Facebook is testing a new section for news — and paying dozens of publishers millions a year to supply articles to it.
The deals are notable for being more generous than past content deals Facebook has had with publishers. As part of a news tab that's being announced Oct. 25, Facebook is paying certain publishers (including The Wall Street Journal, BuzzFeed, and Business Insider) licensing fees for three years, and annual payments range from in the hundreds of thousands to more than $3 million, depending on the publisher, according to multiple publisher sources who spoke anonymously because they weren't authorized to speak publicly about the deals. (Facebook hasn't commented on deal terms.)
The deals are favorable to publishers in other ways, too.
They'll let publishers get traffic to their sites that they can monetize with ads and will respect publishers' paywalls. This is a shift from the past, when Facebook pushed to host publishers' articles on its own property and to make all their content free so readers wouldn't hit paywalls when they clicked on an article. Facebook also is hiring a team of journalists to hand-pick a top-stories section of the news tab, reflecting concerns over its history of letting fake and misleading news spread on the platform.
All told, it's a sweet deal to the publishers that are being paid.
"You would be an idiot not to take the money," said one publishing exec of the terms Facebook is offering.
No one knows how successful the news tab will be with readers and Facebook is only paying a few dozen publishers. Still, some say given Facebook's size and the favorable terms of the deals, they see an opportunity to pressure rivals Google and Apple to improve their financial terms for publishers.
"I think this is really a welcome new trend, and standard, and that the pressure is now on the other platforms that have built their business in part on news to pay for that," said Ben Smith, editor in chief of BuzzFeed News.
"When we talk to them, this will probably be a topic of conversation," another publishing exec said ominously of Apple and Google.
Some publishing leaders including the heads of News Corp and BuzzFeed have been loudly calling for Google and Facebook to pay publishers licensing fees. Others have privately pushed for better treatment from them.
Publishers have the knives out for Google
Tech platforms overall have increasingly been paying publishers for their content. In addition to various Facebook initiatives, Snap pays publishers to create bespoke publications for its app. Publishers can sell subscriptions through Apple News, and Apple has also begun sharing revenue with publishers that are part of its Apple News Plus news bundle that rolled out this year.
But some publishers think they could do much more — Google in particular. The big gripe is that Google sends publishers a ton of traffic, but doesn't pay to license their content. Google also has had a history of penalizing paywalled publishers, and some think it still dings them in search results.
With Apple, the often-heard complaint is that its Apple News app is a terrible deal for advertising and data, reflecting Apple's business model. Apple sends some traffic to publishers and lets publishers sell subscriptions through the app, but requires them to share the revenue. As for Apple News Plus, publishers initially saw little revenue from it.
Apple hasn't responded to a request for comment.
"We're glad [Apple News Plus] is out there, but it has relatively little daily news content in it," said David Chavern, president and CEO of the News Media Alliance, a trade organization for newspapers. "Google likes to talk about how much traffic they drive. Google is becoming an outlier in that they're not offering a sustainable deal for news, and publishers are starting to wake up to that."
Some publishers believe they have a lot of leverage now because these tech companies need their high-quality content to keep people using their platforms.
"In light of the misleading and toxic content running rampant on big tech platforms and with significant political and public pressure, it's not surprising Facebook is striking partnerships better recognizing the value of trusted news brands," said Jason Kint, CEO of Digital Content Next, a publisher trade group. "This is a positive step forward, which hopefully others will embrace."
And now more than ever, Google and other tech giants are in the hot seat with lawmakers and regulators who are increasingly worried these tech giants have become too powerful and are looking for reasons to tear them down. The harm they're doing to the news industry is one such reason, these publishers would argue.
Google is already taking heat in Europe over publisher payments
Some US publishers think they can benefit from the momentum that's building in Europe, where a new copyright law lets publishers ask Google and Facebook to pay them for displaying their content. France is leading the way in adopting the law, but Google refused to pay, which has led to outcry from publishers and European lawmakers. Google's response is that it provides significant value to the news industry through traffic, monetization tools, and the Google News Initiative.
But other publishers are skeptical the other tech companies will budge, especially Google. And it's not like Facebook is paying publishers so much that they can just, say, turn their backs on Google's referral traffic.
"They don't have to do anything for publishers," one publishing exec said of Google. "The model has always been, 'You use our ad tech to make money, we'll send traffic there, it's a win-win.'"