The Facebook Papers, Part 1: The great unbundling

This is the first in a four-part series looking at what happens when what you do is now done by someone else.

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Digital media companies do five things. They create, host, curate, distribute and monetize content. Facebook now does four of them.

Normally this should not concern media companies more than any other competitor that they must face. However, Facebook’s mass acts as an an intense gravitational force in the industry, warping user behavior and fracturing the economic incentives that defined media companies. It suggests that those media companies that survive will view much of the infrastructure they possess today as just as much of a millstone as they did the printing press.

Facebook owns distribution and curation

While Facebook is the headline, the driver is mobile. In fact to talk of mobile and social strategy as distinct is to miss the point. Mobile traffic has surpassed 50 percent of traffic to media companies and is heading towards 60 percent to 70 percent. Mobile traffic is 3-4 times more likely to be from social sources than on desktop and that social traffic is more likely to be Facebook than Twitter by an order of magnitude. On mobile, for media, traffic increasingly = Facebook.

This dominance means that Facebook controls distribution far more on mobile than the media companies. It also warps user behavior into patterns that look very different on mobile to desktop.

Mobile visitors don’t go to homepages. The traditional channel that media companies have used to curate their content is largely ignored on mobile. Instead, the feed decides the content they see.

Mobile visitors don’t recirculate: They don't go from one story on to another within the same site. Instead, they trust the stream more than they trust the site to guide them to what's next. Landing pages and recirculation are the two principal tools of curation for media companies and on mobile they are now vestigial appendages. It is Facebook that curates and distributes. It owns the relationship with the user, and decides what content the user sees and how many see it.

Atomized content

The biggest impact of this is that content that has been bundled together within a site is now atomized. Content used to be connected to each other by the strong force of user behavior and the weak force of brand. Users would come to a site, read a piece of content, and then go on to another.

Habit and ease were driving behavior that over time meant absorbing brand attributes and creating a sense of loyalty and self-identification. That connection is being severed. Habit and ease are now the domain of the platform. Each piece of content exists on its own, served up by the stream or swallowed by it.

When habit is lost to the platforms, what remains is brand. The argument is that the attributes associated with the publisher create a spooky connection from a distance that causes each piece of content to influence the other. Formerly a comparatively weak force, brand now becomes of central importance. Each piece of content must wear its authorship like a fingerprint, distinctive not by its location or layout but by its voice and vision.

Unfortunately, for many publishers the need for cost-cutting and helter-skelter attempts to compete technologically with the platforms means that they have invested more in what commoditizes them than what differentiates. The guardians of brand voice who were sub-editors were cut in favor of investing in new CMSes for sites that increasingly see their audience interact with their content elsewhere. Those few with strong distinctive brands can be thankful for the work already put in, those whose brands are too often interchangeable or indistinct face a hard road.

The economics of atomized content

When content is divorced from each other the old rationale that came with bundling makes less economic sense. Advertising has often been overly concentrated in areas that are often the furthest from public service. Few brands want to advertise next to Isis, even though reporting on Isis might be the most important thing they should be doing. The traditional rationale of bundling has been that the public service/important journalism draws them in and builds a habit which can then be leveraged by directing them to more lucrative content.

That doesn’t work on mobile. The argument for writing the uneconomic news piece that attracts the user to the site who will then go on to the lucrative real estate section is now moot. Those trying to make an economic case for the kind of content that is important for democracy but not for advertisers will find themselves on shifting sands.

Native advertising, the overladen vehicle upon which so many of publishers hopes now rest, faces the same challenges in an atomized content world. When working as intended, native advertising is commercial content intended to elicit the same user experience as the editorial content that surrounds it. In an atomized world, no editorial content surrounds it. It exists alone in the stream, adrift from the content it was intended to mimic.

With that unbundling, the only economic purpose for a site that makes its living from native advertising to create content other than native advertising is to maintain its brand. This means that the media company becomes a native advertising creative agency with an absurdly expensive brand marketing department formerly known as the newsroom.

This may in itself be no bad thing. Newsrooms have been supported by billionaires and test-prep businesses for more esoteric reasons than this. However, native advertising content must support two brands. The media company’s brand must be expressed strongly enough to tie its native advertising to the rest of the content that justifies its premium, while simultaneously fading into the background enough for the advertisers brand to shine through and achieve its goals. This is hard to do.

As we move past the jazz-hands era of native advertising where outlandish CPMs could thrive hand in hand with the vaguest of returns, media companies will be under increasing pressure to deliver something concrete just as their own business becomes more and more dependent on intangibility.

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Tony Haile is the founding CEO of Chartbeat and an adjunct professor of media and technology at Columbia and Stanford Universities. Reach him @arctictony.