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News is the new opiate of the masses, according to philosopher Alain de Botton. The news fix is largely generated, delivered and consumed online 24x7. Among younger people, online news consumption is thrice as common as offline. Increasingly, it is delivered on handhelds, like smartphones and phablets.
Browsing habits have changed as mobile penetration has risen. People don't visit homepages of news sites -they go directly to specific links. Media apps are also popular. Consumers want video, zoomable pictures, podcasts, interactive maps and charts. Those bells and whistles are data-intensive. Links are sourced off the social media. Facebook, or FB, Twitter, Google+, LinkedIn and WhatsApp drive an increasing share of the referrals to news sites. All this has changed how content is created and also subverted advertising trends and processes.
The changeover to mobile has already been disruptive and will get more so. Disruption throws up new leaders. One of those leaders is FB: the social networking giant is working hard to cement its dominance of the mobile space. India is one of the world's largest, fastest growing markets. Whatever FB does will have an India angle.
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FB has three recent mobile initiatives. One is the Facebook Lite app for Android.(http://play.google.com/store/apps/details?id=com.facebook.lite&hl=enplay.google.com/store/apps/details?id=com.facebook.lite&hl=en) This is designed to access FB on low bandwidth networks. The new app offers basic functions like the FB news feed, status updates and notifications. The barebones app should pull in "the next billion" since it allows for minimal data transfers on poor networks.
Social scientist Nishtha Gautam has used FB Lite while travelling in Uttar Pradesh. She describes it as "clutter free". "But sometimes," she says, "I missed the frills of full blown FB." Development banker Neha Kumar says with mild sarcasm, "FB Lite would be useful on all rated 3G networks that aren't actually 3G. I am inured to waiting and waiting for stuff that doesn't load."
The second initiative is internet.org that has rolled out in 12 countries. Here, FB put together a partnership with telecom operators, developers and commercial entities. The telecom operators offer free basic connectivity with minimum data usage. FB lays down the technical parameters for design.
The killer deal is that internet.org is free. In India, it's available only on the Reliance Communication network in seven circles (the country is divided into 22 telecom circles.) Multiple news providers, including the regional media, are on internet.org.
The platform has received flak for two reasons. One, it has zero security and privacy. Commercial transactions are out of the question. Two, offering a bouquet of free sites violates the concept of net neutrality. Dwelling on those controversies would lead us far afield, so let's just say that these are widespread concerns.
An FB spokesperson says, "We're working on support for secure protocols, while staying data-light. If developers can put together secure e-commerce options, it would be great." FB also claims internet.org has a high conversion rate for newbies. Many internet.org surfers convert to paid services. Again, this could attract the next billion.
FB's third initiative has had a soft launch. It is currently in the pilot phase. But it could transform news delivery and advertising. The "Instant Articles", or IA, initiative is a partnership between FB and media organisations. The social network hosts content from its media partners directly on its own servers. That content is served up from the FB app to users (www.facebook.com/instantArticles).
Right now, IA is available only on the iPhone FB app. It carries content from nine media partners: The New York Times, BuzzFeed, National Geographic, NBC News, The Atlantic, BBC News, The Guardian and German majors Bild and Der Spiegel. The advertising arrangement is generous. If FB sells ads, it splits revenue, keeping 30 per cent and handing over 70 per cent. If the media partner sells the ads, it keeps all the revenue.
By hosting on its servers, FB can serve content quicker and it can add features like interactive maps, embedded video and high resolution pictures. It also keeps the surfer locked within a controlled environment.
FB claims that it can load IA content up to about 10 times quicker than an external link. The user experience seems positive, though the soft launch meant many users hadn't heard of it when contacted by Business Standard.
Jane Furey, who serves as a social media mentor on the Gold Coast of Queensland, says, "I can relate to IA. I often shut down links because they take too long to load. I liked some of the pages and did a few test runs. The results were fabulous: fast, smooth, satisfying. I'm impressed." The experience for iPhone users in India was spotty, perhaps because networks here are low quality.
The FB spokesperson says, "We can't set a schedule, but we're certainly looking to roll IA out for Android users. Also, given that India is our second-largest base, we definitely want to localise the media content. In fact, we'll surely look at more media partners everywhere."
The implications of IA are interesting. Facebook drives about 34 per cent of referrals to the top 100 news sites. Google (about 41 per cent of referrals from all properties) leads FB. But the gap between referrals from search and referrals from the social media is narrowing. A year ago, Google referred 44 per cent of traffic and FB, 26 per cent.
FB claims news referrals from Facebook Messenger have risen by 1.7 times in the last year. If all those numbers are consistent with each other, the implication is that traffic to the top 100 news sites has doubled in the past year. This is not impossible. Certainly mobile traffic has increased globally. 3G Data traffic has doubled in India and smartphone adoption is increasing everywhere.
But as FB drives more news traffic, news providers will become more dependent on it as a hub. Since IA is free, it will impact subscription models. Advertising revenue can compensate certainly but that will depend on the terms of engagement with FB.
FB has much more conservative censorship standards than many news sites. It also uses an algorithm to decide what will show up in individual news feeds. That algorithm is tweaked continuously and it's opaque. It can make or break an FB developer, or partner, since the algorithm decides how often something will be displayed, and to whom.
Zynga, the game developer and former FB partner, was hit hard when the algorithm was changed. When Farmville was big and players on FB bought virtual goods like tractors, the revenue was split 70:30 (FB keeping 30 per cent). In 2011, Zynga generated 80 per cent of all its revenue from FB, while FB generated 12 per cent of its revenue from Zynga.
Then FB started developing its own games and changed its algorithm, partly as a response to users complaining about being spammed by game invites. The Zynga stock collapsed 90 per cent. (A former developer admits Zynga was also hit because it was slow to move to mobile).
A media partner in IA would be similarly vulnerable to changes in that algorithm. If content of some sort is filtered out, the media partner loses. Equally, it may gain if content of some description is repeatedly pushed into many news feeds.
Either way, the heightened dependency on FB could be dangerous. It is entirely possible that FB can create a bubble, driven by user-preference but invisible to the user.
A telling example: there have been protests across America ever since an unarmed black man, Michael Brown, was shot by a police officer in Ferguson, Missouri, on August 9, 2014. You could be blissfully unaware of this, if FB is your only news source.
Extrapolating, there is the fear that surfers will be herded into nice, sanitised gardens where they are served bland, curated mixtures of ads and news with the more unsettling events and the more outre opinions being airbrushed.
Sumant Srivathsan, a digital marketer, says, "I don't like the idea of FB as a gatekeeper for content. If I'm left-of-centre, I might be more likely to see left-leaning content. This bugs me. I want to see what Subramanian Swamy has to say too."
It is impossible to predict exactly how this will pan out. Just as the algorithm may impose change on the media, it is possible the media will force changes on the algorithm. We can safely say, however, that IA is a game changer.
What do FB's initiatives mean for India? Well, India is an exceptional market due to its sheer size. In March 2015, there were 970 million mobile subscribers and over 250 million Internet users. About two-thirds of Indian Internet traffic is mobile. Data traffic on 3G doubled last year. There is a massive market for news. It goes off the scale when the regional media is taken into account.
About 40 per cent of India's e-commerce by value (over 50 per cent by transactions) is via mobile. Typically, banking services, travel, entertainment, electronic items are popular. Research is also a big driver. Everybody runs searches before buying something, even if the purchase is offline.
The projections are insane at first glance but credible. Indian data traffic is expected to grow 13 times by 2019-20. Growth will be driven by greater smartphone penetration, faster networks and the aspirations of a growing middle-class.
The learning curve will be steep for the media and media planners as the social media imposes change. Suresh Balakrishna, CEO, BPN India, admits nobody has cracked mobile advertising yet. "Certainly we have not mastered the medium. We are still adapting TV ads for mobile!"
Ashish Bhasin, chairman and CEO (South Asia), Dentsu Aegis Network, estimates, "Digital advertising is growing at 30-35 per cent, about thrice as fast as overall advertising. Other markets have seen an inflection point when smartphone penetration reaches over 35 per cent. In India, smartphone usage is 15-18 per cent, so I would say India is 18-24 months from that inflection point."
Bhasin also says, "Digital advertising is more interactive. On the Internet, you have 30 million channels. So, programmatic advertising is needed with intelligent solutions." "Online or mobile news has a large slice of mind space but a small slice of wallet space," adds Balakrishna. "About 10 per cent of advertising is going to digital/mobile space and this will go up to 20 per cent in the next three years. So it is going to grow extremely fast."
If we go crystal-gazing, the implications are uncertain. Other players are bound to challenge FB in the digital space. Successful or not, they will evolve different models. Competition should result in content of higher digital quality becoming available. The revenue model will change in not-so-predictable ways.
In the early days of the Net, the meme of the pipe smoking nun drove innovation: the internet created space even for minority groups like pipe-smoking nuns. One can only hope that the evolution of a paradigm where the mainstream media is driven by the social media doesn't stifle that pioneering spirit.
Ranjita Ganesan contributed to this report
"I read links my friends post. I also read several online news sites. In my circle, I'm often the first to know about events"
Jane Furey
Social media mentor, Queensland, Australia
"I haven't read a newspaper in months. I check out what's trending on Facebook and Twitter, and I follow links from the people I trust"
Joy Bhattacharya
Project director, FIFA U-17 World Cup, NCR
"The vast majority of the news I read starts with someone posting a link on FB or Twitter, and then there are other links to follow. Feedly is my primary feed reader"
Sumant Srivathsan
Digital marketer, Mumbai
