Facebook Inc (NASDAQ:FB) Plans To Provide News Content On Its Site

Facebook Inc (NASDAQ:FB) has been reported to be holding discussion, with a number of news companies about displaying news content on its site. This is a deviation from the current practice of using a link, which takes a viewer to an external news-related website. If the news organizations agree to this plan, it will demonstrate huge amount of trust these companies are placing on Facebook.

Initial round of discussions have begun, with The New York Times Co (NYSE:NYT), BuzzFeed and National Geographic. There have been reports that Facebook and The Times are close to finalizing the deal.

In order to attract more publishers, Facebook is planning to device new ways through which the publishers can make money through means of advertising running along with the news content. According to the company, the idea is to enhance the viewing experience by scaling down the time taken open a link which re-directs the viewers to an external news site. The latter generally takes around eight seconds.

Facebook Inc (NASDAQ:FB) is targeting this extra time taken in order to increase user satisfaction, which in turn will boost the traffic on its site.

The issue has become pertinent in last few days when advertisement videos have become increasingly popular on Facebook. This has led to a fall in the number of users accessing external websites (belonging to media companies) through Facebook.

News organizations have been reported to been reacting calmly and coolly at Facebook’s proposal. Employees at The Guardian have come up, with a suggestion that all the publishing houses should join hands and agree on terms, which will be beneficial to the industry as a whole. The share of advertising revenue should be kept in mind. However, there has been no official confirmation from any company yet.

The idea above has been pioneered by Chris Cox, Facebook’s vice-president for product matters. Although the company had not been very keen on revenue sharing in its past, currently it is working on revenue sharing model, with the publishers in a bid to attract them.

Publishers face an additional risk if the proposal falls through. They would lose access to the enormous data related to the consumers who would visit their website, regarding the frequency of their visit or their other activity on the web. All this data would then remain only with Facebook which may or may not be willing to share this information.

To the contrary, in case the idea works out successfully for the company, the publishers who do not participate would stand to lose the huge traffic logging on to Facebook. Considering the extra time take to open links leading to the actual sites, readers might actually stop visiting those websites.
Though the idea may be risk-prone for some of the publishers, Facebook would only benefit from this proposal.