Oops! Facebook did it again.

The biggest media platform in the world — used by 1.6 billion people — changed the algorithm that runs its News Feed, the heart of the platform and Facebook’s most valuable product. It said the goal was to prioritise posts shared by friends and family over others.

The company announced the change on June 29, 2016, in three different posts on its official blog signed by four different officers.

The crucial message to publishers was buried in the second to last paragraph of the post signed by Lars Backstrom, Facebook's engineering director. It read: “Overall, we anticipate that this update may cause reach and referral traffic to decline for some Pages.”

Some pages? Which ones? Brands? News publishers? How big will the decline be?

Over 50 million businesses run Facebook Pages, including thousands of news publishers worldwide. Facebook drives 41% of news publishers’ traffic.

All they can do now is to examine every word of Facebook’s official blog posts and try to figure out the possible impact on their business.

Call for Facebookologists

Journalists, bloggers, and industry observers flooded Twitter with comments: “Message for publishers: Tamp down your expectations,” “RIP anyone who relied on Facebook for traffic,” “Winter is here,” “Beginning of the end”….

The lucky ones, like Brian Stelter of CNN, got to interview Facebook officials, but they hardly clarified the issue. Adam Mosseri, the head of Facebook’s News Feed, told CNN on record that the change will be “noticeable” and “significant” but also “small” and not “humongous.”

Specialist blogs of social marketing and analytics companies like Contently and NewsWhip shared some first analysis: “The day many marketers and publishers have dreaded has arrived.”

Welcome to the new reality of doing business with digital platforms. We need Facebookologists today, almost as the Western world used to need Sovietologists in the past to understand announcements of the Moscow politburo.

Powers of Facebook 

Facebook surely has its reasons to change the News Feed’s algorithm in a way that prioritises visibility of private content. Since 2014, the platform has grown to 1.6 billion users. But the percentage of them who shared their status, uploaded their own photos or videos has been in decline.

For example in mid-2014 59%, users surveyed by GlobalWebIndex declared to share photos. In the first three months of 2016, the number shrunk to 37%. As private posts compete for attention with the content provided by professional publishers and brands, Facebook’s feed has started to look more like a news and features magazine than a social network.

As News Feed’s algorithm change may really be about looking for the right content mix, it may as well be about money. Certainly, it proves Facebook’s full control over its platform.

Let us be clear: Facebook’s powers come from its success as a communication tool and media content aggregator, its personalisation and targeting technologies, its seductive design on desktop and mobile.

Facebook has provided superior news user experience to most publishers in the world. No wonder 44% of U.S. adults get their news on Facebook!

As the platform sponsor and manager, Facebook enjoys full and exclusive control over the ecosystem it created.

If Facebook was a country, it wouldn’t be only more populous than China, its platform governance model would be somewhat similar to the dictatorship too. In the Facebook’s walled garden, it is the only law maker, the judge, and the enforcer in one. 

It’s the ecosystem’s tax collector, too. 

After algorithm changes, the profit soars 

When Facebook squeezes organic reach of publishers’ posts, it pushes them to do what it wants from them:

• To pay Facebook for boosting reach of their posts, and basically start budgeting advertising expenses on the platform as distribution costs.
  
  
• To make publishers optimise their content for engagement, so individual users like or react, or share publishers’ content themselves that will improve their ranking.
  
  
• To publish content in formats that Facebook prioritises in the News Feed because they fit its own business objectives, for example Facebook promotes Live news video despite proven lag in consumer demand.
  
  
• To publish content directly on Facebook platform as Instant Articles rather than post links to publishers’ Web sites (Facebook has not admitted really that Instant Articles enjoyed a preference but the News Feed ranking reportedly took the page load time into account and Instant Articles loaded … well … instantly).

The last big change in the News Feed’s algorithm was announced by Facebook in April 2015. It hurt brands that published on Facebook but seemed to spare news publishers.

Since then, the company’s advertising revenue has soared: in the first quarter of 2016 it jumped 57% to US$5.2 billion from US$3.3 billion. Facebook managed to nearly triple its quarterly profit at a time when its Silicon Valley rivals were underperforming!

One year ago, Facebook surpassed Google as a top referrer to news Web sites.

Time to shear sheep? 

Forward social media chatter to boardrooms

Over the last year, while a Nieman fellow at Harvard University, I studied the rise of digital platforms and their influence on the media industry.

My analysis on distributed content strategies by publishers was published in April by INMA (“Evaluating distributed content in the New Media Ecosystem”) and presented at the INMA World Congress in London in May. 

In the report, I write that, for audiences, social media has become the Internet and mobile has increasingly been the device of choice.

At the same time for many publishers, social media had been “this new thing that young people use.” Their strategy hadn’t gone beyond having a fan page and posting links, until became one the main sources of users.

I believe it’s high time we expand the conversation on social media from our newsrooms or marketing departments to boardrooms. Today’s decisions on business dealings with Facebook or Google shape the media company’s future business models.

Throwing content on digital platforms without an end game — any idea of what we are trying to achieve and how a win looks — is really not a strategy at all.

Platforms replace publishers across news media value chain: they aggregate better and on a bigger scale than legacy publishers, they control distribution and advertising sales on mobile, they control reach and promotion formats.

So what’s left for publishers? Providing content to platforms?

Facebook as a fishing place 

The biggest rewards that Facebook offers today are: worldwide reach, great user experience in mobile, and some share in advertising revenue from ads inside Instant Articles and branded content.

The biggest risks are: loss of a direct relationship with audiences and advertising clients, dependency on Facebook’s secret algorithms and business policies that both change over time, and loss of exclusivity in data collection and analytics about interactions with publishers’ content.

Many publishers may not have a choice but to collaborate and compete at the same time. Collaborate in building and growing markets, like video consumption or advertising, and compete in splitting revenues from these markets. This is a new reality: co-opetition.

I don’t think there’s one silver bullet, a strategy that will fit all publishers. So I would encourage executives to answer to several key questions:

• Do they prioritise growth of their digital content audience over revenue and cost control?
  
  
• Is their business or funding model independent from immediate financial results of their digital content strategy?
  
  
• Do they see a big opportunity in expanding reach beyond their digital properties?
  
  
• Are they willing to bet their digital strategy on their relationship with digital platforms?
  
  
• Are they willing to devote resources to produce content tailored to platforms’ audiences, use contexts, and style?

No publisher’s strategy will be complete without a clear plan to take users out of Facebook and bring them to the publisher’s turf for monetisation.

Should Facebook be more transparent about its algorithms?

Journalists, scholars, publishers, social activists, and politicians all over the world discuss the rise of influence platforms’ secret algorithms have on financial sustainability of journalism profession. More importantly, we should consider their influence on freedom of expression and quality of public debate.

Last week, I spoke about platforms’ influence on journalism and news media business at the Revolution of Europe’s Press Conference organised in Wroclaw, Poland, by newspaper and magazine associations from all over Europe. I heard growing concerns about the way Facebook’s algorithms work and calls for accountability in case of abuses, even questions whether platforms like Facebook should be somewhat regulated.

For some, just the size of the Facebook platform and the influence that comes with the size may be a reason enough to regulate. For the first time in our history, there is one single media outlet that reaches — let’s repeat — 1.6 billion people. Fifty million businesses rely on this single platform to acquire customers or make money.

Martin Moore from the Policy Institute at King’s College London wrote in his recent report “Tech Giants and Civic Power”:

“The digital world is currently out of joint. A small number of tech companies are very large, dominant and growing. They have not just commercial influence, but an impact on our privacy, our freedom of expression, our security, and (…) on our civic society.

“Even if they mean to have a positive and constructive societal impact —as they make clear they — they are too big and have too great an influence to escape the attention of governments, democratic and non-democratic.”

A group of scientists from Laboratory of Computational Social Science at IMT School of Advanced Studies in Lucca, Italy, found recently that Facebook’s personalisation of content streams and optimisation  for engagement led to closing people in polarised communities.

Such “echo chambers” seemed to be perfect environments for spreading conspiracy theories or misinformation. People crowded in closed communities didn’t become wiser, as many tech enthusiasts had wished. They often chose to believe information that confirmed the personal values and beliefs they had already hold.

I am writing this post shortly after Brexit referendum, in which many Britons made a future-defining decision about their Kingdom based upon myths or lies.

We need to talk more with Facebook about its algorithm, the way it works, and our concerns.

Note from the author: I will soon be starting a new blog on INMA.org called “Dancing with Platforms,” focused on influence of platforms on news publishers’ strategy, newsroom management, and journalism work. Share your story ideas or comments with me.

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