Facebook isn't the content industry's saviour

Facebook isn't the content industry's saviour

There is always the temptation to cast the biggest player embroiled in an event as the lead player, as the one in charge, in control and closest to winning. Facebook is big, and their dance card is full of content players, but they aren't the belle of the ball, they aren't playing in the content industry let alone winning it, and they certainly aren't in control of the content libraries.

They haven't "quietly given their ¾ of a billion users access to 3 of the worlds largest content libraries, direct to their screens, in a completely device neutral environment."

 * Netflix and Spotify gave Facebook access to their users, in exchange Facebook promotes those services and indirectly gives them access to its users. Saying that Facebook gave users access to the content libraries is the exact opposite of what happened (wet streets cause rain, etc.)

 * Netflix can't implement the Facebook sharing features in the US because of existing privacy laws. They're going to run into this in many, many, many more countries. For good reason, the new sharing features are a privacy violation on a scale so massive that users simply disbelieve their true extent.

 * Device support is implemented by the services; Facebook's platform is device agnostic not device neutral at the moment. Huge difference.

The deal between these content companies and Facebook is a mutually beneficial one and hinges on treating users as homogenous commodities. The content companies get to promote themselves on Facebook via its privacy-shattering universal sharing feature and in exchange Facebook has privacy-shattering access to the content services' users.

Beyond user information, there are many limits to Facebook's ability and power when it comes to these content collaborations. Facebook can't do anything when movie and TV studios refuse to license their content to Netflix. Facebook can't do anything when independent musicians refuse to give licenses to Spotify because they simply don't get paid by the service. Facebook can't ask those using the content services for money and in many cases can't even show them ads, such as when the integration is done in a standalone app like Spotify. Facebook can't even control how the services send it information; the services can all offer their users easy ways of turning off Facebook sharing if the service so desires.

Implicit in the idea that content is Facebook's future is the assumption that it will run a content service of its own, there's no reliable way for it to extract revenue from other service's users. This is usually the point where the Push Pop Press acquisition is brought into the debate.

Which is dumb. I'm sorry to say it, but treating a boutique shop of a handful of designers and programmers as if they were a major content company with expertise in licensing and content acquisition, is simply a bit dumb. Push Pop Press's core competencies were Objective C programming and design, it had no other competencies to speak of. Attributing magical powers to a small group of ex-Apple employees isn't exactly the smartest thing to do.

I'm expecting we shall see the handiwork of PPP's talent soon enough when Facebook releases its iPad app.

It doesn't answer the question as to whether Facebook will announce some sort of media or content venture, but there are a few other hindrances to Facebook's path to content industry nirvana:

 * Facebook is a worldwide company. It has millions and millions of users outside of North America and Western Europe. Streaming content services aren't worldwide. No company on the planet has the clout to acquire worldwide licensing for any content library, music, audio, video, or text. Any content streaming venture by Facebook will only give it a revenue stream for a minority of its current user base and a fraction of its future user base.

 * Relying on content streaming as a primary revenue stream leaves it vulnerable to hostile actions by major content companies. Just look at Netflix's recent price hikes and licensing difficulties.

 * It would be going against powerful incumbents whose survival depends on keeping it out of the market.

In publishing, any new player would find it difficult to give readers good reasons to switch away from Amazon, Barnes & Noble, Kobo, and Apple.

Amazon's tactic with the Kindle is the opposite of being device-centric. The Kindle devices are the hub, sure, but Amazon is committed to making all of its content available on every available platform. Building up the resources to surpass that level of universal availability takes time for even the largest companies.

B&N's tactic is similar to Amazon's, except they are focused on the US, which concentrates their resources and makes them hard to dislodge out of second place.

Kobo offers social sharing features, a gameified interface for those that want it, and international availability. Facebook could target them, but Kobo has a long history, longer than most people realise, and building up the expertise to dislodge them from third place would take a lot of time and effort. Facebook's best bet, if it wanted to enter the ebook arena, would be to acquire Kobo, but that would still only give it a presence and a business model in a fraction of the countries Facebook needs, and Kobo, even with Facebook's resources, would be unlikely to dislodge Amazon and B&N from the second and third places in the market.

That's without getting into other competitors, such as Google and Apple.

Facebook needs to turn its current capital expenditure into revenue, they don't need to spend even more to build up core competencies in new, highly competitive industries where success is very very uncertain and failure will cost them oodles of money.

Instead, Facebook's likeliest path is to continue doing what it does: 

 * Increase user lock-in with sharing features, platform features, and improvements to its core service.

 * Improve its ad platform's efficiency and ROI using people's data.

 * Add features to the ad platform to attract advertisers.

Content companies have a role to play in Facebook's future. By taking on all of the risk, tackling all of the licensing difficulties, and dealing with all of the content industry's many intricacies, Facebook's content partners free Facebook itself to concentrate on its platform and on revenue streams it won't have to share with fickle studios or technophobic publishers.