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Inside Facebook’s plan to dominate media industry

Thursday July 20 2017
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A digitised version of the final print edition of the Independent newspaper in London on March 26, 2016, following a dip in revenues. PHOTO | AFP

By VICTOR KIPROP

Not that long ago, the daily newspaper was an indispensable tool of a free society as it served its readers tonnes of information with each edition.

A combination of hefty advertising revenues and rising circulation figures saw company owners and shareholders reap handsome profits.

But the emergence of social media sites — Facebook, Twitter, Instagram, Google — has ushered in a new dawn for journalism, most importantly the print media.

Now, print media competitors in the United States including The New York Times, The Washington Post, Wall Street Journal and other publications are setting aside their differences to seek a limited antitrust exemption from Congress, to fend off growing competition from digital platform titans Facebook and Google.

The publications are seeking to appeal to federal lawmakers to let them negotiate collectively with the technology giants to safeguard the industry.

Antitrust laws traditionally prevent companies from forming such an alliance, which could see them becoming the dominant player in a particular sector.

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The campaign is intended to help the industry collaborate in order to regain market share from Facebook and Google, which have thinned newspapers’ distribution by numbers, and drained them of advertising revenues.

Facebook has more than 2 billion active monthly users, and in the first quarter of 2017 posted a profit of $3.06 billion, up 76 per cent from the $1.74 billion posted in 2016.

Along with Google, Facebook now controls two-thirds of the online advertising market.

The print media’s belated alliance is in reaction to news that Facebook is building a “pay-for-news” feature that would allow users to subscribe to publishers directly from its mobile app.

Although details remain scanty, discussions centre around making the feature available only on stories published natively to Facebook through its Instant Articles product.

The proposed feature is still in the development stage, so it is unclear whether Facebook is planning to take a percentage of the revenue from subscriptions that are activated through Instant Articles (as Apple does through Apple News) or allow publishers to retain all the revenues.

However, the company is reportedly leaning towards a model that would allow users to read a certain number of articles before they are prompted to pay.

“We are working with partners to understand their business and explore ways we can help them drive more value from Facebook by understanding their varied goals and needs,” a Facebook spokesperson told SiliconBeat.

The new feature would be a boon to publishers who are increasingly emphasising digital subscriptions to power revenue growth, including Wall Street Journal, The New York Times, The Washington Post and Financial Times.

The paywall limit as it stands now may not satisfy publishers with stricter limits such as The Washington Post, which lowered the free monthly article limit to three, from five earlier this year, as it tinkers with its paywall to attract new subscriptions.

READ: Writers taking on publishing

Paywalls, which have been introduced by a number of news companies in recent years in efforts to put a value on the exclusive content they produced and to replace or recover lost newspaper circulation, have worked to varying degrees.

The feature also gives Facebook enormous control over the content that publishers produce and how they make money from it. And over the long term, it risks turning media companies into commodity suppliers of news to the social network.

Reaching the billions of users of Facebook is a huge magnet for publishers, and understandably so. But building your business, or at least a significant part of it, on someone else’s land can have very real consequences.

READ: Social networks reaping from mobile Internet

Facebook may genuinely want to help media companies. But it also wants to help itself. How long until the two clash?

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