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Facebook Inc (FB) Collects “Headless Chickens” To Change News Forever

Facebook Inc NASDAQ:FB

Facebook Inc (NASDAQ:FB) is about to ramp up the publication of Instant Articles, a feature that has caused a rift among, and inside, media companies. So far just five of the pieces have been published, but the firm is set to start putting 30 pieces a day out there, and it could start as soon as this week.

Facebook Inc NASDAQ:FB

Will Lewis, the CEO of Dow Jones, a financial news wire service owned by News Corp (NASDAQ:NWS) warned, in a piece published in The Guardian on June 25, of outlets running “like headless chickens” into the service. He thinks that Facebook dominance over the news might be a problem, and he’s not the only dissenting voice.

Facebook tries to control the News

Instant Articles will bring news pieces directly to the Facebook platform. That means that outlets using the service, which include The New York Times, and Buzzfeed among others, will likely rely on Mark Zuckerberg’s team for a huge amount of traffic and as revenue.

The move is a key one for Facebook. Right now when a person sees a news item on their feed clicking the link sends them to a webpage where ads are not controlled by Facebook, they’re controlled by the news site itself and often involve money being sent to arch-rival Google Inc (NASDAQ:GOOG), (NASDAQ:GOOGL).

Keeping users inside of its own app will allow Facebook to reap a larger part of the profit from the traffic it sends through its site. A note from Evercore Partners published on June 4 showed that Facebook refers the same amount of traffic to top content makers as Google, and it was about to pass the search giant out.

Facebook remains much smaller than Google in terms of ad sales, despite its huge user base and the wealth of info it holds on those who use its site.

If the firm’s product team can use Instant Articles to keep people looking for news off of the web and on its site, it can capture a key part of the ad world, and that’s great for those with shares in the firm. It may not be good for those that write the content, however.

Killing the news at Facebook

In order to launch its Instant Articles feature, Facebook has teamed up with big media firms that already control a huge swathe of the news. National Geographic, The New York Times and Buzzfeed, will give the feature enough content to get rolling, and those firms are ready and waiting for Facebook to let them publish on the platform.

In a June 24 piece, the Wall Street Journal said that “some newsrooms preparing to post a few dozen stories a day.” Facebook is trying to make the first pieces of a high quality, and has only brought in organizations that focus on real stories.

If it’s all about “cats on skateboards,” says Mr. Lewis of Dow Jones, those writing the news are not going to be able to make the system work.

The fear is that as the feature matures it will become clear to Facebook which pieces are going to make the most users click, and the amount of viral content being promoted will increase. Facebook will control what is published and how it is pushed to users.

Facebook kills the media brand

The main argument against Instant Articles appears to be the lack of branding that those making content will be able to do, and the lack of own-service ads that they’ll be able to put in their pieces.

Mr. Lewis of the Dow Jones says that the quality of the news on Instant Articles could be the real crux of the matter. “It’s about stories, whether you are producing stories that rock Fifa… or producing day after day strings of M&A scoops … if you do that, that’s how we measure success” he told The Guardian.”

Revenue based on ads where the viewer isn’t well differentiated can’t work for those that make the news. Lewis wants Facebook to “respect and help us grow our models which have to be cross-revenue models.”

If direct online ads can’t work for those that print quality original news, and it’s clear from the increase in subscription-based services that many feel it’s not possible, then brand is very important. Without heading to a site owned, designed and run by a news source, users may have a harder time telling them apart, and that could kill their ability to sell themselves.

Expanding the walled garden

Facebook is not the only firm that’s trying to take control of the news. Google revealed its own News mobile app, based off the firm’s long-running web service, years ago, but that hasn’t changed the industry.

Apple Inc. (NASDAQ:AAPL), which revealed an upcoming Apple News app at WWDC 2015 on June 8, is a much more interesting player. The firm, alongside Facebook, is building an alternative to the web, and one that could change the way that both Google and those that publish the news earn their money.

Facebook is the most dangerous firm in the space because of the sheer number of users it commands, but Apple could do something even more drastic. Because the firm doesn’t rely on ad revenue, it could give all of the sales from news to those that publish on the platform.

There is little info out there on how Apple News will work in this respect, but we already know what Tim Cook thinks of ads. The problems for Apple is that it can’t offer the same quality of ads to publishers. The firm doesn’t want to collect user info and sell it, because that would kill part of its key strategy for the years ahead.

“Walled Gardens” like those soon to hold the news at Facebook and Apple, are going to become more and more common as big tech concerns seek to kill the dominance that Google has on the web. That will change the news, and there’s little chance of a publisher being able to hold out for very long against the tide.

Changing the news

Those “headless chickens” that are running to Facebook in order to get a solution to their problems with the news are going with the tide, though they may be a little bit ahead of their peers. Mr. Lewis’ firm Dow Jones has not signed up for Instant Articles, nor has any publisher with News Corp, the parent company of Dow Jones.

News has a lot of problems right now, despite those warning of disaster ahead if Facebook gets its way. A large amount of traffic still depends on Google and Facebook, and Instant Articles aren’t going to change that right away.

Facebook is, however, likely to see the change quickly, and those with shares in the firm are betting that Instant Articles will form part of the big bet on killing Google. Shares in the firm are up more than 11% since the start of the year.

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