Facebook’s New Paywall: What It Means for Media.
In a ruthless battle for web traffic and advertising revenue, it is no secret that publishers and media outlets are getting pummeled by plateauing or declining website traffic, in addition to automated advertising and sophisticated ad-blocking tools. But the real culprits of declining revenue are social media networks—where 67 percent of Americans get their news. Unfortunately for publishers, advertising money flows along the same current as web traffic. One Morgan Stanley analyst estimated that in Q1 2016, Facebook and Google would claim 85 cents of every new dollar spent in online advertising and in Q2 2017, Facebook reported $9.16 billion in ad revenue—a 45 percent year-over-year increase. In an effort to keep their heads above water, many newspapers have implemented paywalls in one form or another. Some offer a “hard paywall” that prevents non-subscribers from viewing any content, but that strategy is rare because it suffocates audience development. More commonly, they will employ a “soft paywall;” a system that limits premium content or the number of free articles a user is allowed to view before being prompted to pay. Publishers have long been calling for a paywall system to be implemented on Facebook. In a Pew Research Center’s study, data reveals that a majority (64 percent) of people who get their news on social media rely on just one platform – most commonly Facebook. Many publishers believe that Facebook can leverage that fact to encourage more subscriptions. And it seems like Facebook is willing to give it a shot. The Facebook Paywall In July 2017, the head of Facebook’s news partnerships, Campbell Brown, announced that Facebook would launch a paywall feature, noting that initial tests would begin in October. Details are slowly emerging about what that feature might look like, with testing set to begin in just a few weeks, but Brown did offer insight into what the paywall might look like. Adopting the more common soft paywall concept, Facebook’s paywall will allow users to view 10 articles from a particular publisher before being directed to the publishers’ paywall and subscription options. But there’s a twist: if publishers want access to the feature, they will first have to enroll in Instant Articles. Launched in 2015, Instant Articles make articles load instantly when users click on the article in their newsfeed. Publishers can integrate ads, “Like” buttons to their Facebook page and publish branded and sponsored content to help monetize and grow audience networks. Additionally, Facebook boasts that 20 percent more Instant Articles are read on average, and users are 70 percent less likely to abandon the article before it loads. If those flashy numbers weren’t already enough, Facebook has said that 100 percent of the revenue generated from subscriptions will go directly to publishers. It’s a shrewd business move for Facebook—on one hand, it is fair to question the morality of strong-arming publishers into using a product that ultimately is aimed at driving an even larger share of news consumers to the platform. But, on the other hand, it is also fair to give credit where credit is due, as Facebook looks to alternate solutions to save the revenue stream for publishers. It will surely be a welcome development for those who believe Mark Zuckerberg is on a mission to destroy journalism. For publishers, enrolling in Instant Articles should ultimately be a no-brainer, no matter the morality. The impressive read-through statistics and opportunity for other revenue sources are just too tempting. But a few lingering questions remain. How much will people be willing to pay? Will publishers see a decline in readership? Will consumers turn to another social media platform for news? Will the increased revenue be enough for publishers to survive? These are the questions Facebook hopes to answer as testing of the new paywall rolls out next month, and publishers will be monitoring closely. What Are the Implications for PR Professionals? Facebook’s paywall has obvious implications for publishers, social networks, and of course the readers themselves. But the ripple will also effect public relations businesses and their earned media strategies. It’s the time-old question that every public relations professional has had to ask: “When can I expect this piece to be published?” This question becomes much more important in the media outreach planning phase, and it all comes down to the timing of the month. If a client has a positive mention in a newspaper, the potential audience is much wider at the beginning of the month when users’ 10 article limit is reset back to zero. If the same article were to run toward the end of the month, the potential audience is smaller as readers reach their article limit. News remains an inelastic good, meaning consumers expect content to be a certain price—in this case, usually $0. In an ideal scenario for Facebook, publishers and public relations professionals alike, it would be wonderful if everyone was just willing to pay for good content but that dream seems unrealistic in the modern age (and the same is true for all media, not just news). Facebook’s paywall feature may spur more conversions, but ultimately it will weed out many “free-riders” toward the end of each month. Brands should strongly consider shifting their media outreach strategy to aim for placement at the beginning of the month. In fact, it may be prudent for brands to adopt this strategy sooner given many outlets have implemented paywalls anyway. At the end of the day, earned media is a numbers game and clients expect tangible outcomes on their bottom line. An adaptable media outreach strategy that reflects constantly evolving media technology is the key to achieving those results.