Facebook to Launch Paywall in Response to Publisher Pushback

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Facebook last week confirmed its plan to launch a paywall for content providers, a move that could ease longstanding tensions with traditional publishers who objected to giving away their print stories for free.

Campbell Brown, former CNN and NBC News journalist and current head of Facebook's news partnerships unit, announced the plan at a New York digital media forum, outlining the company's strategy for monetizing the news content that drives so much of the user engagement on the site.

Consumers increasingly are getting their first read of daily news on Facebook.

"We are in early talks with several news publishers about how we might better support subscription business models on Facebook," Brown said. "As part of the Facebook Journalism Project, we are taking the time to work closely with our partners and understand their needs."

Facebook will test its paywall model later this year with a small group of publishers. Readers will be given access to 10 free articles per month but then will have to subscribe to view additional articles. A more robust version is planned for 2018, according to a source familiar with the project.

Brown and fellow Facebook executive Fidji Simo briefed several publishers about the plan during one-on-one meetings last week in New York and Paris, according to the source, and the company has been working closely with numerous publishers in recent months to get a better handle on the issue.

The plan is for the subscription to operate through Facebook's Instant Articles platform. There will be so-called freemium options, and publishers will have full control over locked and unlocked articles. Publishers also will have full control over their subscriber data, and the program will be able to authenticate existing subscribers.

The Facebook announcement came about a week after the News Media Alliance, which represents 2,000 news organizations in the U.S. and Canada, asked Congress to pass legislation that would allow it to engage in collective bargaining with Facebook and Google.

Those two companies dominate most of online consumption of news content and control almost 70 percent of digital advertising revenue, according to the alliance.

Google and Facebook basically have forced publishers to give up their rights and play by their rules, said Paul Boyle, News Media Alliance SVP of public policy.

Their dominance has forced publishers to try and exercise more control, he maintained.

"Basically, what you've seen is a commoditization of the news, where many people can't tell the difference between real news and fake news reports," Boyle told the E-Commerce Times.

"Facebook is responding, gradually and with a variety of initiatives, to help publishing partners," said Rick Edmonds, media business analyst at Poynter.

"This is a constructive step, but not necessarily transformative," he told the E-Commerce Times. "It fits the current trend of publishers asking digital readers to pay a bigger share of their costs -- a bit ironically, in that Facebook and Google are sucking up nearly all the digital ad growth."

It would be mildly surprising if Google, or especially Twitter, should follow suit, Edmonds said.

Facebook's move is part of a natural progression, as the company finally is taking ownership of the fact that it operates as a publisher and is a major information source for many readers, said Zack Fuller, an analyst at Midia Research.

"The argument that Facebook is simply a platform for news content no longer washes," he told the E-Commerce Times, "when we consider the scale of its user base and the fact that it's increasingly becoming many people's core news source away from TV and print."

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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