Facebook's least surprising news ever

Meta confirmed it's ending subsidy payments to news publishers who invested in the platform's News Tab initiative. Now that Lucy has pulled the football again, will the news industry finally learn?

Back in 2019, Facebook announced a raft of exclusive deals with publishers that made those chosen news organizations partners in the platform’s news turn. For a meager $100 million over 3 years (representing about 1/4000th of the parent company’s annual revenue), Facebook paid major publishers like the Wall Street Journal to feature their content in the platform’s News tab. It was a subsidy intended to make sure the Facebook feature was well stocked with professional news from known companies.

Even at the time it was a venture that felt unsustainable. Facebook had famously crossed publishers and developers before, using budget cut rug-pulls to end partnerships that weren’t working. From Facebook’s perspective, they’re a company that is pushing product updates daily and you don’t stick with a failing thing for long. But nearly every time this story has repeated itself, the people left holding the bag have lost traffic and revenue it had come to depend on.

That last part—the dependence—is part of the problem, and it manifested itself today when the company confirmed it was ending these payments to news publishers.

Before you start thinking this is a Facebook hateread, it’s not. Facebook is what it is, with its checkered history on partnerships that blink and scream BUYER BEWARE to anyone willing to give it a go. But more importantly, Facebook’s decision to start partnerships, end them early, whatever … that is the company projecting a kind of cold rationality that makes Zuckerberg’s metaverse seem warm and inviting. If something isn’t working, cut it loose and move on to something else. Move fast, break things, etc. You aren’t changing the company’s ethos when you’re holding the weaker hand.

No, the blame for this rests on the publishers that bought in against all good sense. This is a cautionary tale that feels so well worn that it’s just shocking at this point the industry hasn’t learned its lesson by now. News Tab gave publishers revenue, a priority space that drove interest and traffic, and visibility. It’s the kind of deal that works for publishers until it doesn’t, and then when Lucy pulls the football again the publishers are left without that revenue that was helping enable newsroom investments and helping the budget bottom line.

It’s a cautionary tale about dependence on someone else for distribution. On the open web, anyone can type in your URL and you don’t have to share any revenue made from that direct relationship. That, as we know now in 2022, is the very connection that sustains news best and also has been the industry’s white whale since social distribution and Google searches replaced bookmarks and home pages in the middle of the 2000s. The news business reacted to that shift and its ensuing loss of revenue with massive, devastating cuts that bled talent and decreased quality (which turned off news consumers and bled more ad revenue), but more critically it made it hard to invest in a sustainable model they could control.

With social networks rising, social distribution took on an increasingly central role in attracting users to news sites. That came with a couple critical costs.

First, it threw every news product online into the same tank and forced them to compete with one another at a global scale. Gone were the pre-internet market oligopoly distinctions that came with being a local vs. national product, or a general interest vs. a niche product. It’s all just links online for an audience in social surveillance mode, and what happened next was an attention-driven news economy that rewarded clickbait and outrage over the eat-your-vegetables kind of news that builds healthy democracies.

The second cost was even worse. Once news products became dependent on Facebook, Twitter, Google, etc. for major chunks of distribution, those products effectively lost control of how consumers found them. Dependence on social referrals to acquire audience over the hard-won daily habit from loyal readers makes you susceptible to Lucy doing her football thing, and so ending a partnership here or tweaking an algorithm there has devastating costs to the short term bottom line.

This isn’t just a news problem, so by way of example let’s take a side trip by flipping the script and indulging ourselves in some Facebook schadenfreude.

Meta (the company formerly known as just Facebook) has invested well over $10 billion on a metaverse nobody seems to want. And why would they throw all that money away? Because even though all those fancy Meta videos focus on the visual experience, the metaverse it’s trying to build is about more than content. Meta also owns hardware via Oculus and is working on AR specs, meaning its vision is about controlling the whole experience from start to finish. Even if its metaverse idea is stupid—and from this corner, it feels exceedingly stupid—what it’s trying to build is theoretically a smart growth decision from a distribution point of view. When Apple changed privacy settings on iOS last year, it had a tremendous impact on Facebook’s ad business, to the point where Meta said it would cost the company $10 billion in 2022 alone. It cannot be overstated: Meta as a company (Facebook, Instagram, WhatsApp, etc.) does not exist without gobs of ad revenue.

The through line, then, is this. What Apple did to Facebook shows Facebook’s Achilles heel. It’s an adtech business that does not control its own distribution. Sure, it has a website and mobile apps, but those mobile apps live on iOS and Android platforms that it doesn’t control. A toggle here and a setting flipped there can have a devastating effect on the company’s core business. So, look, while Meta’s vision for the future feels tremendously bleak (might want to pour a stiff drink while watching this ad it debuted during the Super Bowl) …

… if you set aside for a second the company’s claim that the metaverse it’s building is going to be super awesome, you’ll see the real internal logic. By owning the hardware, the software, and controlling the content, Meta is trying to blast off this planet controlled by Apple’s and Google’s mobile operating systems and create a world of its own.

(That probably makes Meta’s actual metaverse product Poochie in this analogy. I haven’t worked that part out yet, but it seems to fit at first blush.)

But the bottom line is it makes sense for Meta to think about product in terms of distribution control. Facebook is not going to own the phone landscape (tried that, failed at that). Its Instagram product is pissing off the Kardashians because it’s desperately trying to keep up with TikTok, which is eating everyone. Couple those two platform headaches with the aforementioned ad revenue headaches, and pivoting to a metaverse it controls at least on paper seems like a better long term bet. Whether it works or not is another story, but it beats standing still. Facebook’s own struggles against platform dependence, then, are the same was what news publishers face on Facebook. Every predator can also be prey.

Speaking of standing still, back to where we started with Facebook’s former news partners. Yes, they are the big loser in today’s disinvestment news, but don’t blame Facebook. Blame the news companies themselves for taking the quick cash and not thinking about a future it can own and control, a story that goes back several decades. Whether you’re a news company, or a social network depending on apps, the lesson is always the lesson: if you rely on someone to distribute your product, eventually someone’s going to change the system and kneecap your revenues. And that’s just what happened here.

The news, of course, is a different kind of product and one that is supposed to contribute to the public good. The news disappearing isn’t the same as all your favorite nostalgia commercials being wiped from YouTube. The people mad at Facebook today are the people who have been arguing for a few years that the adtech companies amassing all the ad revenue that used to go to newspapers should be paying subsidies to news sites (the logic being those businesses depend on having links to content others make). Not because it’s a legal requirement, but because news is good and these companies ought to care enough to invest in products they are currently hurting.

It has always been a puzzling argument. Facebook and Google don’t need to link to the news, and people spending less time with news and more on TikTok says less about the platforms and more about the news (and perhaps the people consuming all of this content). The web is the web, and if you removed the news from it the web would march on just fine. The technology architecture of the Internet is such that no one site or content hub is critical to the Internet’s existence, and no type of content gets primacy. One site gets snuffed out and we find new places to go, new content to consume, and new people to collaborate with. The sad truth is the web doesn’t need the news so much as the news needs the web.

Imagine a future internet without the news, we’re told, as if we’re supposed to envision a devastated landscape without anything to consume. No, that’s not what will happen. The internet is already full of billions of people creating and distributing content for free. There’s more than enough to occupy our time. Something would be missing, but other things would fill the gap.

I am not making an argument about quality. An internet without the news would not be particularly good for democracy, and the reality that people would create content to fill the void says nothing about how good those creations would be. But you’re not going to convince an adtech company to go against its self-interest and lose money on a news investment when their tech is already set up to route users to whatever else is available for free. Guilt and begging are not business models.

What happened today is 100% on the news companies that have stubbornly resisted having an imagination for growing online news into something sustainable. News companies have been learning repeatedly the past 10 years that sustainability is going to be built from having more control of its own experience, and that means viewing with extreme skepticism any partnership that makes it reliant on outside platforms for distribution primacy and—for the love of god—revenue. Particularly when that partnership can be killed on a whim. This is not to knock social distribution, which can be an important strategy for finding and reaching consumers. But the clickbait era has shown that a lot of these companies have banked hard on this and only this, and at some point you have to wonder how many times these companies can be burned by ever-changing rules.

Jeremy Littau is an associate professor of journalism and communication at Lehigh University. Find him on Twitter (I am not getting partnership revenues from this, sadly) at @jeremylittau.