises pressing questions about the future of African journalism funding, which is sorely lacking.

7. Daily Maverick’s views on remedies for market failure of journalism

Addressing the multifaceted crisis in journalism requires a comprehensive approach. When a market fails, policy reform is needed. We believe legislation and tax incentives are necessary that would encourage the following behaviours and outcomes:

  • Leadership development: The industry must cultivate a new generation of leaders equipped to navigate the complexities of modern news organisations, filling the void left by a lack of entrepreneurial spirit and innovation.
  • Job creation: Reversing the trend of “juniorising” newsrooms is crucial to restoring institutional memory and attracting generational talent that has drifted away from journalism.
  • Youth engagement: The industry needs to present itself as a viable career option for young talent, countering the deterrent effect of market failures on ambitious individuals.
  • Tech and product talent: Competing for product and technology experts is essential, recognising that journalism is vying for this talent against the allure of big business and tech giants.
  • Regulatory and policy reform: Significant regulatory changes and policy reforms are needed to foster a conducive public-interest media environment. These include legal and tax incentives to bolster journalism, such as VAT exemptions on reader revenue, tax-deductible donations and advertising rebates to encourage business support for journalism.
  • Community and business support: It’s imperative for those who benefit from journalism, including businesses and tech companies that have thrived at the expense of transparent practices, to contribute to sustaining the ecosystem.

Regarding compensation from big tech for abusing its market dominance, Daily Maverick advocates for a novel approach. We propose a method based on the principle of “environmental rehabilitation” charges as levied on corporations that cause ecological damage.

This model would impose fees on entities that profited from the exploitation of the journalistic landscape, using a formula based on a percentage of revenue, to facilitate the recovery and sustainability of the journalism sector.

We favour this approach over using copyright legislation or payments for news links. While we disagree in principle with those approaches, there is also scope for unintended consequences to occur, as they have in Australia and Canada.

An “environmental rehabilitation” approach can avoid these consequences and prevent big tech from opting out of its obligations while creating a model that could apply to new entrants who engage in similar practices.

8. A special note on Google News Initiative 

The relationship between news publishers and digital giants like Google is often complex, embodying the myriad paradoxes that characterise journalism and South African life.

The Google News Initiative (GNI) stands out as a signal of Google’s recognition of the indispensable role news plays in society and, by extension, its business ecosystem.

Through GNI, Google has committed itself to bolstering the news industry by funding innovation projects and developing tools to enhance news organisations’ operational capabilities.

As a recipient of two Google News innovation grants, Daily Maverick has firsthand experience of such support’s positive impact on a news publication’s offerings and overall sustainability.

These grants have underscored the potential of targeted assistance in fostering innovation within an industry not traditionally known for its pioneering spirit. This support is particularly valuable given the seismic shifts the news industry has faced due to digital disruption, challenging news publishers to rethink their approaches and business models.

The relationship between Google and news publishers is akin to a nation-state composed of various provinces, each with its priorities and agendas. Within this metaphorical nation-state, the GNI programme represents a province dedicated to advancing the news industry, contrasted with other sectors that may prioritise profit with less regard for the broader societal impact.

The GNI’s commitment is further evidenced by the individuals who staff the initiative, many of whom come from journalism backgrounds and are seen as allies in the quest for news sustainability. However, the backdrop of increasing global litigation against big tech companies for their practices brings an added layer of complexity. This has sparked internal debates within Google about allocating resources to the GNI and the tangible returns on such investments.

Despite the broader challenges and criticisms, the contributions of initiatives like the GNI highlight the potential for constructive engagement and the critical role of external support in nurturing innovation within the news industry.

9. In closing

In wrapping up this submission, it’s poignant to reflect on Google’s foundational motto: “Organising the world’s information”.

This phrase captures the essence of Google’s mission but also underscores a critical caution: without a robust and healthy journalism sector, there is a real danger they will be left to organise the world’s disinformation.

The integrity of information, which is the lifeblood of democratic societies, hinges significantly on the vibrancy and sustainability of journalism.

However, it’s crucial to broaden the lens beyond Google, despite its significant influence within the advertising ecosystem, particularly in programmatic display advertising. Meta, with its vast social platforms like Facebook, Instagram and WhatsApp, plays a pivotal role in disseminating information, regardless of veracity or impact on society.

The ramifications are profound, undermining the social fabric and exerting a substantial toll on the news industry, which is in a constant battle against the tide of falsehoods.

The challenges the journalism sector faces are not the making of a single entity but are symptomatic of a broader collapse sped up by the actions of tech giants like Google and Meta. By their dominance and questionable practices, these platforms have contributed to the market failure of journalism.

However, we urgently need regulatory reform to improve the environment in which journalism operates. Remedial action and incentives are required to change the behaviours of business and the public from inaction to broad-scale support.

We have proven the value of journalism to society many times over. We need to act before there is nothing and no one left to do this critical job. DM



Comments - Please in order to comment.

  • Temba Morewa says:

    Why can the media not fully support a good and working capalist system – if the compilation is supplying something for “free” (at another currency, ie. info), FIFO!

  • Johan Buys says:

    Has DM been able to map the income, expense and tax model?

    If a South African advertiser like TakeALot runs sponsored link campaign on “home backup power” and there is activity: (1) TakeALot incurs an expense that it presumably deducts from its SA income, reducing its tax base (2) is there a VAT invoice (I think there is) and if so what are the input VAT claims that Google claims (3) is google taxed in South Africa on the income derived (3.1) from SA internet user activity and SA advertisers (3.2) from foreign ad income (say EBay hits) generated from SA user activity?

  • Patricia Sidley says:

    My experience goes back to the Rand Daily Mail. I was there for the last 8 years of its existence. Some of this was spent in the union at the time, the Southern African Society of Journalists. There was a sense of the impending death of the paper and with my union hat on I called on the CEO of JCI which effectively owned the paper and was a subsidiary of Anglo American. If anybody would have known if it was closing, he would have. What he had to say to me at the end of the chat was: It’s the bottom line that counts, the bottom line”. That I think was the only bit of truth I heard from the people who would have known then who lied to me. Of course it was closed and having asked to be able to see the books with an accountant which they did so. It unfortunately confirmed that it was trading at a loss of R10million a lot in those days. But it has also summed up the only thing that has ever counted. The bottom line. Many more papers have been closed since then and all for the same reason. There have been exceptions to this like the Mail & Guardian and the Daily Maverick. This application to the Competition Commission I think is a breath of fresh air. But what worries me is the possibility of this being disregarded and refusing to work in an environment like this. I think the existing media will fight it. But I have always been a pessimist and I would hope if this came to fruition they would see a way of engaging with it .

  • Dave Crawford says:

    Well said.

  • Fanie Rajesh Ngabiso says:

    This is the single most important submission I have ever seen. Ever.

    Currently a few monopolistic capitalists operate with impunity, force feeding humanity an endless toxic soup of lies, truths and half truths. Poisoning us all. In the interests only of greed.

    And make no mistake – this is real poisoning. It is directly responsible for real death and real mental trauma. Globally.

    So why are our governments not doing anything? Surely this is what we create them for – to defend us from evils we are powerless to as individuals.

    It is beyond time that this status quo changed and these mega corporates be held accountable for murder, or at the very least culpable homicide, of our oh so very human race.

    South African government – you are entirely able to champion the fight against this evil, to the benefit of every single one of us, and you have the ethical, moral and social responsibility to do so.

    Power to the DM. Power to the truth.

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