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Sept. 14, 2017, 1:19 p.m.
Business Models
LINK: www.wan-ifra.org  ➚   |   Posted by: Ricardo Bilton   |   September 14, 2017

For years publishers have held onto the hope that all their investments in Facebook will, at some point, pay dividends when it comes to revenue. But a new report from WAN-IFRA suggests that, for most publishers, that’s still far from the case — and they’re not happy about it.

Surveying nearly 50 WAN-IFRA members, University of Oxford researcher (and 2016 Nieman Fellow) Grzegorz Piechota found that Facebook was responsible for an average of seven percent of digital revenue, with a median of just three percent, across all of its revenue programs. A quarter of publishers said they received no direct revenue from Facebook at all.

In Piechota’s estimate, this puts Facebook lower than Google, YouTube, and Spotify in terms of how much revenue is shared back with publishers, though the lack of complete data makes it difficult to draw direct comparisons. Piechota concludes that, overall, “revenue shared by the leading platforms is too low to fully fund editorial operations,” even for the largest organizations.

Piechota writes:

When WAN-IFRA asked us to research how news publishers make money on Facebook, we soon realised it was a sort of “mission impossible.” In general, publishers really do not make significant money on Facebook.

Even leading news publishers in the U.S. that have embraced the idea of cross-platform publishing and have built vibrant communities on Facebook have not really been able to monetize their engagement with the platform’s products. This is obviously an area Facebook can improve, and it says it will.

Other data show that, for most publishers, Facebook is still embraced overwhelmingly as a distribution channel: 69 percent of publishers said that the main objective of engagement with Facebook is to “distribute my content to audiences,” while just six percent said the goal was to “generate sales right on Facebook.”

Publishers, as you might expect, aren’t too happy with the situation: Just 37 percent said they were satisfied or very satisifed with Facebook’s performance helping spread their branded content. And seven percent said they were satisfied with Facebook’s contributions to their display advertising businesses, which is the model for the vast majority of publishers today.

Piechota’s big recommendation for how publishers should respond to this reality is a familiar one: Publishers aren’t building strong businesses on Facebook, and they shouldn’t try to. “To monetize engagement with Facebook and other platforms, news publishers need to build sound business outside of those platforms rather than outsourcing their future to them,” he writes.

Piechota also recommends that publishers “change the dynamics of competition” with Facebook by investing with business models outside of advertising. Likewise, he suggests, while Facebook is a core concern now, publishers need to better understand that Facebook is just one disrupter of many, and “news publishers need to find a strategic response to digital disruption from all kinds of platforms, not only Facebook. The solution needs to be long-term; one cannot change strategy whenever Facebook tweaks its algorithm.”

A summary of the report is here.

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