How Facebook’s Rumored News Product Could Hurt Local Sites

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facebook-logo1News websites dodged a bullet when Facebook didn’t announce a rumored RSS or news-in-your-news-feed product yesterday. When the company recently sent out an invite to the press regarding the announcement of a new feature, there was speculation in the press that Facebook planned on incorporating customized news and articles into users’ feeds.

It turned out yesterday that the company was just announcing the launch of video functionality on Instagram, and local news sites should be excited that they have at least a little more time before Facebook moves into customized news. Facebook and other social networks already generate a large amount of traffic for news websites, even without any major commitment from the company to integrate content into its social graph. If Facebook actually got serious about these plans, news websites could expect an even larger portion of their site’s traffic to be directed through the social network.

While more traffic from Facebook might sound like a good thing for news publishers, it’s not good for these sites in the long run. Local sites are focused on selling advertising to local advertisers and/or generating subscriptions from local users. In the advertising scenario, the unique selling proposition that local news sites have is that they have a great brand that local users flock to for local information. In the subscription model, local news sites are looking to convince users that their brand has unique content that they should pay for. In both of these cases, the publisher relies on users seeing their site as a premium brand and source for local news and information.

But if more and more users use Facebook as the front door to these news sites, they end up consuming the content and not valuing the site’s brand. For example if you read an article from CNN about the death of James Gandolfini because it showed up in your newsfeed and you were talking with a friend about it and they said “Oh where did you see that?” there’s a good chance you will say “Facebook” and not “CNN.”

Think I’m exaggerating? A study published this week by the Reuters Institute showed that 24% of US internet users “don’t really notice” which sites they are using when reading the news. The study also noted that this appears to be connected to the penetration of social media. Other studies have show people state that they get their news from social media sites, even though those social media sites don’t produce news. It’s clear that when users consume news via a social network, it’s the social network that gets the brand lift and not the news site.

Facebook actually getting serious about surfacing relevant content to users would exacerbate this problem. And let’s not forget that Facebook is competing for local ad dollars against these sites.

Many journalism folks have focused on the fact that a Facebook “news” product would create a sort of tunnel vision where users aren’t exposed to new content or ideas outside of their micro-interests and beliefs. But I think the bigger issue is a larger threat to any sort of business model for local news. It will be interesting to see if and how Facebook addresses the monetization concerns for local content if they launch a news product in the future.

MattSokoloffMatt Sokoloff is a 2012-2013 Reynolds Journalism Institute fellow working on a project to help publishers market their membership and subscription products. His background is in building digital products for media organizations. Read more about his current work here and respond in the comments or to [email protected] or @MattSokoloff on Twitter.