Something every woman should know - WHY MEN LIE!
Facebook was always going to screw over its media partners. We were fools for ever believing otherwise. Now that it may be happening, the media industry, particularly newspapers, will be forced to face the reality that the era of ad-driven media businesses is dead, and to think about what comes next.
This is the reality: Facebook and Google have established a digital advertising duopoly. For 2017, eMarketer projected the two giants would control 63.1 percent of digital ad spending in the U.S., outstripping the original 60.4 precent the firm had previously predicted.
When it comes to online advertising, Facebook and Google are sucking up all the oxygen. Even as the overall spending on digital ad dollars increases, the pair are getting larger percentages of it. Everyone else, thousands and thousands of others, are basically left with crumbs.
“Advertisers are increasingly demanding more granularity in targeting capabilities to reach consumers,” Monica Peart, eMarketer’s senior director of forecasting, said last year in a statement. “Google and Facebook have positioned themselves at the front of this demand curve by being the ad publishers with some of the best-in-class targeting abilities in the digital ad market. With Facebook being able to provide targeting based upon consumer interests and Google capitalizing on where those consumers have been through searches, both companies ensure their lead among digital ad publishers.”
For years, as publishers scrambled to deal with the impact of the internet on their business, they made the mistake of listening to self-anointed experts who preached that asking people to pay for content was a non-starter. These purveyors of internet utopianism insisted that it was the height of idiocy to believe that people would pay because the internet was all about stuff wanting to be free. I know, because I said the same thing, many, many times over the years.
What these paleolithic publishers needed to do was master the lessons of Google, and then Facebook, to understand how things really worked in the internet age. So publishers tried to do just that. They invested in search engine optimization. And then later, they spent huge amounts of resources trying to master the intricacies of Facebook.
For awhile, this created the illusion that there could be winners at this game. The social era gave rise to brands like Vice and Buzzfeed and Mashable, who soared on a crest of rising traffic by mastering the skills of internet-era headline writing. But it turned out that their real business model was raising round after and round of venture capital, not actually creating solid businesses.
Then Buzzfeed missed its revenues target last year and said it would lay off 100 people in November. Last summer, Vice announced layoffs just after raising $450 million in venture capital. And Mashable was sold to Ziff Davis for $50 million, far below the $250 million valuation for a March 2016 investment round.
It was becoming clearer by the minute that the ability to build an ad-driven media business was illusory. Facebook’s decision this week to prioritize content from your friends and family over news content should serve as the final deathblow to almost two decades of delusional thinking.
Same as it ever was
I was working as a business and technology columnist at the San Jose Mercury News late last decade when the newspaper was approached by Facebook, which was interested in figuring out how to work with journalists. It’s hard to remember now how small Facebook was back then relative to now.
It was only about five years after its founding, and about three years after it opened to the general public. I only joined Facebook in 2007. I was more than happy to participate in this journalism experiment, curious to learn more about Silicon Valley’s hottest startup.
The first piece of advice we received was that columnists like myself should create separate pages with special sets of tools that would be separate from our personal accounts. So I spent several months nurturing a Facebook page that people I had not “friended” could “like”, posting my columns, other thoughts, trying to engage readers. It certainly wasn’t a blockbuster, but I approached it with a spirit of always needing to try new stuff.
Several months later, Facebook came back to us. The team had decided it would be best to scrap separate pages. Instead, they offered to move the several thousand followers I’d amassed over to my main personal account where there would now be a “follow” button.
“Huh,” I thought. “Okay.”
This was a taste of something Facebook had already done to developers. And something it would continue to do. Just before our little journalism experiment, Facebook had opened its platform in 2007, allowing developers to write little applications we could add to our account. This prompted a flood of spammy, wall-clogging crap. So Facebook changed the rules, and augmented its algorithms to clamp down on junk and encourage higher quality stuff.
It was the right move, but also a slap in the face to many developers who jumped on the bandwagon.
Not longer after our Mercury News experiment, Facebook formally went public with its media ambitions. After launching a media outreach program in 2010, it created “Facebook for Journalists” in 2011 to help journos understand this new world and find new audiences.
Along the way, Facebook kept changing the rules. During this era, Facebook’s success was fueled in large measure by the virality of social games, particularly those created by Zynga. At one point in 2011, Zynga accounted for 19 percent of Facebook’s revenue, thanks in part to a special, symbiotic relationship between the two. But Facebook CEO Mark Zuckerberg was already rethinking this relationship, worried that it was ruining the experience for too many users.
“A lot of users like playing games, but a lot of users just hate games, and that made it a big challenge, because people who like playing games wanted to post updates about their farm or frontier or whatever to their stream,” Zuckerberg told Adweek in 2010. “They want all their friends to see their updates, and they want to get all their friends’ updates, but people who don’t care about games want no updates. So we did some rebalancing so that if you aren’t a game player you’re getting less updates.”
By 2012, Zynga was a smaller chunk of Facebook’s revenue, and the social gaming company was seeing its own growth hit a wall. People were writing about “Why Zynga Failed” and it ended its special deal with Facebook.
But media companies were too caught up in the Facebook wave to stop and think about the implications of this. Facebook would continue to change the rules for its news and algorithms, and publishers scrambled to adjust.
Eventually, this morphed into the era of clickbait and then fake news, as more nefarious players figured out how to write certain headlines that led to empty or false content. And this would spiral into the controversy surrounding the 2016 election, the denials from Facebook, the grudging admissions, and then the mea culpas.
Worried about its fraying media relationships, Facebook launched a “Journalism Project” in January 2017 to “focus on improving its current storytelling formats such as Live, 360, and Instant Articles…The company said it would work with third-party organizations to promote ‘news literacy’ and help users decide which sources are trustworthy and would also continue to work on curbing hoaxes,” according to Reuters.
But after a rough year, and more blows to its reputation, Facebook just did was it always does: shift direction. This time to de-emphasize news content from pages. After years of trying to engage news orgs and using their content to build its business, Facebook has thrown up its hands, and decided to throw media partners under the bus.
What’s next
Now, it’s true that nobody knows just how much this will impact the news biz. It could be a catastrophe, or it could be minimal. And heck, it wouldn’t be surprising if in six months, Facebook does yet another u-turn and decides it wants to be all about high quality, professional content. But in reading all the reactions from news execs and companies that advise media on internet strategies, it’s revealing that these observations boil down to: Wait and see.
Revealing, because it highlights the degree to which the news business has become so wholly dependent on others’ platforms. We have put our destiny in the hands of others, we tried to pretend they were our allies, that our interests were aligned, and now we have no choice but just to wait and see what happens. Because we are at their mercy.
But this dependency is born out of the chase for digital ad dollars. This dependency on others, and this desperation for advertising, must end.
Facebook and Google have won this game. And no matter how much Zuckerberg pays professional photographers to trail him around at home to take soft-focused pictures of his family, no matter how many cows Zuckerberg milks on tours to get to know real people, no matter how many heart-tugging letters Zuckerberg writes about wanting to make the world a better place for his kids, Zuckerberg’s main job in life is to make more money for his publicly traded business. Period.
And to be honest, he has done a fantastic job at that. His willingness to change direction, to listen to his instincts, is truly amazing. The decisions he’s made, which have often cost Facebook in the short-term only be justified over time with more growth and profits, were often non-obvious and highly risky. I say, without irony or sarcasm, that I admire his business cunning.
As a result, Facebook is not just a business, but one of the most powerful, influential companies on the planet.
For media companies, it’s important, in that regard, to recognize Facebook for what it is: An adversary. A competitor. There should be no more delusional thinking that chasing traffic via clicks from Facebook is going to solve the media business model. Facebook is devouring digital advertising and those clicks are benefiting FB to a much larger degree than publishers
So what to do?
In the face of such a massive power, it can seem daunting to find a way forward. When one throws in Google, it seems like all paths are cut off. But that’s not the case.
The first thing publishers and broadcasters must recognize is that they are not without leverage in this relationship. Consider this chart from NewsWhip for one month:
Given that Facebook has over 2 billion users, news organizations are hardly dominating. But these numbers are not nothing. They are substantial, and valuable. And until now, they represented mainly how Facebook has built a massive advertising business on the backs of other people’s content. What referrals and traffic news orgs get from this deal pale in comparison to the ad money Facebook is making.
Fortunately, European publishers are ahead of the curve on this issue. They have been increasingly vocal about the need for Facebook and Google to pay for their content to appear on their platforms.
In 2016, the European Union began reviewing a series of proposals to allow publishers to demand payments from Google and Facebook for use of their content on their platforms. A letter published just this week from several major publishers makes a straightforward argument:
“Free access to the news is one of the great supposed victories of the internet, which many members of the European Parliament will strenuously defend in the name of noble democratic principles. However, in reality, the concept of free news is a myth. At one end of the chain, actually reporting to inform the public costs a lot of money. At the other end, news consumers are highly valued as an audience that generates advertising revenues. Between the two, some players have won. And some have lost heavily…. neither Facebook nor Google has a newsroom. They have no reporting or production networks, national or international. They have no teams of reporters in Syria risking their lives to show the true face of war. No permanent bureau in Zimbabwe to tell the story of Mugabe’s departure. No journalists in Cameroon. Nor Myanmar. No video reporters. No photographers. No editing teams to plan, edit, check and double-check the accuracy and impartiality of the stories sent in by reporters on the ground.”
Mostly, these arguments have been met with sneers and derision in the U.S., where techno-utopianism still hasn’t been completely snuffed out. Oh, those Europeans are so anti-innovation!
But events over the past year, now capped by Facebook’s latest decision, demonstrate just how sensible this thinking really is. Let Facebook and Google have the digital ad market. It’s lost to publishers. Instead, the EU is considering a royalty model, one that essentially extends the rights enjoyed by musicians and record labels to publishers. And the government is moving into the picture because of the imbalance of power between publishers and the digital platforms.
Crazy? Nope. In fact, Facebook has signed a flurry of deal with record labels in recent weeks with Sony, Universal Music, and others. Bloomberg had reported previously that Facebook had set aside “hundreds of millions” of dollars to pay for these licensing deals. (Side note: Facebook, per usual, doesn’t seem too worried about what this might do to long-time partner Spotify.)
Why shouldn’t news content be able to get the same deal as music content? Even if traffic from Facebook drops, any royalties would be better than the big fat nothingburger they get served now.
The other good news for publishers is that subscription models are starting to gain more traction. The scoffing is over. Big publishers like the Financial Times, New York Times, Washington Post, and Wall Street Journal, continue to see solid revenue gains from subscriptions. Same is true for more local and regional players. People in general are getting more conditioned to paying for everything from software to video streaming by subscription. Paying for news no longer seems like an outlier.
This willingness to experiment with paying for content is one of the reasons I’ve been doing more of my own, non-tech writing on Medium. The platform backed away from ads, and instead moved to a model that pays writers based on engagement and quality. I’m certainly not getting rich from it. But at one point last year I thought: Why post some of this stuff for free on Facebook when I could expand it a bit and post it on Medium where I might get a couple of dollars for it?
None of this should be taken to mean that the burning issue of business models for news would be solved. No single thing is a panacea. Newspapers will likely continue to struggle and fight for their existence.
But the first step should be fundamentally reinventing relationships that have created an unhealthy dependency. Facebook is never going to change. It is driven by its own self-interest. It’s time for publishers to wake up and do the same.
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