One Small Step for Facebook, One Giant Leap for Media Companies’ News Content
Facebook Hosting News Sites’ Content is Bad News for News Sites but will be Necessary Given the Power of Facebook
Robert Clement, Bryant University, MBA523
I recently read an article titled, “Facebook May Host News Sites’ Content” which discusses Facebook potentially hosting media companies’ content inside Facebook. This is bad news for media companies. Allowing Facebook to host this content will end up being a self-defense tactic for media companies and cause them to lose control, namely, of their brand. Additionally, this will continue to add to the power of Facebook and the leverage that they hold.
Let’s step back and take a more expansive look at this. Currently, a link is clicked that brings you to the media company’s website. From there they gain the site traffic, it allows the visitor to further explore their site, and potentially subscribe if that is the format of the media company such as the New York Times. The increased site traffic drives demand for advertising space which creates revenue and more importantly, data about their visitors can be gathered in order to promote the right content to these visitors.
With Facebook now prepared to host this content instead of linking to the media companies’ websites, these benefits will be lost by the media companies as they lose site traffic, revenue, and information.
The visitor will no longer be visiting the New York Times website, Buzzfeed’s website, etc. The will remain within the towering walls of Facebook.
How will this affect revenues? Well, with decreased site traffic comes less demand for advertising space. This will also likely cause the loss of subscription revenue for companies like the New York Times since all of their articles will now be hosted on Facebook. It creates a sense that there will be no need to visit these media sites anymore. These articles will still be populated with advertisements; however, they will likely be controlled by Facebook. Facebook has stated that they may share some of the ad revenues with the media companies. However, the amount will most likely underperform compared to what the media companies make now.
Media companies will be losing their ability to collect valuable information on their visitors regarding who they are, what they read, and how often they visit the site (Somaiya, Isaac, & Goel, 2015). They will not be able to personalize their site differently for different consumers as effectively as they were since Facebook will now be collecting all of this data. All control is lost by the media companies and transferred right into Facebook’s gritty hands.
It’s tempting to think, why don’t the media companies just reject this initiative? That way they can keep their control, information flow, and revenues, right? Unfortunately, it isn’t that easy.
The Gawker website received about fifteen million visits in June 2014. The very next month, the number plummeted 25% to eleven million. This was due to Facebook changing its news feed algorithm. Posts like Gawker were suddenly given a lower rank in users’ feeds (Lumb, 2015). This situation showcases the immense power that Facebook holds.
Facebook is currently the largest social media site with over 1.4 billion active accounts and in some ways has become a one stop shop for many people (Statista.com, 2015). They are forcing people to stay within their walls and shunning out 3rd party sites. Its popularity kind of makes them like Wal-Mart in a sense with the amount of leverage they now hold over their “suppliers”. Sixteen percent of users already rely on Facebook for their morning news (Sethi, 2015).
Facebook has already started hosting videos on their news feed so it only seemed like a matter of time until they broke the news of potentially hosting news sites’ content. It is likely that some news sites will allow Facebook to host their content whether it be large companies like the New York Times or many smaller, lesser known ones.
Once Facebook “locks up” some of these sites, they can give them “preferential” treatment. They can be shown higher up in a user’s newsfeed and given faster loading times. Potentially, Facebook could ensure slower loading times and that not many people see posts of articles of media companies that decide not to let Facebook host their content.
What would this do? Essentially, limit these sites views and frustrate the people for not getting their content fast enough. This in turn could make some people forget that these news sites even exist. The people want their information quicker and that is exactly what Facebook would give them by hosting news sites’ content.
What are the media companies to do? They are essentially backed into a corner. To the left is decreased revenues, customer information, and control. To the right lies decreased site visits through Facebook and slower loading times.
Pick your poison.
References
Lumb, D. (March 2015). The Other Shoe Drops: Facebook May Soon Host News Sites’ Content Inside Facebook. Retrieved from http://www.fastcompany.com/3044187/fast-feed/the-other-shoe-drops-facebook-wants-to-host-news-sites-content-inside-facebook
Sethi, L. (January 2015). Social Media Addiction: 39,757 Years Of Our Time Is Collectively Spend On Facebook In A Day!. Retrieved from http://dazeinfo.com/2015/01/12/social-media-addiction/
Somaiya, R., Isaac, M., & Goel, V. (March 2015). Facebook May Host News Sites’ Content. Retrieved from http://www.nytimes.com/2015/03/24/business/media/facebook-may-host-news-sites-content.html?_r=0
Statista. (2015). Leading social networks worldwide as of March 2015, ranked by number of active users (in millions). Retrieved from http://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/