This has been an idea I’ve had on my mind for some time now. I think so much about the media business and make decisions on a regular basis that have an effect on a media business that it seemed like a good idea to launch this newsletter as an outlet for my thoughts.

So… Welcome to A Media Operator, my newsletter where I’ll analyze and opine on the latest happenings in media. I’ll also dive deep into how media companies are monetizing, growing, and talk about the many media brands that are doing great despite the narrative that it’s media Armageddon. Hint: it’s not for business news.

And it seems that the best way to start is to do just that—start.

Facebook to License Content?

According to a report by The Wall Street Journal, “Facebook Offers News Outlets Millions of Dollars a Year to License Content.” Facebook is working on a news tab and to fill it with content, it needs to license it. The article states:

Representatives from Facebook have told news executives they would be willing to pay as much as $3 million a year to license headlines and previews of articles from news outlets, the people said.

The outlets pitched by Facebook on its news tab include Walt Disney Co.’s ABC News, Wall Street Journal parent Dow Jones, The Washington Post and Bloomberg, the people said.

This comes after Facebook’s Mark Zuckerberg sat down with Mathias Döpfner, CEO of Axel Springer. Döpfner has been pushing for various large platforms—Google and Facebook, in particular—to start forking over licensing fees for news content. And Döpfner isn’t the only executive pushing this. Last year, Rupert Murdoch issued a statement suggesting that the way forward would be for Facebook and Google to “pay those publishers a carriage fee similar to the model adopted by cable companies.”

Essentially, Facebook distributes all sorts of content, but much of it is questionable to say the least. If Facebook wants to add a new tab to its site with trusted news sources, then it needs to accept that news isn’t free and it’s going to have to pay for it.

A few things jump out to me in this opportunity.

There’s a big difference between full article licensing and headline and preview licensing. For media brands doing full article licensing to other media brands might make sense. I’ve seen full Bloomberg articles published (example) on Skift, a travel industry publication. It makes sense for both sides. Bloomberg isn’t really losing any audience and Skift, which specializes in travel content, can better serve its audience by putting all that content in one place.

When you’re talking about platforms like Google and Facebook, though, full article licensing is never worth the money. Not in a million years. Platforms are built to keep users within their walls. That’s why Facebook built Instant Articles years ago—to keep members within its platform. They say it’s about speed, but really, it’s about users staying on Facebook.

If you gives a full article to Facebook, you’re saying goodbye to your audience. Some may argue that you can put links at the end to drive traffic back to your site or the branding is worth putting your content in front of tens if not hundreds of millions of people, but take it from someone who did a full article licensing deal to a platform—the audience back is garbage.

Does the math work?

The question is whether the $3 million a year offsets the loss in traffic. Let’s use Bloomberg. According to Similar Web, Bloomberg has about 75 million sessions a month. Similar Web says 12.7% of Bloomberg’s audience is from social, of which 35.88% of that is Facebook. So, 4.5% of its audience comes from Facebook. That means 3,375,000 sessions or 11,947,500 pageviews—Similar Web says it does 3.54 PVs/session—is generated from Facebook each month.

If we look at a typical Bloomberg article on mobile, it probably has a high impact ad up top, then a video unit with pre-roll, one or two standard 300x250s in the body along with another outstream video, maybe another “house” ad promoting a piece of sponsored content, and then it ends with those beautiful “Around the Web” Taboola ads. And after a few articles (which Bloomberg seems to get with that 3.54 PVs/session), you get locked out from reading more articles until you pay for content.

Let’s assume that the RPM is $20. With all of those units, I feel comfortable estimating that Bloomberg makes $20 per thousand pageviews. If we do the math, that means that Bloomberg earns about $2.87 million from Facebook. Suddenly, the deal doesn’t look that good. Bloomberg is giving up all control of the audience that comes to its site from Facebook for an extra $113,000—and that’s if Bloomberg is getting the full $3 million a year.

Not to mention, you lose out on the ability to convert one of these users to a newsletter or some other form of a retention product, so the 38.97% of traffic that is direct is bound to drop. If that number starts to drop because users are never typing in Bloomberg—they’re just going to Facebook to consume all their news—then you suddenly have a very real problem.

The math just doesn’t work. Yes, $3 million is great, but when you consider the fact that you’re going to lose your audience, a full article licensing deal doesn’t make sense.

But the Journal’s article doesn’t say that it’s full article licensing, but rather headlines and previews. This is a little more interesting.

Under a headline and preview deal, a reader can only see the first couple lines or paragraphs of the article and then they’d have to click over to the website to continue reading. This is a bit more interesting because it is a little like having your cake and eating it too. You get compensated by Facebook and then drive traffic back to your site, where you’re then able to monetize from the ads.

I love headline-only and I like headline and preview deal because we see nice traffic come back to our site. And once they’re there, we can attempt to convert the platform’s user into one of our users.

There’s always a but…

Before anyone gets excited, though, let’s take a step back and remember who we’re talking about. Facebook has never been friendly to publishers. It constantly changes the script, backs out when ideas don’t work, and then leaves the publishers hanging. According to Nieman Lab, reporting on an investigation by The Australian (paywall), Campbell Brown, Facebook’s global head of news partnerships, was very clear on how Facebook views publishers. In the story, she says:

“Mark [Zuckerberg] doesn’t care about publishers but is giving me a lot of leeway and concessions to make these changes,” Ms Brown said.

“We will help you revitalise journalism … in a few years the ­reverse looks like I’ll be holding your hands with your dying ­business like in a hospice.”

How lovely…

Facebook means it. In an article published back in 2018, Slate showed how Facebook had become a smaller piece of the pie (and that’s not because Slate’s traffic had gone up from other sources.

If Brown’s quote is true—as Nieman Lab reports, five people from The Australian corroborate it—then there’s really only one truth. Facebook isn’t friendly to publishers.

But even if Facebook couldn’t care less about publishers, if there’s money to be made, you might as well make it, right?

The problem is we’re hearing this $3 million number and thinking that’s what publishers will be offered. However, that’s going to be the full article rate. I would imagine that publishers get less if it’s just a headline or headline/preview agreement. You’re suddenly looking at hundreds of thousands of dollars up to maybe $1.5 million. Spread out over the year, that’s just not that much money.

Not to mention, Facebook will likely have a bunch of hoops to jump through to make it “user friendly” and before you know it, the publisher just isn’t making any money.

My counsel: never take the full article deal unless the amount of money is significantly greater than your RPM. And even then, you need to really consider what the loss of a direct relationship with the user means to your business. If Facebook comes back to you in three years and says that they’re no longer paying you $3 million for your content, will those users show up on your site again?

If the money is good enough for a headline or a headline/preview deal, though, it might be worth exploring. It can be a blended audience development and revenue deal, which could be very useful for publishers.

Off to the races…

That wraps up my first piece here on A Media Operator. There’s a good chance I missed something. It’s possible Bloomberg doesn’t have a $20 RPM, but instead just a $10 RPM. It’s possible that Facebook is going to pay $3 million for a headline/preview agreement.

But my gut tells me that the math just doesn’t work. And when it comes to Facebook, which hasn’t been friendly to publishers, the math has to be very sound.

Thanks for reading this piece. I didn’t know what to expect when I started writing and honestly, it felt good to think through this. It’s unlikely Facebook is going to ask for the content our team publishes, so this is a problem I won’t have to contend with. But if I did, this is what I’d be thinking.

Please tell your friends or colleagues about A Media Operator and if you’re new here, hop on board and subscribe. Thanks!