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May 19, 2022updated 30 Sep 2022 11:20am

The news industry’s $1bn question: Is Meta about to unfriend journalism?

By William Turvill

Some of the world’s largest publishers fear that Meta could be poised to pull the plug on multi-million-dollar licensing deals as part of a lurch away from professional news.

The technology giant has paid out hundreds of millions of dollars to the journalism industry in recent years through Facebook News partnerships, philanthropic initiatives and other schemes. Last year, it committed to invest at least $1bn into news between 2021 and 2024.

But now, with several governments around the world threatening to introduce legislation that would force the tech giant to negotiate larger news licensing deals, publishers believe Meta wants to distance itself from professional journalism.

Over the past week, Press Gazette has spoken to eight senior news industry sources based across the US, UK, Canada and Australia. Several of them are senior figures within publishers that have signed multi-million-dollar Facebook News licensing deals.

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There is a general consensus among these sources that Meta is gearing up to change its relationship with news. But there is disagreement on how far Mark Zuckerberg’s tech giant will go.

At one extreme, there is a belief that Meta – at the behest of Zuckerberg and Nick Clegg, the company’s president of global affairs – would like to rid its platforms of professional news in favour of community-generated content (thereby potentially averting legislation that would force it to negotiate cash-for-content deals with publishers).

Others say Meta is aware that the relevance and credibility of its platforms – especially Facebook – would crumble without professional news content. They say Meta, anticipating the spread of Australia-style news-tech legislation, is “posturing” and attempting to drive down the price it will be expected to pay publishers.

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The issue came into the spotlight for many publishers last week when The Information, a well-respected US tech news title, reported that Meta is “considering reducing the money it gives news organisations as it reevaluates the partnerships it struck over the past few years”. Citing people familiar with the matter, The Information said Meta needs to cut costs generally and is rethinking “the value of including news in its flagship Facebook app”.

A source at a major UK publisher said Meta has been “dialing down news on newsfeeds for a while” and so they had been anticipating a change in approach. “It is a diminishing priority for them,” they added.

If Facebook was to be stripped of news content altogether, they added, it would seem a “strange move” for a platform that people rely on for information. “This might be a way of telling governments: Don’t waste your energy. We’re not interested in news.”

The context: When and why Meta started paying for news

For news publishers across the world, Google and Meta (the corporation formerly known as Facebook that also owns Instagram and Whatsapp) has been seen as an unavoidable partner for more than a decade. If a major news brand is not on Facebook, it is losing audience to a rival.

As well as being partners with publishers, Meta and Google are also rivals for advertising revenue. Over the past decade, publishers have come to know Google and Meta as the Duopoly of the digital ad world. News companies believe that this dominance is helped by their content and that the tech giants should therefore contribute to the cost of newsgathering.

Emarketer estimates that the companies accounted for 46% of the global digital ads market in 2016 and that this dominance has since grown to above 52%. In some individual countries, like the UK and Canada, estimates have risen as high as 80%.

In 2021 the pair took more than $300bn out of the global advertising market.

In 2015, amid rising pressure from the journalism industry, Facebook launched Instant Articles, a scheme under which publishers could share ad revenues on content posted directly to the platform. The programme proved to be a flop with many publishers – The Guardian described its financial returns as “woeful” – which pulled out within a couple of years.

Facebook and Google’s philanthropic programmes – the Facebook News Project (launched in 2017) and the Google News Initiative (2018) – have provided the news industry with hundreds of millions of dollars in funds.

But publishers have continued to press for payments in exchange for the value of their content. Recognising that the tech duo would not voluntarily enter into such negotiations, journalism industries around the world have lobbied their governments to intervene.

In 2019, as jurisdictions around the world started to seriously consider such interventions, Meta launched the Facebook News tab in the United States. For publishers, this was a significant moment because, for the first time, the tech giant was paying to license news content – headlines, photos and previews to articles – while linking through to their websites.

Facebook News tab terms and conditions

The terms of Facebook News deals are guarded by non-disclosure agreements. But, through background conversations with publishing partners, Press Gazette’s understanding is that most or all US publishing partners signed three-year deals starting in October 2019. Many subsequent deals struck elsewhere have also been three years in length.

Large metropolitan US news partners are paid roughly $500,000 a year, while larger, nationally-focused titles like The New York Times, Wall Street Journal and Washington Post are paid millions of dollars each year.

A couple of months before Facebook News was launched in the US, The Wall Street Journal reported that Facebook was offering “as much as $3m a year”, or $9m over three years. But a source at one major news brand indicated that their deal was worth more than $3m a year.

The Facebook News tab launched in its second market, the UK, in January 2021. Partners included Mail Online, The Guardian, The Telegraph, Sky News, the Financial Times and several large local publishers. Notably, News Corp’s UK titles did not sign up, and have still not signed up despite the company’s US and Australian publications having done so.

Press Gazette is aware of one national title that is paid around £1m a year and of one regional publisher that earns roughly £400,000 annually for its participation in Facebook News.

The programme launched in Australia last year as Canberra prepared to introduce its News Media Bargaining Code, which effectively forces Google and Meta to negotiate licensing deals with publishers.

Meta has since agreed partnerships with all of Australia’s largest news companies – including News Corp, Seven West, Nine Entertainment and ABC – as well as several smaller publishers.

It is not known how much Meta is paying publishers for their participation in Facebook News. But Google and Meta together are said to be paying out more than AU$200m a year £113m) to news companies. Several sources have estimated to Press Gazette that Google deals are roughly double the size of Meta’s contracts. This suggests Meta is paying out more than AU$65m a year (£37m) to publishers in Australia.

In addition to the Facebook News tab, Meta has continued to roll out other news-related schemes through which it pays out millions of dollars a year to publishers. In Canada, 18 publishers have signed up to its News Innovation Test. In Australia, it has the Facebook Australian News Fund, the Newsroom Sustainability Fund and the Public Interest Journalism Fund.

What has changed? The threat of regulation

For many years, both Google and Meta stood firm against the claim by publishers that they earn money from news content and should therefore pay to licence it on their platforms.

The 2019 launch of Facebook News (and 2020 launch of Google News Showcase), therefore, marked an apparent step change – ostensibly, a moment when Meta recognised that it should pay for the value of news.

Behind the scenes, however, publishers have told Press Gazette they believe Meta’s News tab, as well as other payment schemes, were a “PR move” designed to placate the journalism industry and keep regulation at bay. To support this theory, some publishers shared anecdotes of news titles being paid Facebook News dollars months before going live on the platform.

This alleged mindset may explain why Meta is apparently gearing up to reduce news payments – because widespread regulation now seems an inevitability.

Last year – in the face of numerous warnings, threats and an increasingly controversial ‘news’ ban on Facebook – Australia pushed ahead with its News Media Bargaining Code.

Although Google and Meta have not been formally “designated” (see explanation here) under the code, it has forced them to strike lucrative, multi-year contracts with news companies across Australia. Rod Sims, the code’s architect, estimates that it has resulted in annual deals worth more than AU$200m overall.

A Press Gazette investigation into Google News Showcase last year found evidence that Australian publishers are paid significantly more by Google than equivalent news companies in other countries. Industry sources estimate that Australian publishers also enjoy higher-than-average payments from Meta.

The perceived success of Australia’s code has inspired the governments of Canada and the UK to commit to similar legislation. Publishers in the US, and several other countries around the world, are also increasingly confident of securing Australia-style laws of their own.

Several of Press Gazette’s journalism industry sources now speculate that Meta has accepted more Australia-style laws are on their way – meaning that “PR”-inspired payments aimed at staving off such regulation may now be worthless.

What happens now?

Plugged-in publishers, guided by conversations with Meta insiders, have been anticipating a change in approach from the company for several months now. And last week’s Information article offered some clues about the tech firm’s future strategy.

The Information reported that Meta “won’t necessarily end its news partnerships” but may change their “nature”, possibly by switching focus from “links to news articles” to “news content in the form of short videos”.

If short videos become a focus on Facebook – as on Tiktok and, to an extent, on Meta-owned Instagram – this will undoubtedly present an opportunity for some news companies, especially those with multimedia capabilities.

But for others? A source at one major US news company fears that Meta is signalling “the good times are over” for publishers with Facebook News deals. They do not expect their three-year Facebook News contract to be renewed this October. A senior source at a regional US news outlet said they had heard nothing from Meta about renewing their contract.

Concerns are less immediate for publishers in other countries, like the UK and Australia, where multi-year contracts still have years to run.

Still, several of Press Gazette’s sources were sceptical that Meta really is willing to step away from news, even in the face of more Australia-style regulation.

Jason Kint, the chief executive of online news trade body Digital Content Next, pointed for evidence to a recent Wall Street Journal investigation. Citing Meta whistleblowers, the WSJ alleged that when Meta blocked news in Australia, while protesting the News Media Bargaining Code, it intentionally also blocked pages linked to hospitals, emergency services and charities.

“I think WSJ’s report on Facebook’s actions in Australia to avoid funding news by threatening and then overblocking public resources during a pandemic just added to the pile on of evidence that Facebook runs its company around policy and PR interests,” said Kint. “It also showed Campbell Brown [the head of news partnerships at Facebook] was a key actor in this project so I don’t put a lot of faith in any narratives driven from Facebook. In other words, they’re full of it.”

David Chavern, chief executive of the News Media Alliance, suggested that Meta’s apparent loss of interest in news appears to be a “negotiating tactic” ahead of further Australia-style regulations. 

“Facebook is nothing if not repetitive, and this just looks like a version of their Australia threats,” he said.

“Quality news drives engagement and also acts as an answer to many misinformation issues. They want it and need it, even if they claim otherwise.

“But they also want to minimise any compensation they may have to pay for it. Rather than productively engaging in discussions about value, they start with threats. It is a pretty tired approach at this point.”

Meta did not respond when asked for comment in advance of this article’s publication. In response to the whistleblower allegations reported by The Wall Street Journal last week, a spokesperson said: “The documents in question clearly show that we intended to exempt Australian government Pages from restrictions in an effort to minimize the impact of this misguided and harmful legislation. When we were unable to do so as intended due to a technical error, we apologized and worked to correct it. Any suggestion to the contrary is categorically and obviously false.”

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