Some publishers are scaling back on Facebook Inc.'s Instant Articles program, in which they host stories directly on the social media company's platform instead of their own websites so they load faster on phones, according to a report by Digital Content Next, a trade group.
Media companies are frustrated that Facebook restricts the number and type of ads in Instant Articles, making it harder for them to make as much money as they can selling ads on their own websites, where they can better target readers, said the group, whose members include The New York Times, The Washington Post, ESPN and Bloomberg News.
Digital Content Next found that 17 of its members generated an average of $7.7 million in the first half of 2016 from third-party platforms, or 14% of their total digital revenue. Publishers still "express deep ambivalence" about Facebook's commitment to helping them make money on the social media platform, the report said.
"On the most basic level, publishers are being disintermediated, losing their relationship with their audiences, and they fear that Facebook will further encroach on their traditional businesses," the report said.
Facebook and Twitter declined to comment. Snap Inc. didn't immediately respond to a request for comment.
Facebook has struggled with its growing role as a distributor of news to its 1.79 billion users, and has been criticized for not doing more to curb the spread of misinformation on its site. As part of its latest outreach, Facebook is embarking on a project that includes stronger partnerships with media companies, greater support for local news and better efforts to educate users to avoid hoaxes.
Facebook also plans to let more publishers insert ads into Facebook Live videos and recently began letting media companies post branded content, or ads created by publishers.
Still, the Digital Content Next report lays bare the hesitance felt by media companies as they try to reach audiences that get their news from social media. While working with Facebook or Snap helps them reach bigger and younger audiences, they're publishing their work on third-party platforms instead of their own websites, and risk losing out on valuable advertising and subscription opportunities.
Some publishers have also started to put less emphasis on Facebook Live, in which media companies create live video that's hosted on the social media platform. Facebook has paid a select few media companies to produce Facebook Live videos. While some outlets have started testing ads in Facebook Live videos, others express concern over Facebook's "lack of success in creating large-scale audiences around live events," Digital Content Next said. The group concluded that, for many publishers, Facebook Live "has yet to scale or prove a revenue model."
Several media companies have dedicated staff to create content for Snapchat, hoping to reach younger audiences that use it. Yet so far, Snapchat "holds little to no short-term financial interest" for publishers. Snapchat recently changed its model from splitting ad sales with publishers to paying them a licensing fee. The new licensing model "may translate into a limited upside for monetization by publishers," the report found.
-- Bloomberg News