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Duopoly: Facebook tells Press Gazette how it has changed to share more revenue with news publishers
By Dominic Ponsford Twitter
Facebook has told Press Gazette it is listening to the concerns of news publishers and claims it has already found new ways for them to earn more money from being on the platform.
The US digital giant's head of news partnerships for EMEA, Patrick Walker, spoke to us as it today marked six months since it launched the Facebook Journalism Project.
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And he responded to criticism of the platform's domination (with Google) of digital advertising – which many fear will squeeze news publishers out of the market.
Facebook is reckoned to take more than a £1bn a year in advertising in the UK alone, and by 2020 Facebook and Google are predicted to take 71 per cent of all digital advertising in this country.
The growing dominance of Facebook and Google prompted Press Gazette to launch the Duopoly campaign which warns that they threaten to destroy journalism.
Walker said the key ways Facebook has improved the commercial situation for publishers is through:
Technical collaboration
Improved advertising revenue share (rates said to be up 50 per cent)
The introduction of call to action buttons in content (such as email sign-ups)
Introduction of video advertising in news (like Youtube)
And the development of new technology to drive publisher subscriptions.
Press Gazette told Walker: "People look at the fact that Google and Facebook are taking most of the revenue in online advertising, and that share is getting bigger, and publishers worry that there is not going to be room in the market for them – particularly local newspapers which are going out of business at a rate of knots in the UK."
He said: "It's something I get asked a lot and it's an important one…
"We look at partner [publisher] value in many ways. That's something that we constantly check in our conversations with partners, we've just doubled the size of my team in the last year to make sure we have people in all the different markets.
"They derive value in three ways. One is audience growth which they can convert into subscriptions, emails, branded content and brand value.
"The second one is direct revenue, where we've been slow – and that is getting most critical now in this question of where does the money go – ad breaks, ad formats, instant articles, direct subscription conversions through Facebook.
"And the third is technological collaboration. A lot of our time is spent introducing partners who don't have the wherewithal or the budget to invest in things like augmented reality, virtual reality, messenger bots – we get our partner engineering team to go and directly train them and help them develop tools.
"The one thing I think people aren't also taking into account as much – in terms of the growth – is there are a lot of new advertisers, in the tens of thousands, if not millions, who are coming on the platform, because they now have sufficient ways to advertise at very low cost and with high return.
"So there is new money coming in and the pie is getting bigger for everyone to engage with.
"I think you would also see pretty dramatically growing digital revenue in a number of traditional media organisations which have orientated themselves for the future. The one thing that we can't solve and I think the industry needs to focus on is something that predates Facebook's existence which is the general decline in publishing revenue through people moving towards digital platforms.
"It's something that we are very mindful of and it's important for a number of reasons. One, to sustain good journalism, and two because we want to make sure that we can share a lot more of the financial return through engagement on Facebook with our partners."
In the UK the current size of the digital advertising pie is £10.3bn (2016) with most of that money going to Google and Facebook. Press Gazette estimates that the Duopoly takes around 80 per cent of new money coming in.
Facebook now works with over 10,000 publishers worldwide who publish work directly on to its platform via the Instant Articles format.
Such content appears entirely within Facebook. The publisher can sell its own advertising against Instant Articles (and keep all the revenue) or else allow Facebook to sell the ads and keep 70 per cent of the revenue.
Facebook also allows publishers to run Facebook Audience Network adverts on their own sites.
Walker said that Facebook now returns more than $1m per day to publishers via Instant Articles and its Audience Network. This compares Facebook's net profit last year of $10bn.
Walker said the Journalism Project has also led directly to the development of a single Software Development Kit which allows publishers to run stories on Instant Articles, Google Amp and (soon) Apple News in one process. These are all seen as ways of delivering news content more efficiently to smartphones.
Walker said: "Instant Articles are very good for audience growth but one thing partners told us we could do better was taking people to different actions. One thing that we implemented as a result was the call to action button – to encourage reader loyalty, suggest a free trial subscription, install an app or sign up for email registration."
He said that globally this has driven 2m email sign-ups for publishers.
Asked why The Guardian and other publishers had announcing they were pulling out of Instant Articles, Walker said: "A lot of publishers have different goals when they are using Instant Articles. For some of them it's a question of speed of loading, they see a real lift in audience size and people who stay throughout the whole article because there's the rapid loading times.
"The monetisation has been wanting in the case of The Guardian for example where relative to sending people to mobile web it wasn't as robust and so that's good feedback for us. We are working on improving the ad formats, improving the yield on instant articles which for many partners is actually working quite well.
"For very sophisticated partners such as The Guardian who have advanced engineering teams and fast loading times it is perhaps less of a benefit with regard to boosted efficiency.
"From our perspective if somebody doesn't find value in any product we prefer that they give us that feedback and they don't use it and then test it again when they are ready. With the introduction of the subscription opportunity and other ways to convert people (in the case of The Guardian they looking to convert people to registration) we are already seeing a renewed interest."
Walker said that using Facebook to drive subscriptions was the number one request from publishers, with the result that it is set to begin testing new technology in this area with a group of publishers which is expected to include News Corp.
Walker said: "Many publishers are moving to a subscription or some sort of hybrid model and so it was something that we thought deeply about and realised it's not a one size fits all model.
"We've worked closely with several partners that have different models in different markets to determine what a potential solution might look like for a majority of them. We've come up with a version that we're going to begin testing this.
"It will take some time until we've got clear results. But we are committed to a format subscription because it supports good journalism, it's the only way to get certain types of content and it's become an important model in a rapidly transforming publishing industry."
Will the readers subscribe to read the content in Facebook or on the publisher's website?
Walker: "The introduction to the subscription product will be within Instant Articles but the transaction will take place elsewhere."
Another area Walker says Facebook has made progress is around the monetisation of video. It has now introduced adverts to Facebook videos with 55 per cent of revenue going to publishers (comparable to Google's Youtube platform).
Video ads are served after 20 seconds, rather than pre-roll, and all the ads are currently provided by Facebook.
The final way in which Walker says Facebook is helping publishers make money is through tools to help them tag branded content (or native advertising) and gather data about how it is read.
He said Facebook has also tweaked its algorithm so that users see less content which is click-bait, misleading or low value.
He said: "We've done a number of different things in response to the proliferation of click-baity stuff, stuff intentionally meant to deceive mostly for financial gain – so we've cracked down dramatically and created different ways in which you will be able to identify the credibility of a news source, both through badging, more logos for legitimate news stories and histories of a publisher…
"If you click on something and immediately abandon it or you click on it and don't well on it, share it or like it then that's signal. And moving away from something that got a lot of clicks being of value it's what do you do once you've clicked it and that's data that we utilise.
"There is sophistication in the algorithm – I may open something and not like it or share it, the fact you dwelled on it denotes value."
Picture: Reuters/Dado Ruvic/Illustration/File Photo
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2 thoughts on "Duopoly: Facebook tells Press Gazette how it has changed to share more revenue with news publishers"
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They should just be treated as publishers, take responsibility for content and pay their taxes like proper publishers do.
Bill Williams