Will media companies turn on Facebook?
Facebook has close ties to media companies like CNN and The Wall Street Journal. The former company needs the latter to produce high quality content that will bring engagement to its massive user-base; the latter companies need the former because it has that massive user-base. Digital innovations are squeezing revenue and subscriptions at news companies, newspapers, and magazines – they have to find a home online, and that home would ideally come with an inbuilt audience in the billions. Facebook has its own problems: if it wants to sell advertising, it needs the kind of powerful content that can draw advertisers in. This should be a match made in heaven… but is it turning sour?
Facebook’s share price is up 33%, year-to-date
SOURCE: Yahoo Finance
Andrew Morse, general manager of CNN’s digital operations, says: “Facebook is about Facebook.” He’s finding it harder to view collaborations with the company as mutually beneficial. Discussing their latest media scheme – requesting professional quality videos from various media companies to build a service which rivals YouTube – he opines: “For them, these are experiments, but for the media companies looking to partner with significant commitments, it gets to be a bit of whiplash.” Jason Kint, the CEO of industry trade group Digital Content Next, agrees on the balance of power, saying: “Media companies are like serfs working Facebook’s land.”
Initially, Facebook had no trouble finding people to partner with it. After all, it has billions of users, and it’s managed to log success after success when it comes to understanding those users; and, crucially, how to monetize them. Who wouldn’t want a piece of that action?
Increasingly, a number of high profile media companies are finding their relationships with Facebook to be more hassle than they’re worth. The New York Times and The Guardian have both pulled out of Facebook’s Instant Articles service. The Wall Street Journal’s Suzi Watford bemoans Facebook’s imperialistic attitude. Working with the company, she claims, is not about collaboration; it is about doing what you’re told. “If you come to us and say, ‘we want to help,’ I’ve got loads of ideas,” she says.
Nonetheless, it is questionable how far these naysayers will damage Facebook’s media plans. Because it still has that massive audience, and it’s not clear that traditional media can survive without it. Or, as Ben Lerer, CEO of online video machine Group Nine Media (Thrillist, NowThis News, the Dodo) says:
“Whining and complaining that Facebook isn’t making you money is probably not going to be the most successful approach to building a partnership with Facebook where they make you lots of money.”
Dominion holds Facebook in its Global Trends Ecommerce Fund.
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