Latest Facebook Pitch to Publishers Offers Licensing Fees

Facebook, in preparation for a news section due to launch later this year, has offered news outlets as much as $3 million to license headlines and article previews. According to sources, Facebook has pitched Disney’s ABC News, Wall Street Journal parent Dow Jones, The Washington Post and Bloomberg, for deals that would last for three years. Google already offers AMP (Accelerated Mobile Pages) allowing articles to load quickly on smartphones, and Snapchat has revenue-sharing deals with publishers on its “Discover” tab.

The Wall Street Journal reports that, according to eMarketer, “combined, Facebook and Alphabet’s Google earned 60 percent of all digital advertising revenue in the U.S. last year.” According to sources, “Facebook has proposed giving news outlets discretion over how their content will appear in the news tab … allow[ing them] to choose between hosting their stories directly on Facebook or including headlines and previews in the tab that would send readers to their own websites.” In the latter case, “the news tab would be a generator of web traffic for news outlets in addition to a source of licensing revenue.”

Google has been “criticized for not compensating news organizations for the headlines and story previews surfaced by its search engine,” with News Corp. executive chairman Rupert Murdoch and BuzzFeed chief executive Jonah Peretti urging Google and Facebook to “pay organizations that provide quality news.”

Although Facebook pays licensing fees for some content, for Instant Articles, for example, it only split ad revenue with news outlets. Chief executive Mark Zuckerberg has stated he wants to highlight “more high-quality news” and create a “business model and ecosystem to support it,” but “some publishers remain skeptical of Facebook’s latest attempt to fund content.”

“It’s asking a whole lot of publishers in terms of asking us to commit to something that none of us have any idea if it’s going to work,” said one source.

The New York Times reports on how Facebook’s past actions have made publishers skeptical, noting that Instant Articles, intended to enable stories to load faster and thus offer a “better user experience,” never took off. But Facebook’s latest pitch to publishers — that the Facebook app wouldn’t load the entire article but instead link to publishers’ sites — is more appealing than the Apple News app, “which costs subscribers $10 a month, pulls in entire articles from partner publishers, which include Vice Media and New York magazine.”

Publishers split 50 percent of the revenue, based on views, and Apple takes the other half. That led numerous publishers to decline to participate.

“We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else,” said the New York Times Company chief executive Mark Thompson. “We’re also generically worried about our journalism being scrambled in a kind of Magimix [food processor] with everyone else’s journalism.”