Facebook wants to host news content, not just links

25 Mar 2015 | Author: | No comments yet »

Facebook Eyeing News, Messaging Changes.

Facebook is reportedly talking with media groups about hosting their content inside the social network itself, with the New York Times named as one of the likely partners at launch.Facebook is likely planning additions to its site that change its messaging and news content services, which may also funnel more customer data to media companies. Industry watchers say that news websites are keenly aware they are less likely to draw high levels of traffic to their articles without Facebook’s help. “Facebook isn’t just another platform. Companies that have been approached include Time Inc., Hearst Corp., The Wall Street Journal, Huffington Post, Daily Mail, Vice Media and the Daily Beast, according to people familiar with the talks.

With 1.4 billion users, the social media site has become a vital source of traffic for publishers looking to reach an increasingly fragmented audience glued to smartphones. It required clicking links to third-party media websites, whose pages were slow to load, riddled with ads, and often failed to match the promise of their clickbait headlines. Hosting content directly on the site, however, could mean more advertising directed at customers who access the news content, and will likely increase Facebook’s ability to gain important consumer data about its users, says Brian Blau, a research director at Gartner market research firm. “With deeper partnerships you can imagine there would be more back and forth going on with the data about these users,” Blau says. “That is what these content companies trade in.” Facebook has faced “trust issues” in the past from users concerned about how their data on the site is analyzed and shared, but the company has worked to address such concerns in recent years, Blau says. These stories would look somewhat like a normal news story in a user’s News Feed, but instead of sending users to NYTimes.com servers, they’d send users to Facebook’s own. Such a plan would represent a leap of faith for news organizations accustomed to keeping their readers within their own ecosystems, as well as accumulating valuable data on them.

Facebook has been trying to allay their fears, according to several of the people briefed on the talks, who spoke on condition of anonymity because they were bound by nondisclosure agreements. But the ultimate solution was the one Carr laid out: Facebook would simply host news’ sites content on its own platform, then share a slice of the ad revenue that resulted. I wrote in depth in January about Facebook’s plan to cut out the middle man, explaining how it might work and why publishers would feel compelled to participate. But by allowing Facebook to post their articles wholesale, news sites may lose crucial access to marketing data about their readers and have to share advertising revenue with Facebook, the Times explained. “Media companies would essentially be serfs in a kingdom that Facebook owns,” wrote the late David Carr, a Times media industry analyst, in October last year when rumors of the plan first surfaced. “Because we play an increasingly important role in how people discover the news that they read every day, we feel a responsibility to work with publishers to come up with as good an experience as we can for consumers.

At the time, Facebook had just published a blog post encouraging publishers to post videos natively on its platform, so that they could play automatically in users’ feeds. (Facebook’s algorithms heavily prioritize native video posts over, say, YouTube videos.) But I predicted that we’d eventually see Facebook nudge media outlets to post full news stories directly to Facebook as well—perhaps by “late 2016.” That prediction suddenly looks far too conservative. To make the proposal more appealing to publishers, Facebook has discussed ways for publishers to make money from advertising that would run alongside the content.

There are no expectations for any gaming announcements related to virtual reality company Oculus, which Facebook bought last year for $2 billion, although the firm may launch a consumer model of its Oculus Rift video game immersion goggles this summer. Facebook is having no such problem, largely because of its ability to successfully target and track ads on mobile devices — a capability many other online ad sellers have struggled to provide. At Fusion, (Slate contributor) Felix Salmon warns that news sites risk sacrificing their brands—and, in the process, their incentives for accuracy and editorial judgment—by handing Facebook control of their distribution. News articles on Facebook are currently linked to the publisher’s own website, and open in a web browser, typically taking about eight seconds to load. Justin Smith, the CEO of Bloomberg Media, said in February that, “the list is a lot longer than is publicly known of those that have Facebook delivering half to two-thirds of their traffic right now.” There are a number of scary prospects for media companies here.

Facebook thinks that this is too much time, especially on a mobile device, and that when it comes to catching the roving eyeballs of readers, milliseconds matter. But talks have stalled or gone nowhere with several media companies, who don’t feel they have enough to gain, don’t know enough about what Facebook is proposing, or simply fear they would be helping the company grow even more powerful. That’s when Steve Jobs approached the major labels about selling their music through Apple’s own platform. “This is the publishing industry’s iTunes moment,” Yurow wrote. “And we’re blowing it.” (Yurow’s views, he noted, do not reflect those of his employer.) It’s easy to see why BuzzFeed would go along with this. If that platform succeeds it could eventually lead to greater online shopping or mobile purchasing options through the site similar to Square or PayPal, but that will likely take a while, in part because Facebook has to establish credibility as a payment service, Blau predicts. “You have to think that Facebook is getting into the payments space, but it’s something they will have to work on over time to ensure people get a real benefit from using it,” he says. The deluge of attention from Facebook is something that news organizations have little negotiating power against: Either they will welcome it and will invest on it, or they’ll miss out.

Even marginal increases in the speed of a site, said Edward Kim, chief executive of the analytics and distribution company SimpleReach, generally mean big increases in user satisfaction and traffic. Unlike most news sites, BuzzFeed doesn’t make money by running ads alongside its stories but by creating custom ads that are essentially stories in their own right. What if, let’s say, in the economic downturn of 2018, Facebook—having absorbed the lion’s share of digital news distribution—simply dictates the next terms of revenue-sharing with news orgs, becoming a de facto Walmart of News? In how many scenarios does Facebook become a hard negotiator, and in how many does it become a benevolent supporter of a broad and bustling American press? Last year, Facebook also curtailed the ability of brands to reach all of their followers by sharing content, forcing them to buy ads instead. “This definitely has the feeling like they are moving towards charging a toll for traffic,” said an official at one media company that has had preliminary talks with Facebook.

Or consider the following scenario: Facebook selects a couple news organizations and asks them to invest heavily in a native tool that gives news stories—news stories!—an unprecedentedly high-ranking in users’ feed. And so if they could all get together and decide, as a group, what to do about Facebook, no doubt they’d think long and hard about the long-term sacrifices elucidated by Salmon, Battelle, and Yurow.

In September 2011, Facebook announced at its big annual developer conference that some news organizations had made “social reader” apps, which highlighted their content in the News Feed. Meanwhile, the holdouts would see their Facebook audiences wither and die, as Facebook’s algorithms gradually downgrade posts that link out to third-party websites. Opt-out or engagement numbers must have indicated that social readers—which Facebook launched in partnership with news organizations—were disliked by Facebook users. Soon all evidence of the readers were gone—and with it, the miraculous traffic. (Although there was some debate over how to interpret the data at first, the trend proved real, and news organizations shifted their efforts elsewhere anyway.) From what we can tell, Facebook is asking news organizations to publish directly to the site because it will increase user engagement.

One fewer second spent waiting for an article to load is one more second Facebook could be showing you ads—and that translates, at scale, to an incredible regained revenue opportunity. Just Monday, Facebook and Vox published a case study showing how Vox’s willingness to shape its content around Facebook—including posting native videos there—has brought it huge audience gains.

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