LESS NEWS MORE FEED

Facebook’s divide-and-conquer tactics are an unnecessary attack on the media business

No one seems happy with Facebook’s recent algorithm change. The anger is growing among those who put too much faith in the giant social network’s ability to monetize news content.

June 29, 2016 should have been a bad day for several news publishers’ stocks. That day, Facebook announced a significant change in its algorithm. In short: to the detriment of news contents, more family and friends-related material will show up in the users’ newsfeed. This is a statement of priorities for the social network that serves 1.65 billion people across the world.

For the first time, Facebook stated explicitly that it didn’t care too much about news.

The next day, I found myself moderating a panel on mobile content strategies at the VivaTechnology conference in Paris. The panel included representatives from two prominent providers of short videos—NowThis Media and AJ+ (an offspring of Al-Jazeera)—as well as The Guardian and Flipboard (who has built a strong revenue stream based on 80 million monthly uniques and record high CPMs). A while ago, NowThis and AJ+ had proudly announced that they had ditched their app to live exclusively on the social planet, which means relying almost entirely on Facebook for their distribution.

Results were indeed impressive: four billion video views per month in three languages for AJ+; one billion VVM for NowThis, which is backed by the VC firm of Ken Lerer and Eric Hippeau, two Huffington Post founders.

Thankfully, none of these two companies are publicly traded (it would be adventurous, since they are just starting to squeeze revenue from their business). Otherwise, their stocks would have tanked.

On a much larger scale, Buzzfeed commands a $1.5 billion valuation — about seven times its 2015 revenue — with 75% of its traffic coming from Facebook. Like others in a similar situation, and probably for a long time, Buzzfeed is shielded from stock-market sanctions, but not from private investors writing down the value of their stake.

Facebook had always been a magnet for news publishers of all sizes and seniority.

To them, Facebook offered staggering size and granular reach, with an uncanny ability to pinpoint any narrow segment of any audience. Consequently, new media ventures aimed at living in the Facebook ecosystem have multiplied, and legacy media became eager to snatch any bones thrown at them by the social network.

It began with Facebook’s referral potential, expected to send a lot of traffic back to publishers. In a recent story published by Politico (see “Facing the new Facebook reality: The numbers behind the fright“), media analyst Ken Doctor summed up the situation:

Today, Facebook drives about 40% of all referrals and Google drives about 35%. Together then, they drive 75% of all referrals to news and entertainment sites. Google has plateaued and Facebook shows continuing, if slowing, share-of-referrals growth.

We remember the hype and subsequent disappointment of promising innovations such as social readers, launched in great fanfare by the Wall Street Journal, The Washington Post, or the Guardian. The experiment ended up in flames.

Recently, history repeated itself when Facebook came up with new flavors of its news products called “Instant Articles” and “Live Video,” promising publishers incomparable reach.

The relationship between traditional media and Facebook is the result of a huge misunderstanding.

Based on navel-gazing prophecies, news companies started to believe they were indispensable to the Facebook ecosystem as their production was in fact crucial to the social newsfeed. They were also mesmerized by the staggering amount of time users spent on Facebook: currently 50 minutes per day, compared to a few minutes spent poring over news brands sites.

With their usual sense of entitlement, legacy media began to feel that Facebook actually owed them something—at least a recognition for granting the nerdy social network the majestic anointment of their brands. In reality though, sheeplike despair was the real motive for their social strategy: not remaining on the sidelines, better being wrong with the crowd, etc. (A notable exception, however, is the Washington Post’s decision to put every piece of its content on Facebook; most likely, this move is deeply rooted in Jeff Bezos’s DNA, which is to do whatever it takes to establish a dominant market position.)

Digital native outlets developed a different strategy. To their deep-pocketed backers eager to ride Facebook’s coattails, Buzzfeed, Al Jazeera, or NowThis had sold the idea that social was indeed the New Big Thing. Then, the best way to get a juicy slice of the new world was to got into full immersion—i.e. betting massively on Facebook, the grand master of the social universe. That led to the golden handcuffs with which Facebook controls the fate on many players: as long as interests stay aligned, some will thrive while others will merely be allowed to survive.

Coming back to legacy media, they began to realize two unpleasant things.

For one, Facebook was acting as an unforgiving editor, a cold-blooded filter allowing only a thin stream of the news production to percolate into the sacrosanct user’s feed. Even before the recent algorithm alteration, not more than 15% of any news media production ended up in the stream of users who willfully “liked” them. The reason is simply that any piece of information competes directly with content coming from friends and family which is—more than ever, we got it, thanks—at the core of Facebook’s connect-people obsession.

Contrary to what has been widely reported in the US, I don’t buy the idea that Facebook introduces any sort of political bias in its newsfeed. Too much is at stake here. With 1.65 billion users including 222 millions in the United States and 236 millions in Europe, Facebook is a melting pot of communities; I don’t see it risking its global credibility by favoring one side against the other in a campaign. This is especially true for the current US presidential election where the two leading candidates get horrendously low approval rates: 30% for Donald and 28% for Hillary, according to a recent CBS-New York Times poll.

Presumed political neutrality doesn’t necessarily mean that Facebook is societally neutral.

Last year, I had a discussion with the publisher of a renowned investigative US media site. He told me that he and his team had long wondered about the huge discrepancy between the nation-wide resonance of their work and its presence in Facebook’s newsfeed… After meeting people with good knowledge of Facebook’s inner plumbing, they had come to the conclusion that the algorithm was simply biased to favor positive content over the darker pieces that make the bulk of investigative journalism. “We became convinced that Facebook favors a Alice in Wonderland vision,” he concluded.

A second discovery appalled the big media brands who pride themselves—rightfully so—in providing in-depth, well-researched journalism as opposed to the commoditized, perpetually-recycled stream that lives by the click: Facebook is a ruthless brand-destruction machine.

Consider the following conclusion in the Reuters Institute Digital News Report (one of the best sources to understand the shifts in news consumption): When asked the question: “Thinking about when you have used social media/aggregators for news, typically how often do you notice the news brand that has supplied the content?” Less than half of social media users acknowledged being able to identify the actual news source. More precisely: 49% did so in the United States, and only 36% in the United Kingdom! (English-speaking markets seem more affected by brand dilution than, for instance, Germany where 55% of social users recognize a brand, or Finland, 60%).

As this was not enough, the weight of social in news consumption has never been greater.

Again, according the the Reuters Institute Report: 51% in the 26 countries analyzed say they use social media as a source of news each week and 12% say it is their main source.

But a closer look yields an even more unsettling picture: more than a quarter of 18–24s (28%) say social media is their main source of news—for the first time more than television (24%), says the report.

Put another way, as time passes, the evolution of the age pyramid will prove lethal for both TV and print sectors: social use will gradually swallow most news consumption.

Facebook’s recent revision of its newsfeed components will further weaken the position of news providers—both those of legacy media and digital outlets born out of social consumption.

To add insult to injury, the cooperation between the traditional publishing world and Facebook has never been joyful.

Several publishers I recently spoke with regret that Facebook has opted for “divide and conquer” tactics. Not only do its representatives play one publisher against another, but Facebook is said to take malicious pleasure in creating confusion and in multiplying interlocutors within a same company.

In addition, when considering sheer numbers, many publishers express growing doubt over the real benefit of various Facebook features. While technically efficient, Instant Articles have yet to prove they effectively contribute to publishers’ bottom lines.

As for its Facebook Live product, the social giant recently outlined a strategy that further demonstrates how it sees the place of traditional news media versus native players and pure entertainment.

According to The Wall Street Journal, Facebook will give $50 million to about 140 media companies to create content for Facebook Live. Great, but the distribution of monies speaks volumes about Facebook’s underlying content strategy.

 

Two comments. First, it’s a highly concentrated distribution: the first ten players rake in 40% of the amount paid by Facebook to video producers. Second, among the 18 contributors listed above, The New York Times is the only one in the legacy media league; it gets $3 million for a 12 months deal, at par with Buzzfeed. The rest is split between digital native media like the HuffPo or the aforementioned NowThis and Al-Jazeera AJ+.

If someone needed a mapping of Facebook future content distribution—or a list of those who will be allowed to thrive in its ecosystem—there we have it.

This post originally appeared at Monday Note.

home our picks popular latest obsessions search