Facebook Dominates While Newspaper Publishers Pivot to Video: Takeaways for Channels?

Print publishers like The Washington Post, The New York Times and The Guardian are pivoting to video.

However, their turn to video fuels Facebook‘s dominance of Social Media while adding costs to the suffering newspaper business model.

Strategy:

The strategy of former print media players is to:

Chart Tells the Story

However, the overwhelming majority of the views of the publishers’ videos take place on Facebook, and not on their own sites.
This is the powerful message of the chart above from Tubular Labs that popped off the screen in a recent Digital Daily.
It’s also noteable that the native online specialists Huffpo and Mashable dominate the reach of newspapers who are struggling to move beyond ink and paper.

Negatives for Legacy Print Publishers

They incur all the costs of training, development and production of their video content.
Facebook and other social media distributors incur none of these production costs for 3rd party video.
And FB earns around 50% of the revenues from ad sales that are associated with the publishers’ video that appears on the FB feed.
The CPM (Cost Per ‘000) earned on Facebook is a lot less than the CPM that quality brands like WAPO and NYT earn for views on their own sites.
The publishers are therefore gaining exposure and some revenues, but they are collectively helping to build Facebook into an ever-more dominating behemoth.
They are also eroding their own premium brand values when their videos are scrolled into the definitely non-premium Facebook newsfeed.

Facebook Takes a Page from the Cable / Satellite Playbook

A generation ago, Cab/Sat operators launched popular entertainment channels, and then expanded into unscripted niches including documentaries.
Their unscripted channels like Discovery initially relied on acquired programs.
They built their brands and audiences while paying a fraction of the production cost of their scheduled programming.
When these channels reached scale and were loaded with ratings and other predictive viewing data, they commissioned more and more fully-owned programs.
Their 3rd party suppliers of acquisitions mostly faded away.

Facebook’s Video Strategy…

Facebook will follow a similar path…
FB captures valuable customer data from every one of those 200 million views of NYT or WAPO videos.
The data include the viewers’ demos, content preferences, consumer habits, hobbies, and much, much more!
FB is now fully committed to commissioning programs that it owns.
Learning from the proprietary data earned from distributing premium video content from 3rd party suppliers like newspaper publishers, FB is prioritizing the most popular and profitable content offerings.

…It Will Get Tough for the Publishers

FB originals will inevitably displace many of the most appealing and profitable video offerings from the publishers and other suppliers.
The newspapers will lose video views, further pressuring their business model.
Many analysts forecast that only newspaper brands like WAPO that are owned by bazillionaires like Amazon‘s Jeff Bezos will survive.
The New York Times was the greatest brand in the news business, but made more than a generation’s worth of bad strategic decisions in the twin eras of cable / satellite and now online content. Many now wonder if the once-revered ‘gray lady’ will survive her present struggles.

Will Channels Suffer, Too?

I don’t have the data, but it’s a reasonable assumption that the takeaways from the chart are somewhat comparable for unscripted networks like Discovery and Nat Geo.
The channels are losing distribution and viewers, and are also looking to FB and other social media platforms for viewers and to propel their brands into the next generation.
However, unlike the newspapers, the channels enjoy a more sustainable business model that is based on two rev streams: advertising plus fees from long-term distribution contracts with operators.

Online giants enjoy enormous scale advantages

Facebook’s Sweet Spots

Facebook is rapidly expanding its pipeline of commissions.
Its preferred formats and editorial guidelines for unscripted are a work in progress.
- Amazon is further ahead in its video originals strategy.
There will be less need to create mainly 30’s and 60’s as for the channels.
FB’s Sweet Spots for unscripted are a work in progress.
Watch this space for more info!

Feedback Welcome!

These were my Takeaways when I saw the Tubular Labs chart in Digital Daily.
The online video economy is evolving so rapidly that I find it hard to keep up with.
Please email your Pushbacks and Takeaways.

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