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InContext / An inside look at the business of digital content

Facebook and Google are competing to drive more subscriptions. Imagine that.

March 1, 2018 | By Mark Glaser, Founder and Publisher – MediaShift @mediatwit

Recent research from DCN shows that major tech platforms have brought very little in the way of revenues to publishers. Distributed content from Google and Facebook only amounts to five percent of the total average digital revenue for publishers. So how can the platforms turn that around and improve on those numbers? By helping drive subscriptions and conversions for paid products.

Last June, I called out Facebook and Google on this very point. Driving subscriptions would be a win for publishers who need more revenues, and for the tech platforms which need a way to build trust, support the news ecosystem and generate positive press in these times of bots, misinformation and election meddling.

The good news is that both Facebook and Google are now taking clear steps to help drive subscriptions for publishers. Facebook will take a 0% cut on subscriptions they drive through their app on Android and Apple devices, while launching a new Local News Subscription Accelerator. And Google has upped the ante with plans to help publishers identify potential subscribers by sharing more data. The bad news is that there is a long road ahead to making these initiatives work.

Facebook Makes Peace with Apple, Launches Accelerator

Facebook’s News Feed tweaks — most recently, to downgrade publishers’ posts in favor of content from friends and family — have long influenced the kinds of stories Facebook users see. Because people are used to the free-flowing nature of news in the Facebook News Feed, the social giant had been loath to introduce friction.

But after mounting criticism, Facebook has been developing ways to drive subscriptions from its app. And best of all, its support for paywalls will not include taking a cut of revenues from publishers. Instead, Facebook will show users five free articles and then direct them to the paywall on the publishers’ site. That means 100% of subscription revenue goes to publishers – and they get to keep all the data about users as well.

It wasn’t an easy task to pull off on iOS, because Apple is notoriously stubborn about waiving the 30% “Apple tax” it takes from any monetary transactions in apps. But after some tough-knuckled negotiation, Facebook’s Campbell Brown announced at the Code Media confab that Apple caved in and would waive the fee.

Not only that, but Facebook also recently announced a Local News Subscription Accelerator with 12 metro dailies getting training support for a three-month trial. It’s nice that the social giant is putting $3 million into the effort, and partnering with the Lenfest Institute. The big question is whether that work will scale to help more publishers.

Google Leading the Way So Far

While Facebook has made a lot of progress lately, Google, in comparison, has been more consistently friendly to publishers: At the recent Digital News Initiative summit in Amsterdam, for example, Google announced it would help identify which kinds of users would be attracted to which publications. The company also said it would ease the process of subscribing within Google. It also plans offer users a tailored search experience based on their subscriptions. This push to support subscriptions is one that Google has been working on for over a year. At the International Paid Content Summit in Berlin, publishers also touted Google’s efforts in distributing digital subscriptions. A survey among summit participants revealed Google shows much more “cooperative behavior” than Facebook.

Google also recently surpassed Facebook as the internet’s top referral source for publishers, a status that takes on significance for both Google and publishers given Facebook’s decision to de-emphasize news. A friendlier Google in the midst of News Feed shifts can help offset what publishers might lose with Facebook’s algorithmic changes. Coupled with access to Google’s coveted data insights — which publishers want and Google controls — working the publisher-Google relationship is indeed enticing for both parties. If Google wants to win favor with publishers, now is as good a time as ever.

Sharing the Wealth

Ultimately, though, whether Google or Facebook will do better in driving subscriptions is not as important for publishers as whether the two will really commit to the process. Because Facebook and Google together account for such a huge chunk of the attention for internet users, publishers must stay focused on working with both of them, along with other players like Twitter, Snapchat and LinkedIn.

It’s surely a positive that both Facebook and Google are taking big steps in driving subscriptions, and perhaps their rivalry could help push them even more. And while they surely dominate in online advertising, it’s incumbent upon them to make sure the news ecosystem is healthy and thriving. If digital ads are getting sucked up by the duopoly and subscriptions are becoming an important source of revenues for publishers (both for-profit and non-profit), then publishers will need to insist on better data, better leads, and a transparent funnel that helps them survive and thrive.

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