Facebook, Apple reach agreement for publisher paywalls on iOS

Brief:

Facebook, the social network with more than 2 billion users, on March 1 will allow news publishers to run paywalls inside its iOS app for the first time. After reaching an agreement with Apple, Facebook will let publishers collect 100% of the subscription revenue from iOS devices, per TechCrunch.
Campbell Brown, Facebook’s head of news partnerships, said at the Code Media conference that Facebook is lowering the threshold on free Instant Articles to five from 10 before asking users to pay. Facebook in October first tested paywalls on Android, but didn’t reach an agreement with Apple about how subscription revenue would be shared.
Facebook also is creating a section dedicated to news on its original video hub Watch. The section is intended as a place to highlight breaking news, filling a gap in Facebook’s video programming.

Insight:

By allowing publishers to put up paywalls, Facebook may be giving them a better chance to earn more money for their creative efforts. Facebook CEO Mark Zuckerberg had disapproved of paywalls because they prevented the world from being more open and connected, a guiding principle for Facebook since its beginning, per Wired. Following the new agreement with Apple, Facebook will load the paywall on the publisher’s mobile website instead of in Instant Articles, the software tool for publishers to distribute fast, interactive articles to their readers within the Facebook mobile app and Messenger. In addition to getting to keep 100% of subscription revenue, publishers will also get the customer data. Facebook doesn’t collect a fee and the mobile web paywall avoids Apple’s standard 30% fee on subscriptions, per TechCrunch.

While Facebook’s roots are in free user-generated content, the social network has become an almost indispensable platform for professional media organizations to generate traffic on their websites. But media companies face a significant threat from Facebook, which along with Google, is responsible for the most of the growth in the digital ad market.

Rupert Murdoch, the executive co-chairman of 21st Century Fox, and his chief newspaper lieutenant, News Corp CEO Robert Thomson, have taken a central role in the news industry’s corporate war against Facebook and Google, per BuzzFeed. They even expressed their criticism of the social network in a face-to-face meeting with Facebook CEO Mark Zuckerberg in 2016, per Wired. Murdoch accused the company of making dramatic changes to its core algorithm without consulting media partners, wreaking havoc on their businesses. Murdoch had directly competed with Facebook after buying rival social network MySpace, which he later sold for a steep loss. He also sees a growing threat from Facebook in bidding for sports programming. The social network's $600 million bid for streaming rights to cricket matches in India's top league was a "warning shot" that the social network was about to dive into sports, Fox Business reported.

Publishers for years have been unhappy with the inability to monetize their content on Facebook, per Digiday. The Wall Street Journal, ESPN, CBS News, NPR, the Financial Times, Bloomberg and Vice News had resisted Facebook’s Instant Articles. Publishers found they could make more money from stories that loaded on their own mobile web pages than on Instant Articles, which also had banned paywalls, a key source of revenue for publications.