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Facebook revives its news ambitions with generous licensing offers
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Facebook revives its news ambitions with generous licensing offers

Published in: Ecommerce | Tuesday, 13 August 2019. | Written by: Theo Leworthy

According to research from the University of Oxford, online news sources had become more popular than their offline predecessors (print, TV, etc.) by the end of 2016. This is in the UK, but there’s no doubt it tells a global story – even if some countries aren’t quite as far through the book as Britain. Online news sources have a multitude of advantages over their peers, but two make it particularly competitive. It’s faster to get news up there (the click of a button trumps printing presses any day). News can be amended in real time when more facts appear (compare that to tomorrow’s retraction and update in a national paper). After a “fake news” furore that damaged its reach, social media giant Facebook wants in on this trend.

sources news 130819

Facebook has a good reason for getting back in the game: popular news services are a goldmine of ad revenue. News is a heavy-traffic endeavour – lots of eyes fall on every story. And it also provides targeting opportunities – different publications appeal to different demographics, and news stories themselves have the kind of content you can wed advertising to strategically (if the article in question is about a celebrity wedding, for example, then florists and dressmakers may want their ads showing in a sidebar).

Facebook wants to republish news stories and other news content (videos, summaries, statuses, etc.) from major news publishers. According to the Wall Street Journal, which broke the story at the start of this week, the Silicon Valley titan has approached a number of big names, such as Bloomberg, ABC News, Dow Jones, and The Washington Post. And the company is willing to throw hefty sums at publishers to revive its news ambitions: as much as $3 million to license already published content, in some cases.

Facebook’s share price has risen by 41% so far this year

facebook g 130819

Source: Yahoo Finance

Facebook has confirmed to CNBC that it will be launching a dedicated news tab on its platform – and we won’t have to wait long to see it, with the company promising to have it in action this Autumn. According to the Wall Street Journal, Facebook’s new plans will see it look for licensing deals that could last as long as three years, and put a lot of the control in the hands of news and media companies. The report said that Facebook would let these companies decide for themselves how much of each piece of content was published online before users were directed to publishers’ websites.

Facebook has had a contentious relationship with publishers in the past. At one time, it sent huge amounts of traffic to these websites, but paywall problems and other issues led to the company “downgrading” their importance in its algorithms. Add to this the difficulties the company has faced around “fake news” and it’s easy to see why Facebook has seen less activity on the news front over the past year. The company is hoping that sweeter deals and more good faith negotiating can paper over these cracks. And, if they get it right, the rewards are clear.

Disclosure
Dominion holds Facebook in its Global Trends Ecommerce Fund.


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Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.

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