The Facebook papers pt 3: Facebook pulls a page from the Amazon playbook

Expect to see a significant increase in the number of ultralight, platform-only publishers seeking to leverage their lower cost bases.

BY TONY HAILE

In parts one and two of this series, we looked at the forces pushing publishers toward an ever-tighter embrace of Facebook. Parts three and four will look at how those changes will affect the shape of the media ecosystem, and what existing publishers should do about it.

Facebook’s launch of Instant Articles means that a media company wishing to host their content directly on the platform and rely on Facebook’s superior user-targeting for monetization can now do so.

Some publishers are leery of ceding so much to the platform, and there is no requirement to use Instant Articles. However, as Facebook prejudices traffic toward Instant Articles, the competitive pressure to adopt the format will be irresistible.

Likewise, while publishers are free to monetize Instant Articles themselves, the long-term question will be, "Who is better at monetizing Facebook — Facebook or an individual publisher?"

It’s probably Facebook.

To many publishers, this is no bad thing. They talk of a post-social world in which publishers can focus on the pure creation of content and outsource the extraneous rest to the platforms. This position resembles the taxi company that declares that now that Uber is handling customer acquisition, consumer trust, demand management and payment, it can focus on the core job of getting people from A to B.

The most consequential decision Facebook has made is to open up Instant Articles to any content creator. Those creators now have identical access and ability to leverage Facebook’s ability to host, distribute and monetize their content as traditional media companies. What they don't have is a large legacy cost base.

The AWS-ification of Media

In effect, what Facebook has done with Instant Articles is eerily similar to what Amazon did with Amazon Web Services. Prior to AWS, startup costs were so high as to create a significant barrier to entry for most new enterprises. Value accrued to the large companies that could leverage their scale to build new businesses. With AWS, new startups were able to compete with a fraction of the initial capital and infrastructure previously required. Now Facebook has broadly done the same thing to media.

The most consequential decision Facebook has made is to open up Instant Articles to any content creator.

Small ad-supported media companies previously didn’t have the scale to access high CPMs, couldn’t make the comScore Top 50, and were stuck in remnant hell making tiny CPMs. Even hot media companies like Vice would aggregate sites together to boost their audience numbers and make them more palatable. Now new entities will be able to spin up a company with a fraction of the investment required, and without the legacy overhead of their traditional peers.

Their content will be distributed through the same channels, hosted on the same platform, and monetized through the same (Facebook) sales team as the existing digital kings.

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