Publishers don’t love Apple News. The king of sponsored links has another idea

Steve Jobs’ ghost may haunt me for writing this, but Apple is starting to look a lot like Facebook.

At least, that’s how it looks to publishers. In September, Slate’s Will Oremus riled up media Twitter with an excellent article that examined the massive growth of Apple News over the past year, and the accompanying financial pitfalls. While publishers are earning millions of new readers within Apple News, they say they’re making little money from it.

The key stat: Slate gets as much revenue from an article with 50,000 views on its own site as it does from 6 million views within the walled garden of the Apple News app. In other words, when readers to go to Apple News instead of Slate‘s site, Slate trades a dollar for less than one penny.

This dynamic is eerily similar to when Facebook launched its own native article reader, Instant Articles, in 2015. Publishers quickly flocked to it, lured by the promise of massive readership. But it eventually sputtered for the same issue plaguing Apple News: Publishers couldn’t make much money. Apple has taken steps to improve the situation, including helping publishers sell subscriptions–in exchange for a 30% cut.

Matt Karolian, the Boston Globe‘s director of new initiatives, told Slate: “The juice ain’t worth the squeeze.”

Making matters worse, Apple News’ monetization issues are worse than Facebook’s ever were. Facebook could offer the fastest-growing and second-largest ad platform in the world to help publishers sell ads, and it integrated with many third-party ad providers. Apple, on the other hand, has until recently only sold ads through NBCUniversal, which pales in comparison and has delivered “insignificant” revenue to publishers, according to Digiday.

Home sweet home

But what if publishers could have the best of both worlds–a healthy new source of traffic, and the revenue that comes when users visit their own site? That was a question that confronted Adam Singolda a year ago. The CEO of Taboola, a New York-based content recommendation company known for putting sponsored links on thousands of publishers’ sites across the web, loved the user experience of  Apple News. Its position on the iPhone’s home screen made it addictive, like an ever-changing front page of a newspaper. But what if everyone–not just Apple users–had access to an app like that? And what if it actually pushed traffic to publisher sites, where they could actually make money?

In April, Singolda announced the launch of Taboola News, a pre-installed smartphone widget that the Wall Street Journal called the “Android Rival to Apple News.” An initial partnership placed the widget on phones by Chinese smartphone manufacturer ZTE, and last week the company announced a new tie-up to place the widget on phones made by China-based Vivo, the world’s fifth-largest smartphone manufacturer, which reaches 100 million mobile users across Asia.

So far, Taboola News’ footprint has started small, with trials in Mexico and Germany on ZTE phones. But with the new Chinese smartphone partnerships, Singolda has bigger ambitions.

“The top Android OEMs are manufactured in China, outside of Samsung, which is Korea. On that front, it’s definitely a huge part of our operations in terms of signing, and partnering with OEMs in China,” Singolda says. “In terms of the global rollout, naturally these OEMs sell devices all around the world to 2B users using Android every month.”

The widget, currently only available on Android phones made by ZTE and Vivo, pushes relevant news content to the lock screen (on ZTE phones) or to the “swipe right” screen (on Vivo phones), which users see after unlocking their phone. And unlike Apple News, when users click on the article, they’re sent to the publisher’s own site via a browser.

One big question is whether the content will be any good. Taboola is best known for those sponsored “You May Like…” recommendations below articles on publisher sites. Those ads serve as a major source of revenue for many publishers, but its content is often questionable in quality (“You Won’t BELIEVE What These Celebrities Look Like Now”), and has earned the ire of media critics, who say that its “clickbait” content hurts publishers’ brands more than it helps their bottom line.

Singolda insists that his news app is different. “Taboola News is very premium content. It’s not ads. It’s not sponsored content,” he says. Singolda claims that the service will only push content from major, reputable global and regional news publishers, but declined to name them. The company’s news partnerships include publishers like USA Today, Huffington Post, MSN, Business Insider, and The Independent, as well as Asian outlets like India’s NDTV and India Today, the state-sponsored China Daily, and the Thai news portal Kapook.

He also says that Taboola News has built a 50-person editorial team, locally based across the globe, to curate top news content. Apple News, in its own right, has built a team of veteran editors to curate content, and their careful work has been lauded by editors across the media landscape.

How it works

Participating publishers won’t be charged for the traffic they generate through the Taboola News app. Instead, publishers run a Taboola “recommended links” widget on the bottom of their article pages, and Taboola keeps the revenue generated from the clicks on those recommended stories. (Under the agreement with ZTE, the phone manufacturer will get a percentage of revenue from recommended links on the sites.)

Publishers will keep all other ad revenue generated from that visitor’s session on their site. Publishers that are not already showing Taboola widgets on their sites can pay into an automatic bidding system to have their links included in the news widget.

While the Feed is only running on a few million devices so far, Singolda says that it’s already driving over a million clicks per month for some publishers.

The reason for this, according to Singolda, is that users are fresh. “When you think of how people usually get to publisher sites, they get there already exhausted,” he says. “If you spent 20, 30 minutes on a social feed and then clicked to a publisher site. How much time do I have left?”

Visitors that come to content via Taboola News, on the other hand, are at the very start of their “discovery journey.” Singolda compares it to the quality of traffic they see coming from desktop browser portals like MSN, which have traditionally performed very highly. “Attention has a budget,” he says. “So it’s a budget question. It’s a huge value prop for users to get publishers at the beginning of the journey.”

Related: This new tech could help publishers move past Facebook dependency

For a while, it appeared the next big driver of sustained traffic to publisher sites would come from Facebook. In 2013, 50% of all referral traffic to publisher sites came from Google, but as Facebook grew and started prioritizing publisher content in the feed between 2013 and 2015, it quickly overtook Google.

But then disaster struck for publishers. Following an algorithm change in early 2017 that deprioritized publishers in the feed, Facebook referral traffic plummeted. That, among other factors, left publishers where they are today. Search traffic growth is relatively flat. Social traffic is dropping. And Google and Facebook have parlayed their role as content gatekeepers to capture around 73% of the digital ad market, leaving publishers fighting for scraps.

The home screen may represent the best chance for publishers to reach users before they head to Google or a Facebook-owned app. Publishers like The New York Times have driven increased traffic to their own apps through push notifications. But a pre-installed app bringing news traffic from over 2 billion Android devices could change the game.

The next 30 percent

Of course, there are tons of reasons to be skeptical of Taboola News. The company has an uneven reputation for content quality, the app is only installed on a few million devices so far, and all of its metrics are self-reported. The partnerships with the Chinese manufacturers might also not immediately help Taboola compete in the hotly contested markets of the U.S. and Europe. Vivo has only started to expand outside of Asia, and while ZTE has an 11% market share in the U.S. (and shrinking), it’s unclear when Taboola News will be rolled out in the States, if at all.

Plus, Google News looms large. The app got a redesign as an AI-powered “walled garden” for news, similar to Apple News, in May. While Google News hasn’t publicly revealed any user stats, it certainly has more users than Taboola News. And it seems likely to become the go-to news app on Android–even if the search giant got hit with a $5 billion antitrust fine in June from the EU for pre-installing its own apps on Android devices.

But it’s also possible that Taboola News–or a service like it–could be a game-changer for publishers, by sending traffic directly to their owned sites in a web browser.

“I ask myself, what is the next 30% growth to the audience?” said Singolda. “The last time we did that was Google starting Google and SEO being born. My dream would be to drive hundreds of millions of people to the open web and drive huge traffic to journalism.”

That makes Taboola News easy to root for as a technology, despite the company’s uneven reputation for content quality. And there’s little doubt that Singolda–who built a 1,000-employee empire by being the ultimate merchant for publisher traffic across the web–is incentivized to keep publishers alive and thriving.

“If the open web goes down,” says Singolda, “we go down.”

Joe Lazauskas is the head of content strategy at Contently and co-author of The Storytelling Edge, a book about the science of storytelling and how to use it to transform your business.