Tag Archives: facebook

Facebook pays for content. Therefore, it’s a media company

Recently, Facebook COO Sheryl Sandberg was asked in an interview whether Facebook is a media company. “At our heart we’re a tech company,” Sandberg said. “We hire engineers. We don’t hire reporters. No one is a journalist. We don’t cover the news. “

Well, that’s not exactly true. In this video, I explain why.

Twitter might beat Facebook at live video

Everyone assumed that when Facebook launched Facebook Live, it would be the death to Twitter’s own live-streaming efforts.

But then Facebook dialed back on its live efforts to focus on on-demand video in its newly-launched Watch tab. Meanwhile, Twitter is seeing some success with live streaming, especially with its newly-launched Buzzfeed show AM to DM. In this video I explain why Twitter might just win the live-streaming war with Facebook.

Facebook is a victim of its own scale

There have been a number of disturbing reports coming out of Facebook recently, from its allowing Russian trolls to spend $100k on influencing our elections to the recent ProPublica investigation that revealed it allows advertisers to target anti-semites. As I explain in this video, almost all of these controversies can be traced back to one source: Facebook’s quest to operate at massive scale.

Why news publishers are investing in Facebook A/B testing

naytev

Dan Acton remembers the exact moment when he became sold on A/B testing Facebook content.

Acton is the social media manager for DramaFever, a video streaming company owned by Warner Bros that uses a Hulu-like model to license and stream Korean and other Asian TV content for an English-speaking audience. Many (though not all) of these shows are romantic comedies. To promote the shows DramaFever licenses, Acton and his team produce short videos they then upload to Facebook. “Sometimes it’ll be clips from shows, or trailers and teasers for upcoming episodes.” he told me. “We also get a lot of original content produced from Korea, like shout outs from the actors or behind-the-scenes footage that nobody else has.”

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Silicon Valley once steered clear of original content. What changed?

apple tv

By the time news outlets began reporting that Apple is actively negotiating with Hollywood executives to produce exclusive programming for its fledgling television platform, none of us seemed surprised that a major tech company would invest so much money in original content.

If anything, Apple is late to the party. In 2011, Netflix, which until then had been just a tech platform that allowed one to stream already-released movies and old seasons of television shows, plopped hundreds of millions of dollars into the creation of premium shows, greenlighting them before even seeing a pilot. Amazon wasn’t far behind, launching a bevy of shows to mixed reviews. In 2012, YouTube shelled out $100 million to both lure established media companies onto its platform and allow its already-existing stars to up their games. These days, not a week goes by without a major tech company announcing a major content play, whether it’s Yahoo’s resurrection of the show Community or Facebook’s offering of huge advances to YouTube stars in order to entice them onto its native video platform. Twitter recently attempted to purchase the millennial news site Mic, and prominent venture capitalists have bought huge stakes in companies like BuzzFeed, Vice, and Vox, valuing these news outlets in the billions of dollars.

Viewing all this activity, it’s hard to believe that, a mere decade ago, the tech sector considered original content anathema to everything it stood for, a vestigial hangover from the days when the barrier to entry for content production and distribution was relatively high and therefore lucrative.

Circa 2007 – 2008, the practice of creating original content seemed to be a dying profession. The music industry had been completely eviscerated in the wake of Napster and other file-sharing programs. Newspapers were well into their decline, already kneecapped by Craigslist and facing a print advertising exodus. Magazines weren’t far behind them. The book industry, while not exactly suffering, wasn’t thriving either, with most sales coalescing into a handful of conglomerates who were already bracing themselves to have their asses handed to them by Amazon. The television industry seemed relatively sturdy but most assumed its day of reckoning would eventually come.

This is when we saw the rise of platforms that were fueled primarily by user generated content. First Myspace, and then later Facebook, YouTube, and Twitter. Media companies that were suffering looked at Keyboard Cat and assumed that this was the future of content, and Silicon Valley didn’t seem to disagree. Original content was expensive and difficult to scale effectively; why hire 60 journalists to create content when you could spend that money on 30 engineers who would then build a platform on which millions of users would generate content for free?

So what changed? Why are we seeing the sudden emphasis on premium programming in a world where everyone with a GoPro seems willing to upload their videos for no payment?

Well, it turns out that original content actually is scalable, particularly when it’s hosted on the right tech platform. Netflix just announced in July that it had reached 65 million subscribers, a number that would have been difficult to attain when it was merely licensing reruns, especially as other low-cost streaming services have entered the market. And sure, it’s possible that your amateur video of cat could hit the viral stratosphere, but most don’t, whereas YouTube stars can guarantee millions of views for each video posted. The majority of BuzzFeed listicles reach at least a million views, which means that your average BuzzFeed staffer can reach an audience that’s similar in size to The Daily Show’s.

And though viewers have flocked to user-generated content, advertisers still prefer premium programming, especially if it attracts hard-to-reach demographics. The critically-acclaimed USA Network show Mr. Robot only attracts about 3 million viewers per episode, a mediocre turnout when compared to the network’s other hit shows, but it’s having to beat away advertisers with a stick. “It’s a hot property right now,” network president Chris McCumber told New York Magazine. “We have more demand than we can handle for Mr. Robot, and it’s bringing in new advertisers.” And with brands increasingly shifting budgets toward native advertising and away from display, it suddenly behooves tech platforms to have in-house content expertise.

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Finally, tech companies have discovered that exclusive content is a great way to lock users into a platform. A decade ago, there were only a handful of social networks that had the millions of users needed to effectively scale user generated content. Now let’s consider the number of platforms today that have at least 50 million active users: Facebook, Twitter, Google+, LinkedIn, Pinterest, Instagram, Snapchat, Tumblr, WhatsApp, Foursquare, YouTube, Flipboard. I’m likely just scratching the surface.

We now have dozens of networks competing for our attention, and our loyalty to any one platform is tenuous at best. Exclusive content, even if it makes up a relatively small percentage of the content posted to the platform, gives us that much more incentive to choose one platform over the other. Medium, the blogging platform launched by Twitter co-founder Ev Williams, employed this strategy well when it hired top-tier freelance journalists to write on its network before opening it up to the masses (I and call this the “mullet strategy”). Of course, nobody has capitalized on this approach better than Netflix, which is now spending north of $700 million on content you can’t watch without a Netflix subscription.

The question now is how traditional media companies, many of which have been producing original content for decades, will respond. Already we’re starting to seeing seismic shifts in the media landscape, whether it’s HBO launching a standalone app or magazines like Forbes transforming themselves into platforms. News companies are also inking content distribution deals on platforms like Facebook and Flipboard with promises of revenue sharing.

Perhaps the late David Carr was right when he said, in 2012, that “big news is still the killer app,” by which he meant original content. Given how much we keep hearing about the current “golden age of television” and the rise of millennial-focused news companies that are reaching billion dollar valuations, I can’t help but agree. A new dawn is upon us, and if you’re a content producer like myself, then take a few moments to rejoice.

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Why are tech companies scrambling to create original content?

Hand Drawing Content Flow Chart

For the longest time it seemed major tech platforms like Facebook, Twitter, and Google wanted nothing to do with professional publishing, and by that I mean hiring professional content creators, i.e. journalists, to create polished media content. Why? Because Silicon Valley hates anything that doesn’t scale. Original content creation is labor intensive, expensive, and can’t be automated with code. The content created has a limited shelf-life, thereby decreasing the longterm ROI for the labor devoted to it.

You can see this philosophy reflected in how media companies have framed themselves to Silicon Valley investors, and by that I mean they’re attempting to pretend they aren’t media companies at all. BuzzFeed, when announcing a $50 million investment from Andreessen Horowitz, described itself as a company with “technology at its core,” and one of the investors compared it to Tesla and Uber. We’ve also seen the rise of the “platisher,” which is a media company that tries to create a platform for user-generated content (for instance, Forbes’ massive contributor network) so it can scale well beyond the limits of its paid editorial staff.

Why, then, have we recently seen tech behemoths, most of which already boast hundreds of millions of users, trying to enter the original content game? In some cases this has meant merely opening up their platforms so media companies can host longform content directly to them, as is the case with Facebook and Snapchat. Both have entered into partnerships with major news orgs to host content directly within their app ecosystem in exchange for a share in revenue for any ads sold against that content.

But other tech companies are wading expressly into original content creation, either by hiring journalists and artists to produce exclusive work for these companies’ platforms or by outright buying up entire media companies. The most obvious example is Medium, the blogging platform headed by Twitter co-founder Ev Williams. Though anyone can create a blog on Medium (and many do, including me), the company also employs editors and freelance journalists to produce magazine-like publications (my favorite is Backchannel, edited by Steven Levy).

A few months ago, Reddit launched a professionally-produced podcast, then followed it up with a curated email, and is now employing a team of videographers to produce original video. Business Insider recently reported that Twitter has made attempts to purchase Mic, the policy-oriented news site that’s geared toward millennials. Facebook and YouTube, both at war for top video talent, have dished out millions of dollars to entice creators into producing video exclusively for their platforms. Amazon CEO Jeff Bezos decided it was worth $250 million of his own money to buy up the Washington Post and now Verizon is purchasing AOL, which has transformed itself from a platform to a media-oriented content company, for $4.4 billion.

So why are tech companies suddenly interested in labor-intensive, unscalable content creation? My guess is that it has something to do with a combination of the 80/20 rule and the 1 percent rule. Both embrace the idea that the most influential users on any platform make up a tiny percentage of the overall user population. It’s no secret that the media represents disproportionate influence on major social media sites like Twitter, both in terms of branded news org accounts and the personal accounts of their reporters.

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As I’ve written before in regard to Medium, tech platforms will sometimes use what is called a “mullet strategy” (business in the front, party in the back) by commissioning high quality content to attract readers with the hope that some of those readers will stick around to launch and run their own user accounts on the platform.  As I wrote in November, “You’re essentially paying those early influencers to populate your network with content with the hope that the masses will come clamoring to join the club.”

This is why YouTube is shelling out money to keep its stars under its own roof. One could argue that losing a few YouTube personalities wouldn’t matter for a platform that has over 1 billion users who upload 300 hours of video to its platform each minute, but YouTube realizes these stars are the foundation on which the entire network stands. If they were to suddenly leave for Tumblr or Facebook’s video platform, then many of their fans will also begin uploading video content to these platforms, thereby planting the seeds that could grow into a massive user base. Influencers matter, and these tech platforms realize that sometimes you need to pay to keep the influencers from decamping.

So perhaps the notion that original content creation can’t scale is outdated. Instead, it is a means to an end, a way to keep the business flowing in the front so that the unwashed masses of amateur users can be lured into joining the party in the back. Old media isn’t dead after all; it’s just now used as bait.

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How Facebook is trying to pull a Netflix

Facebook-drives-traffic

Those following the ongoing travails of the digital journalism industry have likely read by now that Facebook has been making direct overtures to news companies — many of which rely overwhelmingly on the social network for traffic — arguing that because their mobile sites offer an inconsistent (read: terrible) user experience, they should host their news content within Facebook’s ecosystem. In return for this handover of content, Facebook will share the revenue for any ads it sells against it.

Unsurprisingly, many have come to regard this offer as a Faustian bargain, one that will give Facebook even more power over news publishers until it can leverage that power to make them obsolete. Writing for The Awl, John Herrman argued that these publishers will give in by rationalizing the move as mere diversification of revenue.

Handing over a major source of revenue—not to mention analytics and audience data and the establishment of boundaries—to an outside platform might sound like a risky transfer of power. It would be! But a publisher might be able to dismiss that concern by pointing out that many publishers are already dependent on vendors and ad agencies they don’t control, rather than directly negotiated advertising deals, and that the industry seems to be moving further in that direction, and besides, platform anxiety didn’t really stop anyone from trying iOS apps, right?

It’s easy to detect a heavy dose of skepticism in Herrman’s writing — he’s been a longtime critic of the viral content mill born in part to suck more traffic out of Facebook — but this wouldn’t be the first time media companies will have handed over large amounts of valuable content to another platform: in fact, Netflix’s entire business model is based on just this sort of transaction, and yet so far it has only added to media companies’ bottom lines, providing an additional source of revenue generation.

When television networks syndicate the rights to their programming to Netflix, they’re sending it into a black box where they can extract no user data — all that goes to Netflix — and at the same time they’re giving cable subscribers that much more ammo to cut the cord and just consume media from Netflix. But so far, TV companies have not been hit as hard financially as other forms of media, including record labels and newspapers. For one, they’ve diversified their holdings, launching multiple channels across the cable dial (Fox owns Fox News, FX, and FXX). Also, Netflix has received competition from the likes of Amazon, Google Play, and Hulu, both in terms of viewers and for the rights to TV shows. And now we’re seeing some channels launch their own standalone streaming apps. For the longest time you still needed a cable subscription to access them, but, with the launch of a standalone HBO Go app, we’re likely to see others try out subscription services outside cable.

In fact, news publishers can learn a lot from how TV companies approach streaming services like Netflix and Amazon. For one, they don’t hand over the entirety of their content offerings; you’ll find plenty of NBC shows on Netflix but far from its entire roster. News publishers could set aside certain stories for Facebook while publishing many others exclusively on their websites. TV networks also produce some kind of delay between when a show airs on cable and when it’s available on Netflix — this helps prevent them from cannibalizing their lucrative cable audience. News publishers could also delay uploading content to Facebook, giving its web version a headstart in collecting readers.

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Most important, TV companies ensure their audience isn’t dependent on just one platform. Their stations are available on cable, satellite, antenna (if they’re one of the main broadcast neworks), Hulu, Netflix, Amazon, and their own websites and streaming apps. Though Facebook is certainly the most powerful of social networks, there are still large userbases present on major platforms like LinkedIn, Pinterest, Twitter, Email, Flipboard, and YouTube. Not to mention their ability to create their own standalone-apps for smartphones.

So while it’s healthy to show some skepticism (as I have) when entering any kind of content partnership with Facebook, it’d be foolish to ignore the collective power of Facebook’s engineering base and its success monetizing mobile users, especially as display advertising, the main revenue source for news publishers, performs so poorly on mobile. Turning away that revenue may hinder Facebook from gaining even more monopoly power over the internet, but it could just as easily mean cutting off your nose to spite your face.

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The new evolution in blogging: combining longform with shortform

Ev Williams, co-founder of Medium

Ev Williams, co-founder of Medium

In August of last year, I wrote about how Medium, the blogging platform co-founded by Ev Williams (who also co-founded both Twitter and Blogger), is, in part, an attempt to bring us back to the web we lost. One can argue, as I did, that social platforms like Twitter and Facebook brought tremendous benefits to the internet. These networks created millions of casual bloggers (I use the word “blogger” loosely here) by providing a centralized platform from which to publish, thereby largely democratizing the spread of content on the web. The unfortunate side effect of this was that millions of independent bloggers gave up their own websites and settled into these platforms where they could reach a more consistent audience, even if it meant relinquishing the controls offered by a more robust CMS and the ability to write longform content. Sure there’s always been blogging tools still out there if you wanted to write longer pieces, but they didn’t offer the network effect of Facebook or Twitter, where your followers were constantly checking in looking for new updates. Your only way of letting readers know you had a new post up was through RSS (which never had high adoption rates) or by linking to it from Facebook or Twitter and hoping you could get enough shares or retweets to drive real traffic.

The enticing aspect of Medium, in addition to its slick design, is the ability to apply the network effect to longform blogging, allowing one to amass an army of followers so you don’t feel as if your content is playing to an empty room. Within a matter of months after Medium’s launch, we began to see the emergence of independent voices penning longform essays and blog posts, and it’s begun to feel like a return to the old-school blogosphere, the anti-establishment media that flourished and excited me in the mid-2000s.

Of course, Medium faced a dilemma — not everyone has a regular longform post in them, and its platform didn’t scratch that itch you have when you just want to sound off a few sentences on a topic without having to craft a carefully-worded essay around it. For that kind of insta-punditry, Twitter and Facebook still remained the only places to fulfill that desire.

Until now. Yesterday, Williams announced a major change to Medium’s technology, “We added a way to post right on the homepage of Medium,” he wrote. “Start writing instantly. If you get inspired to turn it into something bigger, click over to the full-screen editor. Otherwise, keep it simple and publish it straight from there.” I navigated over to the front page, and sure enough, there was a status bar waiting for me, not unlike the one sitting atop my Facebook newsfeed. Actually, it is slightly different: Medium’s status bar lets you do things like insert hyperlinks as well as bold and italicize words. You can also upload photos and arrange them within the text any way you want.

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And so we finally have the merging of shortform social media posts and longform blogging. And Medium isn’t the only network to combine the two. For a long while now, LinkedIn has provided the ability to post Twitter-like updates to a newsfeed, but last year it expanded its Influencers blogging platform to everyone, allowing its millions of users to post longform thought leadership posts directly to LinkedIn. Anecdotally, I can report that an increasing number of people within my own professional network have started posting there (I upload at least one piece a week), and the company recently announced that users are publishing 50,000 pieces a week. It’s also worth noting that Tumblr has always provided the ability to post shortform and longform content, though it’s primarily known for its shorter, image-heavy posts.

It’s hard not to be encouraged by such developments. Yes, there’s a very valid argument to be made that we’re still giving too much power to these large social platforms, but this is at least one instance where they’re giving some power — in the form of more control over how our content is presented — back to us. The question now is how Facebook will respond. We’ve heard rumors that it wants to offer some way for news outlets to be able to host their content within Facebook’s ecosystem, but does this mean everyday users will have the ability to post longform content to the social behemoth? Hopefully, these recent moves from Medium and LinkedIn will spur it to action.

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One way in which Facebook is just like 1990s-era AOL

aol developing

There was a long span of time during which the tech world assumed Facebook would be just another Myspace. That’s because nearly every social network invented up to and including Myspace eventually peaked and then waned, losing millions of users in a matter of months, eventually existing as little more than a punch line to jokes. The thinking went that once a social network reached a certain saturation point where it no longer was considered “cool,” its influential users would abandon it for some new shiny object.

Facebook internalized a different lesson from Myspace: never rest on your laurels. Mark Zuckerberg recognized that Myspace’s real failure was its attempts to maximize revenue at the expense of user experience. Facebook capitalized on the data collected from its millions of users to iterate and adapt its platform so that it continued to be indispensable for those who used it. And when users began to desire features it couldn’t offer, it would acquire companies that could offer them.

Though there’s still some hand-wringing about Facebook losing teen users, it’s widely assumed now that the company is here to stay. Now, our focus has shifted to trying to understand the role Facebook will play once it’s reached full saturation within the developed world, a benchmark it’s quickly approaching. That’s why we’ve witnessed Facebook’s attempts to appeal to a wholly new market: the developing world. We saw this with Zuckerberg’s announcement, in 2013, of the launch of Internet.org, a nonprofit focused on bringing internet connectivity to the developing world. And then earlier this year Facebook launched a “lite” version of its mobile app meant to function in an environment with poor internet connectivity.

Moves like these are seemingly paying off. It announced in July that its Asian userbase had grown by 26 percent in the past year.  Other parts of the developing world saw 25 percent growth. Though Facebook’s ability to monetize these new users is likely minimal, it’s becoming firmly entrenched in countries that are very quickly growing their middle class via expanding economies.

But as more of these users migrate online, we’re finding that their view of and interaction with the internet is very different from ours. Surveys of those living within the developing world about their online habits returned curious results: a significant number of people who claimed they’ve never used the internet also claim they regularly use Facebook. What this means is that users are spending nearly 100 percent of their time on the Facebook app without recognizing that it’s part of a much larger internet ecosystem. In a survey commissioned by Quartz, people currently living in Indonesia and Nigeria said they rarely ventured outside Facebook. “In both countries, more than half of those who don’t know they’re using the internet say they ‘never’ follow links out of Facebook, compared with a quarter or less of respondents who say they use both Facebook and the internet,” Quartz wrote.

While reading this article I couldn’t help but think of my own introduction to the internet via 1990s-era AOL. Back then, AOL was a walled garden you signed into, and after that excruciatingly long waiting period of dial-in you were presented with a welcome screen offering several categories and options for navigating AOL. At the bottom corner was a little icon that simply said “Go to internet.” It’s so tiny that I circled it in red below:

aol welcome

Venturing into the “internet” felt like entering the Wild West (this was pre-Google, when it was a lot more work to discover things on the open web if you didn’t know where to look). I rarely found myself visiting the internet, and instead stayed within AOL’s wall where I could enter chat rooms (as a 13-year-old, I especially enjoyed the “adult” chatrooms), instant message with my friends, and send email. What more could I want?

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But eventually the web became more organized and navigable, and suddenly I and millions of other users realized we didn’t need AOL’s walled garden after all and there was a multitude of wonders awaiting us in the form of blogs and forums and email you didn’t have to pay $30 a month to use.

It’s curious that we are voluntarily returning to that walled garden with our adoption of Facebook. Yes, it’s certainly a leaky garden with easy access back out into the web, but it’s still a very closed system with uniform design and strict rules about what is and isn’t allowed.

Part of the reason for this could be that in the developing world many people can only access the internet through their phones, and navigating the open web on mobile is still a clunky experience even on a nice, expensive phone. In such an environment, the structured offering of a Facebook mobile app is much more welcoming and easy to use.  Just as 90s-era AOL provided some welcome structure to guard against the Wild West nature of the internet, Facebook simplifies a mobile experience that isn’t conducive to the open web.

Of course with the rise of phones with larger screens, responsive design, and HTML5, the question now is whether users will continue to remain within Facebook’s walled garden, or if, like internet users in the early 2000s who began to abandon AOL in droves, mobile phone users will venture back into the open web. Given the increasing worry over the amount of leverage and control Facebook has on our lives, I can’t be the only one who, while grateful that Zuckerberg is working to expand internet connectivity, also hopes that this new internet connectivity isn’t to the sole benefit of Facebook. Although I enjoyed the chat rooms and instant messaging offered up by AOL, my life is indisputably richer due to the introduction of the open web.

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