Facebook Facing the Same Challenge As Every Media Owner: Editorial Integrity vs Advertising Revenue

So Facebook’s results are out and they are largely positive — at least as positive as the previous quarter’s. Which just goes to show fickle the stockmarket can be: last quarter Facebook’s shares took a hammering, whereas this time around they’re up 13%.

Personally I’m more interested in the business than the vagaries of the stock market, and particularly in the challenge that Facebook is now facing. Because it appears to me that this very modern business is facing a very old challenge.

Newspapers and magazines can very rarely survive on the cover price alone. So they take in advertising. This advertising sometimes comes in very innocuous forms that can be of great value to the consumer: for example, small ads. Or it can be rather more insidious: poorly flagged ‘advertorials’ for example, adverts masquerading as independent editorial content.

At worst, the wall between editorial independence and advertising revenue can be demolished altogether and when that happens, the ‘news’ is defined by whoever pays the most money.

Now take a look at Facebook. It may be we who generate the editorial content, rather than a team of journalists, but its business is not that different to that of a newspaper or magazine. More than 80% of its revenue comes from advertising. And as it tries to grow that revenue, it is going to be pushing the boundaries of our editorial independence.

Take for example, Promoted Posts: the ability for advertisers to bump up the visibility of their posts to those who have liked their page — and their friends. This is an explicit manipulation of the feeds we receive from our friends, confusing what might be important/valuable to us, with what someone else wants to be important.

Likewise with mobile: with limited screen real estate, how is Facebook going to insert ads without squeezing them into the streams that we really want to read?

These are my concerns for Facebook, because I think many users are already reaching the limit of their tolerance with the platform. Privacy breaches and unwelcome redesigns have already tested people’s commitment. And in the last couple of years we’ve seen growth rates slow and even temporarily reverse in some territories around the world.

As ever I’m not saying Facebook is going to fail tomorrow. Or that I don’t like the platform: I am one of the billion active users. But I think it has a serious challenge on its hands to sustain its position in the market, and I don’t fancy its chances in the long term.

We’re just not that tied to Facebook. The more it infringes on our editorial control, the more we will move away.