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How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

Published: July 20, 2021
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There aren’t many companies that can say they’ve poured hundreds of millions into journalism in the last few years. Facebook has — $600 million over since 2018 — and it is promising another $1 billion in the next three years.

 

By ANTOINETTE SIU

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

Yet when surveying those around the journalism and media world, the jury is still out on whether and how much Facebook’s funding is helping its stakeholders — or merely buying good PR.

A Wrap inquiry into the details of the $600 million found that many of those dollars are hard to track, except in the most general terms. When broken down into the main categories mostly based in the U.S., TheWrap could only specifically verify the expenditure of roughly $122 million — barely one-quarter of the pledged sum — begging the question: Where is the money going?

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

In addition to donating heavily to nonprofits and paying small grants to local newspapers (see graphic), Facebook pays rich licensing fees to a handful of premium publishers, like The New York Times, The Washington Post, News Corp, Bloomberg and BuzzFeed. Those deal terms are not publicly disclosed, but TheWrap has obtained documents of one agreement with a leading U.S. publisher for $5 million over five years.

An executive who was involved with making the deal said the agreement felt more like a PR move and less a business deal. “It always seemed about pacifying publishers, and less about granular tactics about how we help engage our audience. It was more about trying to quiet the storm around very serious audience losses at newspapers,” the individual said.

And in a recent interview, former New York Times CEO Mark Thompson said the paper is getting “far, far more” than $3 million a year from Facebook, in response to a reporter’s misimpression. (The Wall Street Journal reported that the agreements were worth as much as $3 million a year.)

Facebook also recently signed deals with hundreds of publishers across the United Kingdom, Australia, Germany and Canada. Again, a Facebook spokesperson said the company does not disclose the terms of those deals.

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

When asked approximately how many of these content deals exist, Campbell Brown, VP of global news partnerships, replied only: “A lot.”

“We have deals in place with all the major publishers and many of the local and regional publishers in those markets. There are some countries where we haven’t yet launched Facebook News but we do deals to get additional content from publishers beyond just what they’re putting on the platform … We have a green light from Mark (Zuckerberg) to continue launching as fast as we can in different markets,” she said.

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

Another Facebook spokesperson said the company has never “previously quantified” the number of content deals or the growth around them, and that it “varies from region to region.”

On the philanthropy side, most funding has come in $25,000 to $1 million increments, some spread out over a few years, to small newsrooms in a bid to help local journalism. A spokesperson said the company has spent $175 million specifically on local news causes since 2019, with investments in the form of event sponsorships, conferences, grants and accelerator programs. The company would not specify how exactly that money was allocated. Some of the recent grants announced totaled $16 million to groups including the Pulitzer Center, Report for America and the American Journalism Project.

(TheWrap verified $122 million in grant money and deals based on the major programs listed through the Facebook Journalism Project. Some of that total includes national and international investments.)

Notably, none of the funding has come in the form of actually sharing the platform’s gargantuan ad revenue with the publishers whose news content Facebook features. And the all-important licensing deals leave out the vast majority of U.S. news publishers, notably community publishers and especially publishers of color.

“Overall, despite their many billions and the glowing press they’ve secured for the efforts they have made, they’ve done nothing to halt, reverse or even slow the steady demise of journalism that they have otherwise, in every major respect, hastened and profited from,” Ed Wasserman, professor and former dean of U.C. Berkeley’s school of journalism, told TheWrap. “Their philanthropy is best understood as a cynical palliative meant to neutralize media support for the grievously overdue antitrust initiatives that they are girding up to withstand.”

A licensing deal or payola?

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

Facebook’s various deals with major publishers also bring up a host of messy issues in terms of ethics and business, as journalist Dan Froomkin wrote in Washington Monthly.

The first is a question of conflict of interest: Does taking money from tech companies stray from traditional journalism ethics? The question would have been easily answered in the context of the print days, Froomkin pointed out: “In the pre-internet days, independent newspapers wouldn’t have considered accepting gifts or sweetheart deals from entities they covered, under any circumstance. The Washington Post under the editor Leonard Downie Jr., for instance, wouldn’t even accept grants from nonprofits to underwrite reporting projects, for fear of losing the appearance of independence.”

Moreover, a move in support of legitimate journalism crafts a positive image for a company often criticized for misinformation, hate speech and invasion of user privacy. And rather than propping up the smaller, ethnic and local news organizations in dire need, these multimillion-dollar deals are mostly between Facebook and legacy media with the greatest influence.

“One such effort would allow the industry to bargain collectively with Facebook and other tech giants by withholding content from the platforms unless they received a fair price for it,” Froomkin wrote. “But for that to work, small newsrooms would need the biggest and most influential companies to sign on. With those organizations receiving millions of dollars from Facebook through their own side deals, the smaller publications could be left stranded and defenseless.”

The licensed content resulting from these deals ultimately ends up in Facebook News, the newly dedicated home for verified news organizations to promote their work (TheWrap is a part of this platform). The app enlists the company’s news curators — made up of teams of former journalists — to sift through news and group into four categories: general, topical, diverse and local news. Additionally, Facebook said it uses machine learning to distinguish news from what it deems “everyday content.” In the settings, users can toggle between getting news curated by their team or going with only content selected by the algorithm.

The feature, which is separate from the main news feed that most are familiar with, lives on a separate tab on the mobile app. It is accessible through desktop, but is mostly optimized for mobile use. It is unclear how many users are aware it exists or use it to access news separately. At least from the outside, that seemed to be the problem Facebook was attempting to solve.

“That was kind of the impetus for Facebook News, is ensuring that there’s a destination for it and people can find it,” Brown said. “They’re not just scrolling through their news feed and stumbling upon this or that post from a very reputable news organization and then at times, I’ll get a post from my crazy uncle that is sharing some of the articles from who knows where. We really wanted to create a destination that was devoted to news organizations that are putting boots on the ground and doing the real work of journalism.”

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

What happened in Australia did not stay there

Social network companies have increasingly dominated and profited off of the digital ad economy. Ironically, Facebook and Google have become the biggest funders of the journalism business, with the Google News Initiative committing more than $300 million since 2018 to fund startups and news projects.

In February, this battle played out in Australia for Facebook and Google when the county’s government proposed legislation that would require the two companies to pay news outlets for their content. The legislative push led Facebook to pull news from its platform in the country for five days, while Google also threatened to shut down services. Both have since struck deals with media companies to smooth things over, but the clash in Australia reflects a larger, ongoing tension between social media and publishers around whether Big Tech should have to pay for using publishers’ content on their platforms.

Following that clash, Nick Clegg, Facebook’s VP of global affairs, described it as a “fundamental misunderstanding” between the company and news publishers, insisting that Facebook is generating income for Australian publishers, free of charge.

“It’s the publishers themselves who choose to share their stories on social media, or make them available to be shared by others, because they get value from doing so,” he wrote. “That’s why they have buttons on their sites encouraging readers to share them. And if you click a link that’s shared on Facebook, you are directed off the platform to the publisher’s website. In this way, last year Facebook generated approximately 5.1 billion free referrals to Australian publishers worth an estimated AU$407 million to the news industry.”

After the showdown in Australia, Facebook moved to commit $1 billion to news spending on the heels of Google rolling out a $1 billion investment last year to partner with publishers throughout Germany, Australia and Canada, Brazil, Argentina and the U.K. Some of the publications include Der Spiegel, Stern and Die Zeit, with a total of 200 publishers that signed on.

Facebook has been on a similar path to get friendly with publishers as companies face growing pressure in many countries to start compensating publishers for their content. Most of Facebook’s content deals, where the social network pays for content, are in places like Germany and Australia, which have passed or proposed laws requiring the company to pay for news.

“I’m a major skeptic where Facebook is concerned and I regard its pronouncements about outlays to strengthen journalism as generally worthless,” Wasserman said.

“Look, I understand this perception,” Brown told TheWrap. “I think it’s easy to look at the state of journalism from a business perspective, and the state of tech companies right now, and make these broader assumptions.”

In June, Facebook hit a major milestone in valuation, joining the ranks of companies worth more than a trillion dollars.

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

Enter Campbell Brown

In 2017, Facebook tapped Brown to help the company mend its strained relationship with news publishers. The former journalist worked at CNN and anchored on NBC before entering the political scene as an education activist. Since arriving at Facebook, Brown said she has focused its efforts on understanding how to build products and programs better suited for publishers.

“What our long-term goal has been is trying to get more quality journalism on Facebook, and in addition to that, to try to ensure that there is a strong, profitable news industry,” Brown told TheWrap. “I am proud to say that over the last four years, we have become one of the largest funders of journalism in the world, and I think we take that responsibility really seriously.”

In the last three years, the company has invested millions into launching news-dedicated products and initiatives, providing grants to organizations including the Pulitzer Center and Report for America, and running an Accelerator program formatted like a boot camp for publishers to get their ideas off the ground. “Facebook is a tech company, obviously, with a way of building products that didn’t really do it in conjunction with (the news industry),” Brown said.

For boot camp graduate Paulette Brown-Hinds, founder of Voice Media Ventures, the $100,000 grant from Facebook goes toward an important resource currently missing in her newsrooms: staff training.

For her 49-year-old multimedia company whose titles include Black Voice News, transitioning from a legacy print model to digital means many of her journalists and staffers need training on new tools and technology. A lot of the product-focused backgrounds and project management positions needed today didn’t exist in newsrooms previously. Her company also got a $300,000 grant from the Google News Initiative this year.

“The biggest challenge when you’re trying to look at sustainability is the management of staff and the workflow for training of the staff,” Brown-Hinds said. “Resources is a problem, but it’s having access to staff and teams that can help you access those resources is a challenge for small publishers.”

Asked whether Facebook’s payments to publishers will benefit her company, Brown-Hinds said that it likely won’t help small, hyper-local media companies like hers. Even so, she does not believe that Facebook alone is responsible for hurting the media business.

“I don’t blame them for the demise of news media. It’s much more complicated. With controversy aside, any support for the industry is good. The partnerships that FJP and Google News Initiative have with journalism organizations have a thoughtfulness to the kind of support. It wasn’t just, here’s cash,” Brown-Hinds said.

Can Facebook accelerate journalism?

Looking at its next $1 billion news investment, Brown said that Facebook will continue to make direct payments to publishers and focus on local news and products. Some of the money will go to newer initiatives — including Bulletin, its free newsletter product featuring writers Malcolm Gladwell and Mitch Albom — as well as to expand Facebook News into more markets. The company previously said it would invest at least $5 million — a pittance by Facebook standards — to kickstart Bulletin and invite local journalists to its platform later this year.

Brown contends that one of its greatest achievements has been the Accelerator, which now runs globally to invite publishers together to tackle a news project and kickstart it with Facebook funds. The program brings in outside experts and consultants, some of whom include journalism veterans and execs from NPR, Dow Jones and Gannett.

“I’m pushing us to do more and more on that front because it’s been so successful,” Brown said of the program. “I would say that we learn as much as they have from these programs — and just the return that we get, whether it’s measuring what they’re seeing in terms of revenue and growth, but also what they’re conveying to us anecdotally — is one of our most successful investments.”

How Facebook Is Taking Over Journalism With $1.6 Billion Secret Deals

Douglas Burns, the co-owner of the Iowa-based Carroll Times Herald that his family has operated for the last 150 year, said “news deserts” are widespread in his region. Coming out of Facebook’s Accelerator, the paper used some of its $125,000 grant to start the Western Iowa Journalism Foundation.

“It will help dozens and dozens of newspapers, not just mine,” Burns said in a phone interview. “There are a lot of people that still do trust us. I just hate to think if we go away, what’s left?”

Being a part of the Facebook boot camp also got him access to coaches, including Ryan Tuck, a media consultant who has worked for Bloomberg and McClatchy. Coaches, who are not Facebook employees, ran sessions on topics ranging from subscription strategy to messaging on social and other platforms. The most useful takeaway for Burns was learning how to generate revenue from nonprofit streams. His cohorts included fellow publishers from Los Angeles, Tampa, Philadelphia and Montreal. “I was probably the only person in the room that knew how to drive on a gravel road without falling into a ditch,” Burns recalled.

Sustainability is the key

Brown, now having spearheaded news partnerships for four years at Facebook, said the company’s relationship with news leaders is changing. The company is working on helping organizations make money on and off Facebook’s platforms. “When I started four years ago and met with publishers, a lot of the conversation started with this hard truth of, ‘You can’t uninvent the internet, you have to adapt,’” Brown said.

“Now, the conversation has evolved because as we talked about, publishers understand the need to diversify revenue streams and go bigger on things like subscriptions. So, I think when it comes to improving on the reputational front, it’s just putting in the time and the work.”

Despite the money and connections, there is a question around the sustainability of Facebook-funded projects and partnerships. The fact that some of these grants are one-time checks means publishers will have to look elsewhere — or continue to rely on Facebook and other companies — to fund efforts over the long haul or to start new ventures.

Penny Abernathy, a former executive at The New York Times and Wall Street Journal who teaches at Northwestern University’s Medill School of Journalism, said money from tech is just a fraction of what news companies have lost in advertising revenue, she said.

“It doesn’t address the underlying problem, which is that we have lost news in a dramatic fashion in the past decade and a half. The for-profit model that supported news collapsed and an alternative digital one has not evolved,” said Abernathy, who has been researching the decline of local news nationwide.

Over the years, Facebook, Google and Amazon together have gobbled up some 70% of digital ad dollars in the U.S. market, according to eMarketer data. Newsrooms losing revenue has resulted in massive job losses, with the local and regional reporting often hardest hit.

There are still many questions when it comes to welcoming Facebook’s money and help in the journalism world, with skepticism persisting that a self-serving intent lies behind the company’s largesse. Froomkin argues that the way forward is not for elite publishers to accept special treatment in the form of rich licensing deals, but to band together to demand fair compensation for all news publishers.

As Froomkin’s noted in his report, “Some sort of trusted intermediary or collective agreement seems necessary, because it’s hard to see direct handouts as anything more than a corrupt stopgap measure — especially when they’re mostly given to the news organizations that need the money the least.”

Even as Facebook works to repair its relations and public image in the news world, the gestures and deals may have come too little, too late. In April, 125 newspapers across 11 states filed a lawsuit against Google and Facebook for monopolizing the digital ad market and engaging in secretive deals to kill competition. That lawsuit followed another in January, in which West Virginia-based HD Media filed an antitrust suit against the two companies.

“I just can’t compete with Mark Zuckerberg’s algorithms,” the Carroll Times Herald’s Burns said.

By ANTOINETTE SIU. This article was originally published on The Wrap.

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