Why Even Digital Publishers Should 'Like' Facebook’s News Feed Change

Why Even Digital Publishers Should 'Like' Facebook’s News Feed Change
Credit: Depositphotos

What you need to know

Changes to Facebook's news feed will likely benefit users, advertisers and maybe even journalism.

The shift from passive to active consumption of news is at the heart of Zuckerberg’s reasoning for the changes to the News Feed, and why they will be good for news publishers in the long run.

Described as a “nuclear bomb” by Adweek, Facebook’s changes to its News Feed that kicked in a week ago have sparked fears of apocalypse and doom for digital publishers.

Facebook CEO Mark Zuckerberg said the move aims to provide users with less public content from businesses, brands and media like The News Lens, while being in line with Facebook’s long-term aim of fostering greater interaction between friends and family.

Business Insider said the change will be “a nightmare” for publishers that rely on Facebook for distribution, as even dedicated readers will now have to take a number of steps to keep track of their favorite news outlets.

The article suggests Mic, Mashable and Bored Panda and other media outlets overly susceptibility to the whims of Facebook’s algorithm, and which have recently announced rounds of layoffs, face imminent destruction.

It goes on to say that “Facebook's refusal to own up to its role as a media company is now going to end a bunch of actual media companies struggling to compete with Facebook's own power and influence over news.”

San Francisco Chronicle editor in chief Audrey Cooper echoed these sentiments, penning an open letter to Zuckerberg calling him out on promises he had made to her the previous year that Facebook was invested in helping the publication do its job. “I naively hoped that your corporate conscience might move you to realize that Facebook has an obligation to more than its shareholders,” Cooper wrote, adding that Zuckerberg has given up on the news and abdicated his responsibility to “improve public discourse”.

Media critic Frederic Filloux suggests that Facebook is now “done with quality journalism” and that “publishers have been screwed.”

Such outcry is predictable but misses the mark.

Credit: Depositphotos
Facebook hopes its changes will earn a thumbs up from advertisers and users alike.

Financial motivation

To answer why requires a bit of poking around in Facebook’s motivations for making the changes.

According to Gautam Mishra, founder and CEO of Australia-based high-end news aggregator Inkl and a former director of strategy, data and research at Fairfax Media, Facebook only went into news as a way to keep the News Feed populated with fresh content, which in turn sustained longer sessions and thus more advertising views.

“This has never been about civic journalism, it’s about selling ads,” he said. “If they only had ‘original content’ – if you come back in and the feed is not fresh – then you’re going to stop doing that. It made for a longer, fresher feed. They weren’t doing it to help publishers.”

The fact that they have rolled back on this notional obligation should come as a surprise to no one, and the fact is, as I will later explain, the move may actually turn out to be good news for all concerned anyway.

What is more surprising is that the News Feed decision appears at odds with Facebook’s prime directive as a public company of providing its shareholders with juicy returns. Of course, any content provider, of quality journalism or otherwise, can still pay Facebook to boost its content – that has not changed, nor is it likely to.

But Facebook’s Vice-President of News Feed Adam Mosseri told Stratechery in an interview that the change would reduce the overall amount of time users spent on Facebook, and hence the platform’s income from advertisers under the cash-for-clicks model. Zuckerberg has also warned investors about such impacts.

So why would Facebook abandon a model that has milked its 2.07 billion monthly active users and the brands who chase them for advertising revenue of more US$10 billion in the third quarter alone?

Because on the flip side of the News Feed change is not less cash from advertisers, but more – at least from those making the switch to video that Facebook believes is the trend.

Video is the key

In his interview, Mosseri offered clues as to this longer term thinking. He referenced surging mobile video consumption in markets like India as a result of cutthroat price competition on smartphone data plans. “We think video is going to be increasingly how people communicate and consume information,” Mosseri said.

Facebook is responding to this macro trend in mobile-first markets, many of which are in Asia-Pacific. While they are obviously less valuable to advertisers than their U.S. and European counterparts, the fact is Asia is Facebook’s engine for future revenue growth. According to eMarketer, 182.9 million people logged into Facebook in India last year, accounting for about a third of the total in Asia-Pacific.

Kareem Rahma, CEO and founder of New York-based maker of viral videos for mobile-first millennial, Nameless Network, is uniquely placed to read Facebook’s play, having worked with The New York Times for six years under a remit to generate more video views for its content.

Moreover, on starting Nameless Network, Rahma specifically choose to focus on Facebook as the distribution platform because of its global audience.

“[Facebook’s] motivation is that the news feed is so cluttered with data, content and ad load and they want to create a separate experience,” Rahma said. “The intention is for people to watch videos on the Watch Feed – Facebook can charge much higher ad rates and experiment with different forms of ads [while] giving advertisers a very safe space.”

By creating a dedicated space for the active consumption of video media and other professionally generated content, Facebook can mimic YouTube in having viewers become accustomed to viewing preroll adverts before seeing content.

This notion appears to answer a question posed by Stratechery as to why Facebook is moving away from passivity and toward active engagement on mobile screens when services like Snapchat and Twitter have all struggled to monetize such an approach.

This shift from passive to active consumption of news is also at the heart of Zuckerberg’s reasoning for the changes to the News Feed, and why they will be good for news publishers in the long run.

Credit: Nameless Network Facebook
Nameless Network targets mobile-first millennials with educational and entertaining content.

The shift to active consumption

Facebook is feeling enormous strain as a result of evidence given in Congressional hearings in October and November that made clear how deep Russia’s involvement in fake news had become, and its influence on events prior to the 2016 U.S. presidential election.

Even before the hard evidence, Washington DC-based new media news publisher Axios had discerned an intensifying drumbeat on Capitol Hill for Facebook and its peers to take more responsibility for these issues or risk regulatory intervention.

Zuckerberg himself has said the News Feed shift intends to cut down on the passive consumption of content. He thinks that the habit Facebook has nurtured of relying on his service for news, something studies suggest is now the case for about 50 percent of Americans, has promoted the unquestioning acceptance of factually inaccurate news. After all, under the previous News Feed, no decision had to be made by the user as to where the news was sourced or whether they wanted to see it.

Zuckerberg believes that changing this habit will be good for everyone: users, advertisers, investors and, yes, even news publishers, because it will force people to re-engage with actively seeking news and other non-original content.

Real news is safer than you think

In the meantime, real news is safer than you might think, especially when taking a global view.

Here’s an eye-popping stat for those who have not picked up a newspaper in a while: The World Association of Newspapers and News Publishers (WAN-IFRA) estimates that in 2016, print’s share of its members’ revenues was 91.6 percent.

The majority of WAN-IFRA members are legacy publishers, the kind of institutions that are supposed to safeguard and resource quality journalism, and the fact that their revenues are still deeply reliant on print is sobering.

Many are migrating their print subscription models to digital, with The New York Times providing perhaps the most high-profile successful example. Circulation revenue accounted for almost a third of WAN-IFRA’s total digital revenue in 2016, having grown some 300 percent from 2012-2016.

This reflects a broader industry shift away from advertising and towards revenues sourced directly from readers. That shift is necessary as it is clear the broad distribution model that Facebook has been accused of killing was not working in the first place. Witness Buzzfeed’s layoffs and restructuring as a case in point.

“There has been this switch from ad revenue to subscription and circulation revenue, and from looking for a wide audience to one that is willing to pay for content,” said WAN-IFRA’s Asia Director Gilles Demptos. “Legacy publishers are not too preoccupied [with the Facebook change], their revenue will go down but they always knew it would and that it was not sustainable.”

Facebook’s actions thus merely accelerate and ongoing transition away from reliance on advertising and towards alternative models.

“We think this is a good things for the industry because it forces the industry to focus on building their own model rather than being reliant on external distribution,” said Inkl’s MIshra.

Digital publishers must be resilient to Facebook's whims

It may be too early to tell, just a week into the change of News Feed algorithm, but the reception from digital publishers that spoke to The News Lens has been surprisingly benign.

Those deeply immersed in Facebook such as Nameless Network have already pivoted to adapt to the News Feed changes, which were widely signaled towards the end of 2017. Rahma said he has seen the numbers flatline having switched focus from posting 10 News Feed videos per day to 10 Watch Feed videos per week, and that he did not dwell on the now redundant work invested in building up his branded pages.

“We saw quantity go down and quality go up and we made more revenue [having] shifted resources to the Watch Feed to work lockstep in Facebook,” Rahma said, adding that he expects his business to flourish going forward.

Elsewhere, digital publishers have either already diversified their content across an array of social media, reducing their vulnerability to Facebook, or evolved business models that source revenue from multiple streams.

Norman Goh, social media editor of Malaysia-based digital native publisher Malaysiakini told The News Lens that Facebook’s tinkering with the algorithm between 2014 and 2015 convinced the company that it could not depend on the social network.

“There was a huge dip [in traffic] in early 2015 that affected 20 percent of the traffic,” Goh said. “We saw a stagnation in the growth of followers, and had complaints about not being able to see content – we tried to diversify our presence on various social media platforms: Facebook, Twitter, Instagram and now Telegram.”

Goh said that one of Malaysiakini’s main strategies for avoiding dependence on the News Feed algorithm was diversifying content and responding directly to readers. “You have to put in some frontline service as a publisher and drive brand loyalty,” he said, while outlining how the platform breaks up its content into different formats that provide an easy way into each story, from text and images to gifs and video.

To be fair, Malaysiakini publishes in three languages and benefits from occupying a lesser contested, non-English language space.

The same is true of Bahasa Indonesian multi-platform news and entertainment media company IDN Times, which enjoys an audience of 23 million monthly unique visitors and was profitable in the second half of last year, according to co-founder Winston Utomo.

Utomo said IDN also takes a tailored approach to multiple social media platforms, while also enjoying a healthy mix of revenue streams, from ad sales to advertorial, events, native video and branded content.

Just like Rahma, both companies said that the Facebook changes have yet to significantly impact their traffic.

Evolving new models

The Guardian’s Emily Bell has argued that Facebook’s move is bad for democracy, noting the world is threatened by “a rising tide of authoritarian regimes [that] promote themselves through social tools without the mediating layer of the bothersome press.”

I am tempted to argue that this is in fact a separate issue in that it suggests Facebook should not only enable the media but also take responsibility for its role as, “the new gatekeepers take on a mantle of democratic responsibility.”

Again, this is muddled thinking. Facebook’s responsibility is to make money. The media’s responsibility is to evolve business models that work without Facebook.

Even in places where free speech is under far greater threat than in the U.S., such as Hong Kong, this is already happening.

When founding his crowdfunded Hong Kong news agency FactWire, which focuses on investigative reporting, Hiu-tung Ng said he rejected reliance on advertisers having witnessed some newspapers being punished by brands for their stance during the 2014 Occupy Hong Kong protests.

"I had the impression that most online news is too much based on strong political views about certain issues, they have a stand they take in order to survive,” he said, adding that FactWire sidesteps the need for ads by serving news portals with stories in a subscription basis. FactWire now counts 90 percent of Hong Kong’s editorial as its clients.

A climate deeply mistrustful of the growing influence of so-called “Red Capital” – money directed by the Communist Party of China – is also spawning alternative digital media eager to fill the vacuum opened up by an increasingly unfree press.

Chinese-language citizen news portal and newsletter HKcNews adopted a subscription model in order to be sustainable, having initially crowdfunded financing in 2016. “[Mainstream media] self-restraint in reporting sensitive political news gives us a space to expand, to provide independent and professional coverage,” said co-founder Daisy Li.

Li and Ng also downplayed the impact of the Facebook changes on their business models.

Moving away from the ‘messy middle’

Of course, not everyone is safe.

According to Inkl's Mishra, those competing for “the messy middle” are in trouble.

“Staggering in the background of all this is that the breakeven audience figures for free ad-supported operations have been skyrocketing,” Mishra said. “You are getting to 50-plus million monthly readers and you still can’t cover the costs of producing a broad array of news content – that’s clearly a problem - what other industry can’t break even with 50 million people using the service?”

Mishra sees Facebook’s actions as accelerating a breakaway from a middle ground that sees global news outlets rushing to publish the same 500 or so stories just with slightly different treatments.

“You will have free low-cost info sources, Vice, Buzzfeed, and they will go down infotainment and video route, and for everybody else it has to push them up to write about serious news that people are willing to pay for; it’s a more sustainable model ultimately.”

Echo chambers and other consequence

Questions have also been posed as to whether the News Feed changes will amplify the echo chamber bubble widely decried for polarizing political and other opinions in the digital age. Facebook’s Mosseri provided a robust counter to this idea, suggesting that content that is informative and entertaining will still find its way to the top under the new system. The real impact remains to be seen.

A potentially more insidious shift should be closely observed. Digital editors may seek to more aggressively cultivate social media influencers, either as writers or sources, under pressure to plug a shortfall in users, compromising their publications’ objectivity in favor of higher traffic.

“In 2018, a lot of news publishers and brands will engage more with social media influencers,” predicted Malaysiakini’s Goh. “They [will] target those that help them reach out to untapped markets among different age groups."

“Going through influencers is the easiest way – either you pay them or make use of their followers,” added HKcNews’ Li, before warning that just like relying on Facebook, such a strategy can only ever be short-term given the power it places with actors operating outside an organization’s payroll.

In conclusion, Facebook’s push has the potential to shake people out of the passive news consumption habit the service had engendered, to the benefit of all concerned.

In the meantime, the changes promise to accelerate a phase of creative destruction as publishers reliant on the social network for distribution are forced to find more innovative ways to engage their users, in the process opening space for new entrants to find a niche.

And a final thought: Facebook is just as interested in the fallout of these changes as its customers. There is every reason to believe the company will tinker further going forward, and that it will find new ways to maintain its engagement with digital news.

(Disclosure: The News Lens, IDN, Inkl and Nameless Network share a common investor: North Base Media)