
Facebook and the Media Have an Increasingly Landlord-Tenant Style Relationship - e15ctr0n
http://fortune.com/2015/11/09/facebook-media/
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dworin
This sounds more like having a distributor than having a landlord.

Imagine you create a craft beer. You can't build a relationship with all of
the bars, restaurants, nightclubs, gas stations, convenience stores, and
grocery stores that sell beer. So you sell through a distributor, who has all
of those relationships. The amount of product you sell is now at the whim of
that distributor.

You own the product. The distributor owns the means of getting it to the
audience. You can sell some direct, but not as much as the distributor can. So
you go to them for volume.

You can increase sales by creating a better product, so consumers demand it
(i.e. high quality content). You can provide incentives to the distributor
(i.e. paid ads on FB). You can do some of your own marketing to make it appear
more valuable. But ultimately, you have to sell to the distributor as much as
the end customer.

And if you're in a popular category (content/craft beer), the more people that
enter, and the more product they have, the less share of shelf-space (which is
like the facebook feed) any one product is going to get.

~~~
morgante
The differences are two-fold:

(1) There are multiple competing distributors who compete for your business.
On the other hand, Facebook holds a monopoly on the time spent on its page and
is incredibly dominant.

(2) Distributors don't typically compete with producers, but Facebook does. It
also has "owned" content (friend's updates, videos, etc.) which it can serve
without giving any traffic to media producers. This gives it a much stronger
negotiating advantage.

~~~
saurik
On #2, the IRL version is a house brand, a strategy that even retailers such
as Best Buy utilize.

~~~
morgante
Yes, many retailers have house brands. But I don't know of any distributors
that do.

~~~
saurik
OK, I see: the original example involved dealing with lots of small chains. I
failed to catch that, as that's not how larger chains like Best Buy and Wal-
Mart work (you tend to just deal with them directly, and they can demand that
by being large), and for my kind of business they are whom I care about ;P.

FWIW, I thereby will argue that Facebook is acting more like a "retailer" than
either a landlord or a distributor ;P. You are trying to get space on their
shelves so people "browsing" see the things you are selling. You technically
can create your own store somewhere, but people don't randomly browse there.

One of my favorite stories of the relationship between a retailer and a
supplier is that of Wal-Mart dealing with record labels in the mid-2000s. Wal-
Mart, Target, and Best Buy represented over half of all music sales, but from
the perspective of those stores music was, at best, a loss-leader for stereo
systems.

[http://www.rollingstone.com/music/news/wal-mart-
wants-10-cds...](http://www.rollingstone.com/music/news/wal-mart-
wants-10-cds-20041012)

> "This wasn't framed as a gentle negotiation," says one label rep. "It's a
> line in the sand -- you don't do this, then the threat is this." (Wal-Mart
> denies these claims.) ... "We're in such a competitive world, and you can't
> reach consumers if you're not in Wal-Mart," admits another label executive.

> While Wal-Mart represents nearly twenty percent of major-label music sales,
> music represents only about two percent of Wal-Mart's total sales. "If they
> got out of selling music, it would mean nothing to them," says another label
> executive. "This keeps me awake at night."

> For the music industry, having such a dominant retailer is like being stuck
> in a bad marriage. Whereas traditional music retailers took advertising
> money from the labels to push new releases in Sunday newspaper circulars,
> Wal-Mart barely advertises locally. It relies on national campaigns, where
> it promotes its own low-price policy. "Wal-Mart has no long-term care for an
> individual artist or marketing plan, unlike the specialty stores, which were
> a real business partner," says one former distribution executive. "At Wal-
> Mart, we're a commodity and have to fight for shelf space like Colgate
> fights for shelf space."

------
morgante
Sharecropping is a better metaphor.

Facebook owns the audience (land), but they don't yet have the ability to
fully satisfy (farm) that audience. So they direct traffic out to publishers
who provide content to fulfill that demand. Like sharecropping, they split the
revenue.

Of course, there's a reason that sharecropping has a bad name: all the power
is held by the owner (Facebook). They can, and probably will, shift to a model
of owning the content directly.

In 10 years, I wouldn't be surprised if most publishers were dead, replaced by
Facebook directly paying creators. (We can already see this in television,
with Netflix directly producing their own content.)

~~~
itchyouch
I think this is unlikely as facebook generating media for consumption isn't
part of their core competency. It's meant more to be a platform for connecting
users together.

More compellingly, content generation could be owned by facebook if there was
a limited set of content to generate. Farms produce some limited subset of
crops (e.g. corn, rice). Netflix produces a limited set of tv shows. Netflix
with only the shows that netflix creates wouldn't be as compelling without
access to the other large corpus of shows. The same would be for FB. While it
could be argued that FB could generate its own content, like Apple/Google apps
on the app stores + other apps, I doubt that the cost/benefit of FB becoming
their own content producing shop will ever be compelling enough to kick out
the existing media companies.

~~~
morgante
You're right that Facebook will probably never completely kick out existing
media companies.

It'll probably follow the Netflix model more closely: building specific pieces
of content which it thinks are desirable for the platform and as a competitive
edge against others.

One example: I envision Facebook expanding its "trending stories" feature to
include a full-length in-house article about trending news.

~~~
riskneural
Would you believe for a moment news published directly by facebook? What about
the risk that they simply used your data as news? What about yesterday's
fiasco, in which they digitally enabled support for fashionable Paris in
geographic regions which have their own ignored tragedies?

~~~
ethbro
I think this can be summarized into a cleaner formulation: by controlling the
last mile, Facebook obtains the ability (though not the requirement) to absorb
whatever components of the experience they choose.

This has always been one of Microsoft and Apple's biggest strengths (though
executed with varying degrees of competency at various times for both of
them).

Facebook isn't going to replace all existing publishers, but it very well
might become a publisher for a few very profitable sub-niches / types of
content.

Or more likely (again, a la Microsoft and Apple) simply buy quality publishers
in those niches. Because quality, but under-supported publisher + first-party
FB analytics, advertising ability, & platform control = a pretty winning play.

~~~
tracker1
Something like Huffington Post owned by FB would be pretty powerful, and fit
well within FB as an org and platform... The integration could be very clean
given their understanding of your interests... there's already promoted
articles, and other similar articles when you comment on something... adding
in more FB control and integration could very well be a next step for them.

------
d4rti
If your business is dependent on Facebook you need a plan for if all that
traffic goes to 0. It's happened to the news media, it's happened to games on
Facebook, it will happen again.

Like the scorpion, it is in its nature.

~~~
greyman
I'd like to add that it didn't happen to news media (yet). I help with SEO for
one middle-sized news media, and FB traffic is up to 25%, not more. I have
read that others have bigger numbers, though.

------
wahsd
I'll say it can keep saying it until the day people start realizing that it
was real, Zuckerberg has expressed that he wants to replace the internet with
Facebook, even if just in the vast majority of people's minds and thereby
essentially atrophying and starving the open internet. He is a direct threat
to the internet and freedom in general and that doesn't even consider the
deliberate and cooperative relationship he has with the intelligence networks
to create mass surveillance systems which each individual maintains a dossier
about themselves on.

~~~
laotzu
>Once we have surrendered our senses and nervous systems to the private
manipulation of those who would try to benefit from taking a lease on our eyes
and ears and nerves, we don't really have any rights left. Leasing our eyes
and ears and nerves to commercial interests is like handing over the common
speech to a private corporation, or like giving the earth's atmosphere to a
company as a monopoly.

-Marshall McLuhan

~~~
pdkl95
[https://www.youtube.com/watch?v=bm-
Jjvqu3U4](https://www.youtube.com/watch?v=bm-Jjvqu3U4)

While Vihart is talking about youtube in this video, her discussion of Edmond
Snow Carpenter's "They Became What They Beheld" is very relevant to this
situation as well. (note: Marshall McLuhan may have written an early version
the book)

Too much medium, not enough message.

------
vineet
I wonder what Google thinks of this - strategically. This should worry them a
little.

Maybe they need to create a 'Google Reader' :)

[edit: fixed typo]

~~~
morgante
Seriously, the death of Google Reader drove me straight into the arms of
Facebook.

~~~
tyfon
Pardon my ignorance (I don't have a facebook account), but how does facebook
even remotely do the same function as google reader? Can you put in rss feeds
to your front page on FB?

~~~
morgante
> how does facebook even remotely do the same function as google reader?

The problem which Google Reader solves is "show me some stories from a variety
of sites which interest me." Facebook also solves this, admittedly in a rather
different way, but it's still the same job to be done.

> Can you put in rss feeds to your front page on FB?

No. But that didn't keep me from replacing Google Reader with increase
Facebook use.

~~~
loxs
Actually it does something kinda sorta similar with Facebook Pages and Groups.
Especially now that lots of people write directly on their Pages instead of in
a blog. You can "like" the page which is similar to following RSS. Admittedly,
this is a lot different, as Facebook decides what you see. You are not
guaranteed to see all the postings and you can't "save them for later".

But it seems to work, at least for the bigger part of the population.

~~~
morgante
> You are not guaranteed to see all the postings and you can't "save them for
> later".

Actually, Facebook _does_ have a "save post" feature.

> But it seems to work, at least for the bigger part of the population.

Yup, it's a pretty suitable news/reader replacement.

------
jwatte
And some economists still think that "rent seeking" is not a thing :-)

