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Is a Facebook-Google duopoly a warning for news publishers?

31-July-2017
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Is a Facebook-Google duopoly a warning for news publishers?


Earlier this month, an American industry body called the New Media Alliiance (NMA), which represents nearly 2,000 media outlets including some of the world’s most influential publishers in the world, wrote to the US Congress demanding anti-trust exemption so they could collectively bargain with Facebook and Google. It is a significant step and one that caps long simmering tensions between the news media and such platforms, which have increasingly come to dominate user time and digital dollars.

 

As Google and Facebook become even more pervasive in our daily lives, their influence continues to increase. For example, it is estimated that nearly 70 per cent of all digital revenue in the US is accounted for by the two. In India, sources indicate it to be around 60 per cent.

 

“Digital advertising is tough unless you are Facebook or Google and have huge audience and

impressions. If you look at the numbers, 84 cents of every dollar spent online incrementally is spent on these two. The remaining 16 cents is being scrapped over by not only The Economist and The New York Times but also the likes of Microsoft and numerous others in this space. It is not a good place to be,” said Paul Rossi, President of The Economist Group, speaking to us back in March.

 

But it is not only a question of ad revenues. Take the case of Facebook. Mark Zuckerberg has made no secret of his desire to see Facebook become one of the most influential content companies in the world. To this end, Facebook has been aggressively courting publishers and content creators through various products like Instant Articles. It has spent millions in getting the best content partners on board with promises of increased visibility and easy monetisation.

 

Writing for Recode, Peter Kafka says (HYPERLINK: https://www.recode.net/2016/5/11/11656312/facebook-video-news-feed), “That’s a 47-minute (!) long video of a walk through a New York City park. It exists because the New York Times created it, because Facebook told the New York Times to make it. Facebook is paying the Times to make a Facebook Live video. It is paying other publishers, including Vox Media (which owns this site) to make Facebook Live video, too. But the truth is, Facebook doesn’t need to write publishers checks* to get them to do what it wants. All it needs to do is make it clear what kind of stuff it wants in its News Feed. It doesn’t need to tell us how high to jump — we’ll go as high as we can.”

 

Publishers have always been wary of the fickle nature of these platforms. For example, earlier this year, an update of its algorithm meant that publisher content is now shown less regularly on a user’s timeline as opposed to content from friends and family members. These are the scary bits and that have been giving the heads of major media companies sleepless nights.

 

In April this year, The Guardian joined a growing list of publishers that include The New York Times, Vice News, Forbes, The Los Angeles Times, The Chicago Tribune, etc., who have either decided to end their partnership with Facebook Instant Articles or scale down the content that they post on the platform.

 

The reasons for this are many and range from no significant monetisation for the publisher to a fear that their audience is moving away from their own websites and spending more time on Facebook. The latter is a legitimate concern, especially as more global advertisers are now looking at subscription to bolster flagging revenues. In this scenario, they would want their readers to finally come to their website.

 

A much older criticism of both Google and Facebook is that they are not very open about their data. It is their bread and butter and they guard it with jealousy. For example, in an opinion piece written for The Wall Street Journal, NMA Charirman David Chavern talks about “fair share of revenue and data.” It has been an almost constant demand for a long time but though both Google and Facebook have made concessions it does not seem likely that they will give publishers as much access as they want.

 

Meanwhile, there are rumours that Facebook is planning to introduce a paywall for news content. Such freemium and subscription models have been utilised by a number of publishers in the West with varying degrees of success, however, it has still not made its way to India where advertising remains the major source of revenue for news publishers online.

 

So, what can publishers do to more effectively counter the influence of the likes of Facebook and Google? 

 

The head of a publishing house commented that it is important for the industry to provide a united front so that it could negotiate more effectively. But most publishers we have spoken to in India, though are wary, do not seem to see this duopoly as a threat. This makes sense since the number one priority for digital publishers in India is to increase reach and Google and Facebook provide them with the best means of getting high visibility. However, it is worth considering what the future might hold if too much power resides in the hands of a few. In this case, two.

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