The desperation of the referral fee

Have you noticed wherever you go on the web, you encounter articles that recommend products and offer product reviews with titles such as “The best deals on Amazon” or “The 75 best gifts for men that we know he’ll love”? Today I opened up the Wall Street Journal and came across this feature article, “Your Morning Routine Needs a 2024 Reboot. These Gadgets Will Help.”

When I went to CNN I encountered a section called “CNN Underscored” with numerous articles such as “The 19 best polo shirts for men,” and “The Best Products on Sale this Weekend.”

NBC News’ website featured this article:

These articles that proliferate the web are not news stories nor are they real product reviews conducted by knowledgeable experts in their testing labs such as this site. They’re money-making schemes published on these sites to get readers to buy products so they can earn referral fees from the sellers of the products. They are simply ads disguised as reviews.

As much as we might fault these news sources for mixing news with promotional pieces and not distinguishing between the two, we can also lend them a bit of sympathy for why they are doing it: a desperate move to survive.

Income is dependent on traffic to their sites. The more traffic, the more opportunities for a visitor to click on an ad, providing income when they do. Referral fees offer another opportunity for revenue when a visitor buys a product discovered on the site, a practice Amazon began by paying a percentage of sales to sites that send them customers.

Here‘s a list of the referral fees Amazon’ pays:

CategoryReferral Fee Percentage
Automotive & Powersports12%
Beauty15%
Books15%
Camera & Photo8%
Cell Phone Devices8%
Clothing & Accessories17%
Consumer Electronics8%
Grocery & Gourmet Food8%
Health & Personal Care8%
Home & Garden15%
Industrial & Scientific12%
Luggage & Travel Accessories15%
Sports & Outdoors15%
Tools & Home Improvement15%
Toys & Games15%
Video Games & Video Game Consoles15%

These fees offers the websites a new source of income that they desperately need as their readership diminishes, and as Google soaks up much of the advertising revenue.

And their plight is going to get much worse with the advent of AI. Let me explain how.

Currently a Google search, say for a current news event, will bring up a list of websites with relevant articles. I searched on a current event in the new, “Houston severe weather,” and up came this result:

I now can click on one of the results that will take me to the news site where I can read the story, read other stories, and perhaps click on an ad.

But with AI search, instead of getting links to these websites, we will get an AI-created news story on the subject we searched for, perhaps a few paragraphs with photos that tell the story, likely curated from these and other news sites on the web. No additional click is needed and no need to go to any other site. From a user’s perspective, it’s quicker and direct. But from the perspective of these sites, it’s devastating.

It means a big drop in traffic to these websites and a corresponding loss of revenue. Now AI engines such as ChatGPT shouldn’t just take the work of others and serve up their own results, and they are being sued by the NY Times, accused of doing just that. But it will be very difficult to figure out where the AI sources its information, since it can use many on-line resources and create its own story in it’s own voice. It’s a nightmare scenario for the many news sources that rely on traffic to their sites. It’s even more galling knowing that they may be competing with their own content!

I’m now a little less critical when I see the shameless promoting of products to gain referral fees. It’s an act of survival, but a small one, that won’t be enough to significantly disrupt the online news industry even further.

by Phil Baker

5 thoughts on “The desperation of the referral fee

  1. Randy says:

    Dear Phil,

    Your thoughts and analysis are correct in many circumstances, but your choice of an example, I believe, was a poor one, very misleading and frankly, I believe, poor journalism. If you read the CNN Underscored website (https://www.cnn.com/cnn-underscored/about), you would see that it says “Though we operate separately from CNN’s newsroom, we use the same rigor to provide you the guidance you need to make the smartest purchases. Our editors and writers, who are not only journalists with decades of experience in the consumer space but also everyday consumers ourselves, spend hundreds of hours a week testing products in the real world, ensuring they stand up to how and where you’d use those same products. For anything we don’t directly test, we use insights from top experts to help point you to the information you need to know. If we don’t feel confident in a product, we’ll direct you to a better option; anything we recommend is something we as editors have, or would, spend our own hard-earned dollars on.”

    Unless you want to claim they are lying or trying to mislead, your conclusion ( “These articles that proliferate the web are not news stories nor are they real product reviews conducted by knowledgeable experts in their testing labs. They’re money-making schemes published on these sites to get readers to buy products so they can earn a referral fee from the sellers of the product. They are simply ads disguised as serious recommendations.”) is at a minimum misleading, if not somewhat factually incorrect. Maybe the products are not tested in a lab and maybe they earn a commission (as most news sites do), but that does know mean they are not real product reviews. For someone who does not know the facts about the site, you have really misled your readers, who might not read, what is often a useful site that I have often used.

    At a minimum, you could have chosen a much better example. If you cannot find one, I would be happy to show you.

    Sincerely

    P.S. I have no connection to CNN or CNN Underscored and am just a reader and consumer.

    • Phil Baker says:

      I have reviewed dozens of articles from CNN Underscore and they are simply lists of products that they like, not products that they have tested or compared to other options. While their lists are full of good products (iPhones, Yeti tumblers, etc.) these are not reviews. From the link you provided, I quote,
      “Our editors and writers, who are not only journalists with decades of experience in the consumer space but also everyday consumers ourselves, spend hundreds of hours a week testing products in the real world, ensuring they stand up to how and where you’d use those same products. For anything we don’t directly test, we use insights from top experts to help point you to the information you need to know. If we don’t feel confident in a product, we’ll direct you to a better option; anything we recommend is something we as editors have, or would, spend our own hard-earned dollars on.”

      I challenge you to find test information as a part of their recommendations or a citing of the specific experts they say they consult. I am coming from a position of having been a part of the tech review industry that reviewed products in labs and did serious comparisons with competitive products. I would agree the CNN Underscored is not as bad as many other examples and even has some good content.

      If you want to see what real product reviews are, check out https://www.rtings.com where engineers are buying, testing,and comparing products in a lab with appropriate test equipment. And while they are no longer as good as they once were, Consumer Reports does product testing used as a basis for their recommendations.
      Phil

  2. Randy says:

    Hi Phil,

    If you are complaining that they do not have engineers test the products, very few articles, blogs or other media sources would qualify and I believe that would include the New York Times and the Wall Street Journal. As an example of one of the people reviewing articles for CNN Underscored read the bio of Mike Andronico (https://www.cnn.com/profiles/mike-andronico#about). He was previously U.S. Editor-in-Chief of Tom’s Guide. He holds a Bachelor’s Degree in Journalism. Also, as much as I love Consumer Reports many times they miss things that a tech geek like myself would find important and they can only test a limited number of products.

    The key point is that I believe you should have chosen other sites to make your point and you would have had a much better article.

      • Phil Baker says:

        Randy, I read the Samsung piece and I don’t find it to have much substance, reading more like a PR piece, so our opinions clearly differ. I think reviews such as found in Underscored can actually be more deceptive because they do a better job in disguising their purpose.

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