Publishers Ditch Advertising for AI Licensing Revenue

The Numbers Tell a Contradictory Story

USA Today Co. just reported its best EBITDA margins in years. Profit margins expanded from 8.8% to 13.3% year-over-year. The company looks healthier on paper than it has in a long time.

But here is what is actually happening: the audience that advertisers pay to reach is shrinking. Unique visitors dropped 7.7% year-over-year, from 195 million to 180 million. Digital advertising revenue fell 3%. The business is getting more profitable precisely as it becomes less useful for media buyers.

That is not a contradiction. It is a strategy. And it is one that should alarm anyone allocating media budgets.

AI Deals Are the New Revenue Engine

USA Today Co.'s Q1 2026 earnings revealed that "other" digital revenue, the category that now includes AI licensing deals with Meta, Microsoft, and Perplexity, surged 125.6% year-over-year to US$33.75 million. CEO Mike Reed described it as a "notable impact" on the quarter.

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But he immediately hedged. "We are taking a long term approach rather than near term, because in the very near term it is a little bit lumpy or unpredictable," Reed said. CFO Trisha Gosser used the word "variability." Q1 may be an outlier, they warned.

So the business is celebrating a revenue category that its own leadership describes as unreliable. And it is doing so while cutting ad-supported traffic access by pushing paywalls more aggressively.

This is the trade-off nobody is naming clearly: publishers are optimizing revenue per user, not total audience. For advertisers, that means paying more to reach fewer people through an increasingly restricted open web.

The Broader Publisher Retreat From Advertising

USA Today Co. is not alone. News Corp has secured AI content licensing deals worth up to US$50 million annually from Meta and a separate agreement with OpenAI potentially worth US$250 million over five years. Digital subscriptions now represent 62% of News Corp revenue. The advertising relationship, for these major publishers, is no longer the primary business.

Meanwhile, the traffic that programmatic advertising (automated buying and selling of ad space) depends on is collapsing across the board. Google search traffic to publishers fell 33% globally in the year to November 2025. Google Discover referrals dropped 21% year-over-year. The February 2026 Discover Core Update alone caused Yahoo to lose 47% of article placements. Fox News lost 34%.

The 500 most-visited publishers averaged a 27% traffic decline, shedding around 64 million monthly visits. Only 24% of publishers believe advertising-based AI use cases are important to their future business.

Publishers are not pivoting reluctantly. They are leaving.

What Media Buyers Are Not Being Told

The bifurcation is not theoretical. There are now two distinct tiers of publishers: those with AI licensing deals worth US$5 to US$60 million per year (OpenAI alone has 18 such agreements), and everyone else.

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Local publishers are in freefall. Traffic declines from AI are running 25-50% across local media, with some outlets reporting click-through rates dropping 89% after Google introduced AI Overviews. These publishers do not have the content scale to attract AI licensing deals. Their path forward is unclear.

Gosser's framing that USA Today is "optimizing for revenue per user rather than raw traffic volume" is accurate. But it omits the implication: premium publisher inventory is being restructured around subscribers and AI company partners, not around programmatic media buyers.

For marketing leaders allocating budgets, the inventory you relied on is being reassigned to a different customer. The question is not whether the publisher economics are changing. They already have.