Silicon News – How Tech Companies Are Becoming Media Giants
Social media and tech giants like Facebook, Google, Apple and Snapchat are moving forcefully into the journalism business by publishing news on their mobile apps. This could be good news for users, who stand to benefit from faster, richer news. Some publishers could also gain extra revenue from more viewers and readers of their products – especially younger ones – on mobile devices.
But there are obvious risks too. With the tech and social media firms hosting the news, publishers will see less traffic and therefore less advertising on their sites. Smaller news producers lacking the resources to produce content for the new platforms could be shut out of the game. There is also the threat that these Silicon Valley mega-firms will move from distributing news to producing it, a move that could crush even the biggest media players.
Since the advent of the Internet just over 20 years ago the journalism industry has been revolutionised by new technologies such as smartphones and tablets. It has been disrupted by the emergence of major new players such as Huffington Post and Buzzfeed. It has been hit by the slump in advertising revenues and the collapse of newspaper readership. And publics used to being broadcasted to on media companies’ terms have now become “the people formerly known as the audience” in Jay Rosen’s memorable phrase.
“The journalism industry is facing the same kind of tectonic disruption as been experienced by the music industry, described as “walking backwards to an uncertain future,”” write academics Clare Cook and Esa Sirkkunen. And this disruption has only just started. For just as publishers have finally started to loosen their reliance on advertising and get readers to pay for the expensive news they consume, they now face their biggest challenge yet in the form of technology giants muscling in on how journalism is produced and distributed.
In the last six months, Google, Apple, Facebook and Snapchat have aggressively moved into the journalism business by creating content platforms that have one thing in common – a desire to shift eyeballs so beloved by advertisers away from the websites of media outlets and on to their mobile applications. Twitter has also started curating news in Moments, although this is not a proprietary platform as the social media site does not host articles but simply provides links to them.
Facebook Instant Articles, Snapchat Stories, Apple News and Google Accelerated Mobile Pages are all tailor-made for today’s brave new digital world, which is increasingly mobile and increasingly social. The question is: are publishers – whether digital-first upstarts like Huffington Post or legacy organisations like the New York Times – ready for this revolution?
With faster wireless connections and bigger screens, smartphones have become “the defining device for digital news,” according to Nic Newman, Research Associate at the Reuters Institute for the Study of Journalism. News accessed via mobile phones has risen from 37% to 46% in the last year in the 12 developed countries surveyed in the Reuters Institute Digital News Report 2015. In the United States, UK and France over a quarter of respondents said the mobile phone was the main platform for getting news.
The implications of this shift to mobile for traditional publishers are huge. Firstly, people tend to use significantly fewer sources, such as applications, to access news via mobile than via tablets or computers. This tends to increase loyalty to mega-apps like Facebook, Snapchat, Google and Apple News – which is installed on all new mobile Apple devices – over news websites or less popular media apps. Secondly, young people use smartphones as their main news platforms much more than others, again favouring social media behemoths like Facebook and Snapchat.
The other big shift in how journalism is consumed is the drift towards social media as a source of news. While TV and online remain the main sources of news in the Reuters study, social has overtaken print in seven of the 12 countries and its share is rising fast.
As more and more people get their news from social media, it stands to reason that the importance of social media companies over how news is distributed and consumed will grow. Of the top five social networks for news, four are controlled by Facebook – which owns WhatsApp – or Google, which owns YouTube. This raises obvious questions about media pluralism and the domination of information and communication by U.S. technology companies.
It also means that publishers using the new platforms will have to assign greater importance to the audience than before, with all the implications this has for the future of quality journalism in a world where celebrity gossip, funny stories and bizarre photos often prove to be the most viral content.
Because of its colossal size – it has almost 1.5 billion users – whatever move Facebook makes has huge repercussions. So when the social media giant announced the launch of Instant Articles beta in May 2015, the media world was plunged into a new bout of existential angst. This has only increased since the platform was opened to all publishers last month.
Would Instant Articles help or hinder publishers still grappling with over a decade of digital disruption? Would it save news organisations struggling to boost traffic or would Facebook devour them whole – as it has other companies like WhatsApp? The ambiguous mood was summed up by Joe Lazauskas when he wrote that the launch of Instant Articles “feels like a cross between Christmas and a funeral in the media world. Christmas because everyone gets to write a navel-gazing hot take on what this means for the future of the fourth estate; a funeral because many, including some New York Times newsroom vets, are declaring this the time of death for media as we know it.”
So what are Instant Articles and why are publishers and media pundits so nervous?
Facebook is already a major news player. In a recent survey, over 40% of users said they used the social network for finding, reading, watching, sharing or discussing news in the past week. The New York Times now receives 14 to 16 percent of its traffic from Facebook, which has doubled from a year ago. And as more and more users get their news from social media – almost twice as many Americans get their news from social media as from newspapers, according to the Reuters report – then Facebook’s influence as a news provider will only increase.
Until Instant Articles, Facebook never hosted – or published – news. So if users wanted to view an article shared on Mark Zuckerberg’s 11-year old behemoth, they were taken to the site of the news organisation that produced the article – say Der Spiegel or The Daily Telegraph. Facebook has two problems with this. Firstly, it takes users’ eyeballs away from their site – and its lucrative advertising potential – to other sites. Secondly, as Facebook claims in its PR pitch, articles in Instant open up to 10 times faster than on the standard mobile web, where article downloads average eight seconds.
In other words, this is not a question of copying and pasting articles from news sites to Facebook. Instead, Instant offers a different news experience – potentially faster, richer, more interactive and suited to multimedia content. In short, the sort of content made for mobile – and Instant will only originally be available on mobile devices – and geared toward a younger generation of news consumers who get their news via social media on mobile devices.
“Media outlets are handing control of their products to a platform-turned-publisher that is so powerful it could end up swallowing the suppliers which feed it.”
It is little wonder then that news organisations, despite initial doubts, have leapt on the Instant bandwagon. In fact the media outlets that have already signed up to Instant reads like a ‘who’s who’ of the most successful online news publishers: The New York Times, Buzzfeed, The Guardian, Spiegel Online, Bild, BBC News, Daily Mail, MTV, Washington Post, NBC News and The Huffington Post.
For news providers wary about giving up control of their content, Facebook insists that: “With Instant Articles, publishers are in control.”
News producers decide what to publish on Instant. And Facebook offers publishers two choices for earning revenue by placing their articles directly on the social media site – either they can keep their own adverts and take 100% of the royalties or let Facebook take care of the adverts and keep 70%. Either way, each click on the article, even though hosted by Facebook, is counted as comScore traffic credit.
At first glance, Instant Articles looks like a great deal for publishers. More eyeballs on more articles should mean more revenue. But, as Emily Bell, Director of the TOW Center for Digital Journalism at Columbia University, points out, with Instant Articles Facebook goes from being a platform to a publisher. And “once Facebook is the world’s front page, publishing responsibilities begin to attach themselves to the company.” For example, “Does it get rid of stories which might be deliberately biased or misleading? Does it want to show us stories which are videos before it shows us stories which are text? Each decision means programming the algorithm which selects types of news stories. Facebook might see this as an engineering task, but these simple decisions are also editorial.”
So Instant Articles represent an exciting opportunity for news organisations to reach new audiences with new formats – and earn extra revenue doing so. But they also represent a risk because media outlets are handing control of their products to a platform-turned-publisher that is so powerful it could end up swallowing the suppliers which feed it.
With about 100 million daily users, 80% of them residing in the US and most of them in the 13-34 demographic, Snapchat is the fastest-growing social media platform. It is also one of the fastest changing. Originally little more than an instant, self-erasing messaging system, since 2014 Snapchat has expanded two of its main features. The first one is a classic chat feature allowing users to send each other text messages or videos in the chat feature with the option of saving them before they disappear. The second and most notable change since January 2015 is the expansion of the ‘Stories’ section into two sub-features called ‘Discover’ and ‘Live’. These look set to revolutionise the entire revenue model and market worth of the application.
The Discover function is the resulting collaboration of 15 publishers – such as BuzzFeed, National Geographic, VICE, MTV, CNN, Cosmopolitan, The Daily Mail and People – serving as content channels on the platform. Each of these ‘branded channels’ has 5-10 hand-picked and often custom-made stories that have a 24-hour shelf-life.
The Live function enables users and publishers to generate content simultaneously by geo-tagging their snaps to a specific event or location, contributing to a ‘global community’ feeling and allowing users to access snaps related to a topic, event or location with a sense of immediacy.
Like Facebook Instant, eyeballs are diverted from the publishers’ platforms to those owned by the social media giants – elevating the companyʼs market worth and creating a headache for news providers caught between opting in and gaining new audiences and staying out and keeping control of revenue streams.
The flipsides of Facebook
The rise of social media publishing platforms has the potential to change the business of journalism as we know it. The question is, will this change be for the better or worse in terms of the quality and economics of journalism?
The news apps are likely to be a hit for users, who will be able to get free, fast, quality news from media outlets without having to scroll through various websites. There are also some clear advantages for media organisations, which should be able to reach a wider and more diverse audience because of increased digitalisation and the popularity of social networks. If users like content – usually because it is personally relevant – they will share it on social media. In turn, this could earn more revenue from extra eyeballs on adverts – especially as Google AMP, Facebook Instant Articles, Snapchat Discover and Apple news have lured publishers by promising that the revenues from advertising on these new projects will be largely theirs to keep.
However, there are some obvious downsides too.
- Firstly, the changes being rolled out by the Silicon Valley tech and media giants further reinforce a trend that focuses more on the distribution of news products rather than the gathering and producing of them. With journalists increasingly reduced to the role of news providers for tech companies with far bigger audiences, news publishers risk being sidelined or even squashed.
- Secondly, with content proprietary platform formats, publishers will start to lose visitors to their websites as users stay on the social media apps where much of their content is. This could have serious effects on revenues as advertisers migrate to search engines and social media platforms.
- Thirdly, the new platforms favour big media companies, which have the resources to develop differentiated content and are more willing to share part of their revenue to get more readers and viewers. Smaller media outlets, on the other hand, are pushed towards difficult decisions from the start. Do they cooperate and gain bigger audiences but also higher costs? Or do they refuse and have greater control but lower revenues?
If publishers agree to participate in the four new initiatives it will give users, via social media, greater power to qualify what news is. For in the brave new media world of “user-generated visibility,” users are no longer passive audiences but active participants. They decide which articles and information will be more spread and which are more worthy than the others. For example, Buzzfeed reported that in 2013 Facebook referrals to the viral journalism site outpaced Google referrals by 160 million monthly to just over 40 million.
Platforms are not neutral distributors of news. They change the type of news being produced – for example mobile demands shorter and snappier pieces for mobile. Buzzfeed has grasped that social media, rather than search or website visits, is becoming the primary means for the distribution – which is one of the reasons it has become one of the world’s most successful media companies. “If Buzzfeed is correct…then the control of pathways to audiences no longer lies with the organisations which publish news but with the platforms that carry it,” says Columbia University’s Emily Bell.
This may be good news for Silicon valley, but it raises worrying issues for journalists and publishers who have less and less control over how information reaches the world. Even more disturbing for publishers is the prospect of tech companies like Facebook and Apple actually producing as well as distributing news by employing their own journalists. With the power to rig algorithms to make their home-produced articles more visible and more popular with users, the tech giants would, at a switch, become media giants.
With thanks to Milan Pažicky and Johanna Strohm for their contributions.