Paying for news —

In strategy shift, Facebook seeks to pay millions to license news

Potential partners include Bloomberg, Wall Street Journal, and Washington Post.

A casually dressed man waves while crossing a stage.
Enlarge / Mark Zuckerberg.

Facebook has approached several prominent news organizations to license its content for a new news-oriented section of the Facebook site, The Wall Street Journal reported on Thursday. Some outlets could get as much as $3 million per year. It's a significant change in strategy for the social media giant, which previously explored an ad-sharing model under Facebook's Instant Articles program.

The Journal reports that Facebook has approached a number of news outlets, including ABC News, Dow Jones (parent of the WSJ), The Washington Post, and Bloomberg.

Deals would last for three years, according to sources who talked to the Journal. The new initiative could launch as early as this year, though it's not clear if any news outlets have actually agreed to Facebook's terms.

Why Facebook might want to do this is easy to see. In recent years, the company has faced a barrage of criticism for soaking up massive ad revenues while diverting traffic to marginal news organizations churning out clickbait. Cutting deals with some of the news industry's top brands would allow Facebook to showcase high-quality journalism while directly supporting the organizations that produce it.

Still, $3 million in annual licensing fees doesn't sound like a hugely significant sum given the size of the companies involved here. Take The Washington Post, for example. Its full financials aren't available, but we know that the paper earned more than $100 million in digital ad revenue alone in 2017—with print ads and digital and print subscriptions on top of that. The same year, the paper passed 1 million subscribers, generating tens of millions of dollars in additional revenue.

So $3 million in annual revenue from Facebook would represent a small fraction of the paper's digital revenue. If the sum entitled Facebook to the full range of content from a publication like The Washington Post, as the WSJ story suggests, it could be quite an attractive deal for Facebook.

Facebook's reported service appears to be different from the one Apple announced earlier this year. Like Facebook, Apple approached a number of top-tier news organizations to license their content. Apple ultimately scored deals with The Wall Street Journal and the Los Angeles Times. But Apple's business model is to sell subscriptions and then split revenue with publishers. By contrast, Facebook sounds like it's seeking to pay a flat annual fee to news organizations for unlimited use of their articles.

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Channel Ars Technica