As Facebook prepares for a wider rollout of its News tab, it has agreed licensing deals with mainstream news outlets in the UK. This comes as the UK government has threatened a crackdown on the market dominance of the tech giants.
The takeaways:
- Last year, Facebook announced that it would offer American news outlets millions of dollars a year to license content in its new News tab. In the US, the tech giant struck deals with publishers including ABC News, The Wall Street Journal, The Washington Post and Bloomberg, among others.
- In August, Facebook confirmed that its News service would be coming to the UK, Germany and other markets. As part of this, they have been negotiating with publishers about payment amounts.
- Facebook’s News section will feature a mix of top stories chosen by curators employed by Upday, a news aggregator service, alongside other algorithmically-chosen stories.
The news comes hot on the heels of an announcement from the UK government that it is creating a competition regime called the Digital Markets Unit to tackle the ‘fundamental imbalance of power’ between platforms and publishers.
- The unit, due to launch in April 2021, will govern commercial relationships, which crucially will ensure “the platforms are not imposing terms that limit the publishers’ ability to monetise their content”
Show me the money: Unlike Google’s public $3 billion spending commitment, Facebook has remained tight-lipped about how it has arranged finances with publishers.
- Launch partners include the Guardian, the Daily Mirror, the Independent, most of the UK’s regional news publishers, and magazines such as The Economist.
- However, sites that haven’t agreed licensing deals with Facebook may find their content ends up in the tab anyway if they meet standards.
- In the US, it was reported that Facebook was prepared to pay as much as $3 million a year for the next three years to publishers.
Some publishers are privately expecting to make millions of pounds a year from the deal, according to The Guardian.
A two-tier system
Facebook’s approach in both the US and UK splits publishers into those who are influential enough to negotiate licensing payments, and those who aren’t. Rather than apply a rule – for example, payments based on traffic – it is up to individual publishers to strike their own deals, meaning that there will be a lot of disparity between payments.
But Facebook aren’t the only ones setting their own terms with publishers. Google last week struck a deal with six French publishers to license content for their own upcoming News Showcase.
The long game: Both platforms have been clear that news isn’t part of their core business, and should it disappear, would barely affect them.
However, with increasing regulatory pressure from governments around the world, they are both choosing to make pre-emptive moves rather than be forced into a dispute like the one ongoing in Australia, which would have far longer-term implications for their relationships with publishers.
- For organizations eyeing up a cash windfall, it is important to note that both Google and Facebook have only committed to these content payments in the short term. What they decide to do once government pressure has eased in a few years’ time remains to be seen.
- Our bet is that this doesn’t feature in the long-term plans for either company, and therefore publishers cannot rely on it as a dependable revenue stream.
