Meta has started telling publishers their content payment deals in the United States won’t be renewed, the latest in a slew of developments that point to the company’s shift away from news media.
Meta watchers have been flagging the end of the road for Meta’s strong embrace of the news industry for most of 2022, but this is the most significant signal.
The Wall Street Journal reported that Meta has formally begun to inform U.S. publishers of its intention to end content licensing deals. This affects the content that appears in the Facebook News tab.
This product was created as a payment vehicle for news media companies that carry professionally created journalism. It is different from journalism that appears elsewhere across the social media platform — as a share, self-published, or a paid promotion.
The News tab operates in the United States, United Kingdom, Germany, and Australia, and its newest iteration is in France.
Most big U.S. publishers will be affected by the phase-out, and its deals worth more than US$100 million annually include USA Today, The New York Times, The Washington Post, and The Wall Street Journal. Meta’s U.S. deal size and spread have been uneven, with few deals going to small- and mid-sized news media companies.
Many media executives knew informally that Meta was unlikely to renew, as reported in May by The Information. It spiralled in the United States from “not a priority” to “not happening” in just a handful of weeks.
Meta said it would instead expand into direct deals with content creators (metaverse, NFTs, premium short video). The job description has expanded for Campbell Brown, a former U.S. TV anchor who runs Meta’s news media partnerships, to include sports leagues, film studios, broadcasters, streamers, digital media companies, and news publishers, reported Axios.
What it means for news elsewhere
The cash doesn’t dry up immediately. All current payment deals will be honoured until their contracts expire. Meta has signed three-year partnerships in most instances. The U.S. deals are the first to be near their full term.
In Australia, where it has deals with the costliest price tags, contracts still have between 12 to 18 months to run. It’s the same three-year term for newer deals, such as those in France with 100 publishers, which was signed before the News tab launched six months ago.
Meta has continued to sign publisher deals in Europe, where it has deemed the price to be reasonable and the signing a requisite to comply with local copyright law. This combination might mean Facebook News deals, or similar, live on longer in the European Union where its regulatory approach and deal size appears to be friendly to Meta.
The change in its priorities towards individual creators indicates Meta is not averse to paying for content — but, importantly, the company doesn’t want to be forced into deals. It wants the right to choose them.
The company’s investments in digital media training, fact-checking of news sources, and media business transformation grants are not directly affected by this call on U.S. News tab deals and are reviewed in each region as contracts expire.
Why: Meta believes news isn’t a priority for Facebook users
“A lot has changed since we signed deals three years ago to test bringing additional news links to Facebook News in the U.S.,” a Facebook spokeswoman said in a statement. “Most people do not come to Facebook for news, and as a business it doesn’t make sense to over-invest in areas that don’t align with user preferences.”
Meta frequently says that news makes up less than 4% of the content people see in their News Feed.
Yet Facebook is a huge primary source of news for its users in many countries. In the United States, 42% of people get their news from social media, according to the Reuters Institute’s annual global survey of digital media. And within the social category, Facebook remains the most-used network for obtaining news.
Why: growing legal pressure
“In many markets, the complexity of our partnerships is growing because of government regulation around news,” wrote Meta’s Brown when explaining her team’s pivot toward digital creators.
Its experience with the Australian media bargaining code was a public relations disaster. It shut off all news content to its Australian users in its week-long protest against the new code. It stands accused by a whistleblower of gaming its lockout to antagonise the government. And it faces the imminent prospect of huge fines for not having done deals with some of the media companies, including one of two government-owned broadcasters.
Meta executives didn’t show up at the Treasury department’s official first-year anniversary review of the performance of the media code.
Recently, at a U.K. parliamentary inquiry, Meta accused Australian media companies of pocketing content payments for shareholders and to pay down debt instead of investing it in journalism.
It faces a repeat situation with the upcoming (and tougher) Canadian legislation in late 2022 and then in a slew of other countries also going down the path of competition-based law reform to force commercial partnerships by deploying the threat of so-called “forced arbitration.”
The European Union has adopted a more traditional copyright law approach to use of intellectual property. Here, in the countries that have passed the law into national legislation so far, payment size to publishers has trended lower.
Halfway between the competition law countries and the copyright law countries sits the draft legislation for the United States, which continues to be reviewed by lawmakers. No date has been set yet for its passage to a vote in Congress.
What comes next
Meta is facing challenges on multiple fronts: earnings, advertising revenue, Apple’s “do not track” policy, the rise of TikTok, the elevation of Telegram and Signal, and an uneven rollout of its Reels product.
Crucially, Meta’s scrapping News tab deals is unlikely to get it out of trouble in those countries writing new competition laws to redress the market power imbalance between Big Tech and media companies. Nor will it let it avoid payments in E.U. countries where less aggressive regulatory intervention still requires financial deals.
It also won’t do anything to help Meta get on top of issues such as fake news, fake accounts, and fake advertising metrics. In fact, any prolonged absence of fact-checked, professional journalism from verified sources on its platform is likely to make many of these issues worse and inflame its regulator relations.
Regulators, whether of the copyright or competition law persuasion, will continue to call for a fair price to be paid for professional journalism to be carried on those platforms.