If you’re trying to fight the impression that you’re over-mighty and bullying, it’s probably best not to behave like you’ve got the Death Star at your disposal.
So what’s Facebook Inc. doing in threatening to stop users in Australia from sharing news stories on the site and on Instagram? Taking such a step would have deprived local media businesses of A$200 million ($148 million) over the five months through May, according to Facebook’s estimate. Still, it’s “the only way to protect against an outcome that defies logic,” the company said in a statement Tuesday.
The trigger is a proposed law to enhance the power of news organizations in negotiations with Silicon Valley. Under the plan by Australia’s antitrust authorities, news companies would be allowed to bargain as a group with social media and search platforms over the price they’d be paid for their content, rather than individually.
In truth, though, the world and Facebook would be much better if it followed through on its threat — both in Australia, and globally. The bargain that news organizations have struck with Silicon Valley in their search for traffic is an abusive relationship that benefits nobody.
For one thing, it’s not traffic that drives profitability for news companies, but revenue — and the two measures have been growing further and further apart for decades. Before the rise of the internet, newspapers typically made about three-quarters of their revenue from advertising. Circulation — subscriptions and news-stand sales — accounted for the remainder.
That’s changed drastically as media buyers have migrated to Facebook and Google, whose data-rich, targeted product is far more attractive than the sort of display advertising they once bought in the pages of newspapers…Read more>>