Facebook announced yesterday that it plans to start hosting news sites’ content on its platform. While the article does its best to subdue the inevitable media freakout, it’s hard not to dig into what this means for the future of media companies and their platform “frenemies”.
What is Facebook trying to do?
Ignore the PR speak about improving the user experience, Facebook is angling to become a portal for all content on the web. This isn’t news though, we’ve already seen a few indicators that this is where they’re headed:
- Video – Not only did they enable auto-play for native video, the news feed algorithm heavily weights these videos. It’s a not-so-indirect way of incentivizing publishers to host their video on Facebook.
- Paper – It’s a bit more tangential, but Paper is Facebook’s sandbox to test out editorial concepts.
- Internet.org – This is an awesome initiative to bring connectivity to the rest of the world. I wrote more about it earlier this year, but the opportunity for growth as the world comes online is huge for any company. Facebook launched the app last year, and it’s now available in India, the Philippines, certain countries in Africa, and more. It provides mobile users free access to selected websites. The key is that these services can only be accessed via the Internet.org Android or web app, which puts Facebook in an interesting position as it brings new users online.
What‘s the 10,000 foot view?
Facebook’s strategy represents a shift from content primarily living on individual media apps or sites, to that same content finding a home on distribution platforms. Again, this isn’t totally new.
YouTube is an obvious example?—?a lot of publishers face the conflict of hosting video on their own platform to own revenue vs. hosting video on YouTube where there’s scale, but revenue is shared.
SnapChat is also interesting. Discover houses content within the app, with no opportunity to link out. Additionally, some media brands are creating content specifically for SnapChat.
As usage continues to exponentially shift to mobile, and mobile users continue to spend the majority of their time on a core set of apps, it becomes harder for brands to break in unless they partner with those apps.
What does this mean for media?
Companies like BuzzFeed and Vox are already optimizing their content for distribution platforms. Their content looks great anywhere, their content creation process enables editors to easily distribute, and they‘re empowered to make smart decisions based on data. Most media companies are still playing catch-up to these digital-first brands that operate more like technology companies.
Of course, the real question is how Facebook’s strategy impacts various business models, and which publishers are best poised to handle a possibly momentous shift. For the purposes of this post, I’ll focus on four revenue streams, with the understanding that there are other opportunities (i.e. conferences) that contribute.
- Display Advertising – I won’t repeat the numerous think pieces on why display ads are a dying breed. But if content shifts to live on platforms like Facebook or SnapChat, that death may come sooner than we think. Display ads only generate revenue with scale on a publisher’s own site or app.
- Paywall – There’s a reason everyone is anxious to hear what the NY Times will do with Facebook’s plan. Opening up content to Facebook’s platform could destroy the paywall model. Like display ads, the paywall is entirely dependent on users consuming content on a publisher’s platform.
- Branded Content – Branded content is an opportunity for advertisers to visually align themselves with a media brand, often a specific story. Ford could buy a storytelling piece on Vice, and have their branding prominently displayed on the story and site. It’s palatable to advertisers since they want to be associated with great journalism and a great media brand. That appeal is easily lost when the content lives on a different platform, since it’d be visually standardized, with little differentiation between media brands.
- Sponsored Content – This is possibly the only revenue opportunity that translates to other platforms, and it’s the reason why BuzzFeed, Vox, and Vice are focusing efforts on native advertising. It doesn’t matter if users watch a BuzzFeed video on their site, on Facebook, or on YouTube. The advertiser is so integrated into the content that the ad opportunity is the same regardless of platform.
We don’t have details on revenue sharing with Facebook’s plan, but if YouTube is any indicator, it’s a scary road ahead for media companies. Companies that embrace sponsored content are in the best position to take advantage, but all should tread carefully.
What’s the Future?
Below are extrapolations assuming all the above is true?—?that content consumption will drastically shift to platforms like Facebook, and publishers will primarily become creators of raw content. Extrapolation is fun so I took a shot at what the media landscape could look like down the line.
News will be owned by platforms that can deliver it best.
Facebook, Twitter, or even apps like Breaking News can process and push pure news out more efficiently than traditional media companies. They also have the technology to support fast, personalized, and localized news.
Media companies will organize around content types and verticals instead of brands.
Big media brands won’t be able to sustain today’s scaled operations in a new world of revenue sharing. Instead, companies will scale down and become hyper-focused around producing specific types of content, like investigative journalism or local sports.
Platforms like Facebook will face the editorial challenge of delivering diverse content that’s “good for you”.
Part of the power of a brand like the NYTimes is the editorial oversight that comes with it. Users trust that when they visit the Times, they’ll find content they were interested in reading about, and content they should be reading about. If content becomes detached from these brands, consumption becomes self-selecting. Users will only read content from people they’ve chosen to follow, and ultimately miss out on serendipitious discovery.
If platforms own the delivery of content, they will also be responsible for the curation of it. Facebook has worked hard to adjust their algorithm to deliver “good” content, but it won’t even scratch the surface of what needs to happen. It wouldn’t be surprising if Facebook or Twitter built an editorial staff to take on this responsibility.
Individual creators will be more empowered.
Stratechery by Ben Thompson is a must-read for me with every new post. Thompson wrote a great piece on Blogging’s Bright Future, where he touches on new opportunities for individuals to build financially sustainable blogs. Revenue sharing with Facebook would be yet another opportunity for individual writers to create a sustainable business without worrying about scale.
Ultimately there’s simply too much unknown to really know where this is headed. Maybe enough brands will balk to kill this new strategy. Or maybe the “frenemy” relationship will remain intact and it’ll simply be another distribution opportunity. Either way, it’d be a serious mistake for media companies to brush Facebook’s strategy aside without taking a hard look at what it means for their future relationship with platforms.