Facebook Not Getting Into Content Creation

In an article on streamingmedia.com, author Adrian Pennington writes about a keynote speech at the broadcast trade show, IBC, by Joanna Shields, European vice president and managing director for Facebook.  Shields states that all the talk of Facebook entering into content creation is just that, talk; there is no truth to the rumors.

Shields did state that there is a strong tie of television to social media, and that “all TV will be social in the future.” (Pennington)  Her opinion is that TV was the first of the so-called social networks, and she believes television is actually a better medium when it is indeed social, involving the viewer in entirely new ways. 

This is very interesting, as Shields further explains that she believes the use of Facebook by its 750 million users will provide new viewing experiences, making the whole process better, and even creating new sources of revenue.  Her main point was that media companies who partner with Facebook could tap into the same power to share its users possess, of sharing with others the things they care most about.

This is a most interesting concept, as Facebook has turned into a hub of connections: people, print media, TV, radio, etc., all have an outlet offering with Facebook.  Shields sees this as a natural resource that can be monetized, in a “word-of-mouth” sort of way, but on a much grander scale – especially when one considers the Facebook facts: on average, Facebook users have 130 friends, and if an item is shared with each of those friends, and with the friends of those friends, and so on, the potential is 2.1 million friends of friends of friends – and these are people talking about products and programs that they care about, not just random eyeballs or ears.  (Pennington)

Examples of monetization, as provided by Shields, include: sponsored stories, movie rentals, voting on a television program, and playing games.  Her biggest concern, as it should be, is that of possibly missing something in this ever-changing world of interconnectivity.  It will be interesting to see how much of this speech comes to fruition in the coming months and years.

Fox closes door on TV’s free lunch

In a July 27, 2011 column for AdAge.com, Brian Steinberg writes about the latest development in the disappearance of “free TV”, namely that News Corp.’s Fox is ending the availability of new episodes of such popular shows as “House” and “Fringe” to online viewers who don’t pay some type of subscription fee.

Steinberg makes the point that there are many viewers who forget that producing such favorite shows takes capital to cover expenses such as on-camera talent, special effects, and shooting on location.  He continues to explain to us that advertising used to provide that cash flow, and while this has not completely gone away, it is much less than it used to be.  In 2004, the pre-season sales push called an “up-front” snagged as much as $9.5 billion in contracts for networks, but this year, the amount was down to around $8.8 billion to $9.3 billion.  It sounds like a .2 difference isn’t that much, but when you consider that represents $200 million, that is a lot of money, the cost of producing many episodes of a television episodic for quite some time.

One of the points Steinberg stresses is about Hulu, and the fact that, while Hulu Plus is a subscription service that does bring in money to networks participating in supplying content for viewers, the free on-site selections are supported by ad sales alone, and this is a fraction of what networks are used to getting.  But the interesting thing here is, Hulu is partially owned by Fox.  And as Steinberg mentions, one would think that Fox would be interested in using whatever tactics it has available to drive traffic to this site by offering popular, free programming.  Now, with Fox pulling back on content, it seems the days of free online video by Hulu may be coming to a close. 

The crux of this action by Fox is really this: the distributors of TV content will make sure the viewers pay for the ability to watch their content, whether it be local news or the latest and greatest reality program; it will be paid for, by the viewer, through un-skipable advertising spots or through subscription fees or maybe both.  Steinberg makes an excellent point, “TV, especially in these days of rapid technological change, is best thought of as a business associate. Sure, the thing is friendly, but there's always the expectation of money hanging in the wind. Fox just made that abundantly clear to those who were looking for a hug rather than making a handout.” (Steinberg)