No Traffic, No Moat: How AI Breaks The Economics Of Destination Publishing | AdExchanger

"For a time, audiences struck a workable balance between aggregation platforms and publishers' owned and operated sites, apps and channels. That balance broke when Google launched AI Overviews in May 2024. Coupled with the rapid adoption of LLMs for search and discovery, referrals fell sharply, which exposed a hard truth that publishers have been reluctant to face: When discovery breaks, destination economics break with it."

"Publisher costs remain fixed and stubborn: websites, apps, ad tech, CMS, identity and consent infrastructure, analytics, billing systems, compliance ... and all the people that run the business. Meanwhile, traffic-dependent revenue is collapsing. A small number of global brands with unique and valuable content, durable subscriptions or licensing revenue may survive this transition intact. Everyone else faces an ugly reality."

"Once platforms realized content was the product, they lost the incentive to send users elsewhere. Distribution collapsed inward. For a time, audiences struck a workable balance between aggregation platforms and publishers' owned and operated sites, apps and channels."

Digital publishing historically relied on building destinations where audiences would visit and generate revenue through advertising or subscriptions. This model began deteriorating when social platforms prioritized content distribution in 2007, accelerating when Facebook, Netflix, and streaming services realized content was their product and stopped directing users elsewhere. The final blow came with Google's AI Overviews in May 2024, which dramatically reduced referral traffic to publisher sites. Combined with LLM-powered search and discovery tools, this collapse exposed a fundamental problem: publishers maintain fixed costs for infrastructure, staff, and technology while traffic-dependent revenue plummets. Only publishers with unique content, strong subscriptions, or licensing deals can survive this transition.

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