Hearst’s Barrett on Talks With Facebook: Progress, but More Needs to Happen

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Facebook is making a number of moves to help local news publishers do their work better and generate revenue to pay for it, as detailed in this space earlier – herehere and here. But individual negotiations between Facebook and the biggest local news publishers – the chains of daily newspapers – are still in their early stages.

What publishers primarily want from Facebook is what they call a “level playing field.” They contend they don’t get enough value for their content when it is featured on Facebook.

In this Q & A, Robertson Barrett, president of Hearst Newspapers Digital Media, details what he sees as the current promise of Facebook’s nascent effort to promote subscriptions for local news publishers and assesses the state of other major, yet-to-be-resolved issues for the publishers as they weigh their future on and with the giant social platform:

Let’s start with subscriptions. Facebook CEO Mark Zuckerberg confirmed last week that the platform will let local news publishers keep 100% of subscription revenue that results from FB’s Instant Articles product. Does that move go a long way to meeting your needs?
Hearst is an alpha partner in this subscriptions effort with Facebook, and we consider ourselves a collaborative partner who is helping to inform the effort and make it work. We have not launched yet, so while this 100% revenue commitment by Zuckerberg is initially helpful, we don’t know if that revenue share will persist in the future.

What is your primary focus on the subscriptions issue?
Revenue is not the paramount focus for now. We just need to experiment aggressively to see what will drive results. We’re more focused on conversion rates and testing the value proposition of subscription at the outset. It’s not surprising that Facebook is forgoing revenue in the initial round to learn the same things.

The initial launch will not include a relatively frictionless payment mechanism on the Facebook platform, like Apple offers with iTunes. Users will have to click through to the publisher’s page to subscribe. While it’s good for publishers to control payments, it means more friction for users – more click-throughs, learning different payment interfaces, entering credit card info for many different publishers. So that will likely dampen the initial results.

Given the revenue shares that Facebook competitors like Apple take – usually 30% – it will be interesting to see where this goes if Facebook proves to be a subscription driver rather than simply the primary engine for users to sample free news content [via a porous paywall that Facebook reportedly wants to give users 10 free looks at content before a subscription is required].

What’s the “end game” here?
The ideal endgame is that publishers as well as Facebook have direct consumer relationships and the ability to re-market quality content to consumers. We won’t achieve this unless Facebook invests as much in the user experience as the most dedicated publishers do, and Facebook moves to support frictionless payments for subscriptions. That likely means Facebook investing engineering resources beyond the levels that short-term returns would justify. and staying with publishers all the way down this road. Let’s see what happens.

Separate from subscriptions, local news publishers also need pathways via Facebook to build and nurture topic-specific communities. I want to gather audience around breaking-news memes, news beats, specific writers/columnists/voices and local topics of interest.

Facebook is now testing three initiatives  to connect users to local news. They promote user discovery of local news providers in Groups, badge local users who opt in and enable users to post local news articles and join relevant local groups. Doesn’t this achieve a lot of what you’re seeking?
These initiatives can all obviously help the journalism business by increasing consumption of professionally produced local news articles, but these and further efforts in this direction need to take into account that Facebook is likely benefiting disproportionately versus publishers from increases in user time and monetization from these articles and activity.

It’s one thing to offer publishers 100% of subscription revenues while the paid experiment is small. It would be another to index the value of these local news articles against the usage (if not also quality and accuracy) these articles contribute to the Facebook experience.

Why is it important to Hearst and other local news publishers to have more control over Facebook’s Calls to Action, where users become more active participants in their online experiences?
Facebook is developing Calls to Action on many fronts, including the subscription initiative. But it would create more value and scale to allow publishers to collaborate systematically in developing CTAs that give them pathways to reach users with more relevant content and to interact with that content..

Rob Barrett

These new CTAs need to go beyond the basics of email signups and “liking” pages. They have to let users explore publisher-related content, play with data related to an article, interact with   reporters and other users around a story or declare interest in a certain topic.

It would be desirable to have interactives on local sports, crime, real estate and entertainment that happen frictionlessly on Facebook, and generate data around user interests that can be shared at the cohort level with publishers. With that data, publishers could make better content investment decisions and target audiences on Facebook at the cohort and micro-cohort levels.

You also have an issue with targeting in regard to the News Feed and Calls to Action. What do you want fixed there?
Facebook could improve the playing field by allowing publishers enhanced targeting abilities, (e.g., giving them pathways to reach users with relevant content and more nuanced CTAs that get users to interact with that content). Publishers now can target by paying Facebook to promote their content. Publishers now have a limited ability to target users registered with Facebook Connect, but that path requires publishers to substantially ramp up their use of Facebook as their registration path to achieve scale instead of using their own registration, which offers clear ownership of user and subscriber data.

What do you want Facebook to do to help publishers on ad monetization?
In addition to removing likely friction from the subscription effort, FB needs to address the stark fact that the duopoly [Facebook and Google] is squeezing the ad sales model faster than subscriptions can replace it. The various Facebook efforts to provide new tools, like the ones on auto dealership targeting, are scattered across multiple Facebook teams and often (in that autos case, I’m not 100% sure) may just further disintermediate publishers. (Autos dealerships and new players can theoretically just use these tools themselves.)

Facebook won’t and shouldn’t coddle publishers by unduly favoring them in the marketplace. But Facebook has not unified its various efforts under its existing Publisher Value Initiative (the initial home of the subscription effort). It is therefore hard for Facebook or publishers to see what these far-flung projects (including the FB journalism initiative) add up to, and to what degree they could assist news publishers in creating a sustainable business model, especially in the case of local news publishers.

Is there a big gap in publisher relationships with your users on the Facebook platform, including dialogue with those users?
Yes, to the extent that publishers cannot access all user data beyond PII [personally identifiable information] tied to consumption of their content. Facebook has an enormous advantage in being able, de facto, to have dialogues with users based on their behavior. Only some of that data travels back to publishers, and publishers for the most part have to pay Facebook through ads and promotion to target potential readers/viewers.

Most important, Facebook has not done nearly enough to allow publishers (along with individuals) to interact and develop meaningful relationships with communities of users over time. With Mark Zuckerberg’s new focus on building community, Facebook is talking about reinvesting in its Groups. We’ll see whether that means adding a few incremental features, or whether it means dedicated product management over time to build valuable and sustainable communities long after the Facebook summits and press conferences have ended.

Several news associations, like Local Independent Online News (LION), are aggressively experimenting with offerings from Facebook’s Journalism Project. So I do think that counts as progress versus the relative non-conversation between Facebook and journalism before this project.

Summing up, it looks as if you think Facebook has to do much more to level the playing field. Are you confident that will happen?
To summarize, for tangible, scale-able progress, I’m looking for a systematic effort by Facebook to collaborate with publishers on Calls to Action and data sharing that allow publishers to have direct, ongoing relationships with local news and information consumers. We want relationships that create sustainable economics at a level where we can employ full-time, knowledgeable beat reporters or subject-matter experts. I’m not seeing that yet in the partnership discussions with Facebook.

I’m confident that the recent focus by Mark Zuckerberg on news and community comes from a genuine interest in addressing the issues of fake news and the isolation and filter bubbles that Facebook (or any social network) can create. But there’s no basis to say this impulse comes from a desire to level the economic playing field, and it’s really hard to imagine that the playing field between news publishers and the world’s largest social platform will ever be truly level.

But I do think we’ve seen a realization at Facebook in the last year that publishers do need to make money if they’re going to be able to pay for the production of local news. That is truly new. We’ll see if this commitment grows beyond these initial steps into something big enough to make a difference.

Tom GrubisichTom Grubisich (@TomGrubisich) has written “The New News” column for Street Fight since 2011. He is also working on a book about the history, present, and future of Charleston, S.C.