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Facebook Wants to Help Publishers with Subscriptions – How About Just Paying Them?

Like the abusive spouse who shows up with a wilted bouquet by way of apology, Facebook now is in “early talks” to help media outlets grow their base of subscribers, perhaps with a feature that asks frequent readers to pay for news articles. I have an idea who should be the proposed program’s first subscriber: Facebook itself

The subscription feature (importantly, it’s not yet implemented or even officially announced) would likely allow Facebook users to read up to 10 articles a month for free before being asked to subscribe to the story source, the Wall Street Journal reported. That’s a similar approach to the paywalls for many big publishers, but less strict than those for, among others, the Wall Street Journal.

Internet Ad Growth (Source: Mary Meeker KPCB.com 2017 presentation)

Growth in Internet ad revenues, from Mary Meeker’s 2017 presentation

 

This is amusing news indeed, given that it seems to ignore the company that has been the biggest beneficiary of all those news stories (fake or otherwise) that Facebook users read and share and like and comment upon.

Hint, that beneficiary hasn’t been the New York Times, or the Washington Post. It sure hasn’t been Time Inc., which just laid off 300 employees as part of yet another “restructuring.”  And it hasn’t been any other traditional publisher/unwilling donor to Facebook’s bottom line.

But donate they have. Facebook’s U.S. ad revenues jumped 62 percent between 2015 and 2016, to more than $14 billion, according to stats from Mary Meeker’s annual State of the Internet presentation from a couple of weeks ago. Combined with Google, the Big Two will grab more than 85 percent of all the growth in Internet advertising. Not incidentally, Meeker reports that Internet advertising this year will, for the first time, pass spending on TV advertising.

More generally, Facebook is one of five tech/social-media companies that gobble up about two-thirds of all Internet advertising, according to the Pew Center, along with Twitter, Microsoft, Google and whatever we should call Yahoo now that the Verizon deal closed and it’s part of  “OATH.”

Some of Facebook’s share of that money came from its admirably precise ability to target ads to its nearly 2 billion users as they page through posts and pics by pals and family. And some of it, as we saw during the U.K. Brexit election and the U.S. presidential election, involved “fake news” planted by opportunistic or scheming overseas outlets. But a lot of what keeps people coming back was originally created by a traditional media outlet. Not incidentally, virtually none of those traditional media outlets make a dime directly from Facebook.

Nonetheless, those outlets continue to try to make money from their huge Facebook viewership, enticed by the vast numbers possible when a story hits. But those efforts really haven’t panned out for many publishers, even with previous Facebook efforts to ease some of their pain.

One such effort, Instant Articles, has been a bust, as the New York Times and many others are now pursuing other options on other platforms. After the fake news controversies blew up after the November election, Facebook also announced a series of initiatives to both suppress fake news and  (modestly) support high-quality journalistic efforts.

And it’s not like Facebook can’t break out the checkbook for content. More than a year ago, it signed $50 million in deals with 140 news outlets and other creators to experiment with live streaming. That was a nice little incentive, and generated a spurt of live experiments of varying quality.  I’m not sure live streaming will be more than a niche option, but at least there’s precedent for Facebook paying for content on its site.

So how would it work for Facebook to actually pay for content? Turns out there’s a model for that too. Look at what’s happened with streaming music. People pay a monthly subscription to Spotify or Apple Music or Tidal or Pandora, which in turn pay a share of revenues to musical acts and labels based on their share of airplay. Spotify and Pandora also offer a free, ad-supported tier that millions more people use, generating more payments for musicians.

That could work for Facebook too, instead of cajoling its readers, so well trained to read for free, to finally put up some money for the publishers.

Facebook should pay a share of its huge ad revenues, based on story viewership and the ads that get wrapped around them.  It’s the least the company can do for the publishers providing a huge amount of content that benefits Facebook’s bottom line, often at the expense of their own. And it’s a lot more likely to generate real money than begging Facebook users to pony up.