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News publishers need to rethink their digital platform strategies

September 18, 2017 | By Rande Price, Research Director—DCN @Randeloo

A new WAN-IFRA analysis finds that publishers receive minimal revenues from distributed content on Facebook. The report, Reality-Check — making money with Facebook, focuses on new business challenges for publishers, specifically the rise of digital platforms like Facebook. The analysis concentrates on Facebook since it’s one of the most popular social network in the world with 2 billion users. It also owns three leading networks — Messenger, WhatsApp, and Instagram. Facebook is now a source of news for half of all adults in major countries, and it is already the biggest source of referral traffic to news websites.

Disruption

Facebook’s technology matches users with other users, content providers and advertisers. The more people use it, the more useful and valuable it becomes for all constituents.

Grzegorz “Greg” Piechota, author of the report, identifies three distinct manners in which digital platforms disrupted the news media industry: 1) separating products and services, 2) sidestepping access to audiences, and 3) disengaging content consumption from the advertisements that fund the content. Facebook masterfully unbundled articles and headlines on publishers’ websites, offering pieces of content without seeing the publisher’s homepage or website.

The platform also blended professional and amateur journalists and treated them as equal, thereby competing for the same consumer attention. Facebook provided just enough publisher content that consumers can sidestep a publishers’ website.

Overall, news publishers cannot rely solely on distributed content monetization programs. Facebook and other digital platforms. WAN-IFRA members report that Facebook contributes on average 7% of their digital business revenue, consistent with learnings from DCN’s Distributed Content Revenue Report released earlier this year. Interestingly, Facebook appears to share proportionally less revenue with content creators than other platforms do.

Aligning strategies

News publishers should continue to build diversified revenue streams to include digital subscriptions, e-commerce and branded content. Importantly, they can no longer rely on the most common digital-publishing business model based on advertising revenue.

News publishers should address not only Facebook, but emerging digital disruptors. Forward thinking is critical to serve and engage new consumer news behavior.

Important considerations

Publishers need to assess Facebook’s new programs from both consumer and business vantage points. Facebook plans to let users subscribe to a publisher’s content directly from their mobile app. Users will be able to access contents behind paywalls. It’s initial testing is set to begin in October 2017.

However, there are still many questions to be answered before news publishers decide whether to participate:

  • Will consumers subscribe to the news publication or Facebook?
  • Who sets the price?
  • Will Facebook receive a revenue share?
  • How does the subscriber access the content – via Instant Articles or the publisher site?
  • What data will Facebook share with the publisher?

Digital platforms transformed business models and created new products to attract consumers, publishers, and advertisers. Notably, news publishers are taking steps to embrace new business-models, explore product innovation, diversify revenue sources. As publishers continue to explore the most effective ways to work with platforms, it is important to shift focus from audience development to customer acquisition and retention.

 

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