Facebook and Publishers Take Cautious Approach to Content Tie-Up

Conversations Heat Up, but Questions About Ad Revenue Sharing Remain

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The march towards media companies publishing content directly to Facebook continues.

BuzzFeed is among several publishers that will reportedly partner with Facebook to publish content directly to the social media site.
BuzzFeed is among several publishers that will reportedly partner with Facebook to publish content directly to the social media site.

Barely a month after Facebook Chief Product Officer Chris Cox said publicly that the social network wants to host media companies' articles and videos, The New York Times reported that BuzzFeed, National Geographic and the Times are the initial partners in a project that will see Facebook hosting some of their content. The project is expected to rollout in the coming months.

BuzzFeed and the Times are already among numerous media companies that publish videos directly to Facebook. But a partnership with the social network would likely go further, extending to ad revenue sharing.

Here's how it would likely work: When Facebook users click a headline from one of those media companies, they will stay within Facebook and not shift over to the publishers' site. The concept is part of a broader narrative taking hold in the media world: After years of trying to lure readers to their own sites, media companies are now considering which social-media sites and messaging apps could host their content instead. Several publishing execs said it's the dominant topic of conversation.

Snapchat, for instance, invited more than a dozen media companies to publish articles and videos directly to the messaging app in an offering called Discover. Those media companies are the envy of their peers. "Discover has been nothing less than a wild success," said an executive from a digital-only publisher that's not on Discover, but would like to be.

The Times and BuzzFeed declined to comment on the Times reports. National Geographic did not immediately respond to an email on Tuesday.

Mixed signals
At least half a dozen media companies are talking with Facebook about publishing to the site, according to the Times. Several media executives have told Ad Age that they've had face-to-face meetings with engineers and product people at Facebook in the last six months about this possibility, but the conversations haven't gone anywhere. One exec said Facebook asked publishers to agree in principle to publish to the site, but they didn't discuss revenue sharing opportunities.

Two other execs from large sites said they had reached out to Facebook about publishing directly to the site, but the social network shut them down. "We have asked but they have indicated that they aren't ready to discuss with us," one exec said.

These executives are not from the Times, BuzzFeed or National Geographic, so it's possible that revenue discussions didn't start in earnest until later in the process. Facebook had a number of exploratory conversations with publishers last year that didn't involve a discussion of revenue, according to one person with knowledge of the matter.

Facebook declined to comment for this article.

When a reader currently clicks to a publisher's site from Facebook, the publisher can display ads around the content and keep the revenue. The new plan "would remove the usual ads that publishers place around their content," according to the Times. The Times' report added:

Although the revenue-sharing ideas are still in flux, one would allow publishers to show a single ad in a custom format within each Facebook article, according to one person with knowledge of the discussions.

The implications
However this shakes out, the implications for a range of players -- including Facebook, media companies and even Google -- could be significant.

By hosting publishers' content directly and splitting ad revenue, Facebook would not only become today's printing press and delivery truck, but could also take over ad sales for publishers. Google's YouTube, for instance, has done this for many video creators, producers, publishers, TV networks and sports leagues.

In the extreme, news consumers love the Facebook-boosted stories so much that they pretty much only read content on Facebook and Facebook becomes the dominant revenue stream for its publishers. And Facebook effectively is employing newsrooms.

In the less extreme outcome, Facebook becomes another place for media companies to publish content and collect incremental ad revenue, much in the way Snapchat Discover is shaping up. It could also help publishers make money from mobile devices, which contribute at least half of most media companies' traffic but represent a mere fraction of revenue.

Meanwhile, Google would see its biggest ad-sales rival encroaching on its supplementary display revenue stream and endangering its primary one. If a publisher's articles end up only on Facebook, that's a publisher Google's search bots can't crawl anymore to see what people are reading. If that happens, people will stop searching Google to find out about something they saw on Facebook or Twitter.

Amazon would see a looming tech rival that could threaten its Amazon Web Services division. Media companies such as Conde Nast and Dow Jones use Amazon's cloud-computing services to quickly distribute their content around the world. Amazon wouldn't want Facebook to intrude on the market and push down its already slim margins.

The impact could extend to Twitter, Pinterest and possibly Apple, if its latest TV and music industry negotiations are any indication. Companies like Yahoo and AOL already syndicate some publishers' content and may rally their strong sale forces to fend off Facebook and Google.

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