Facebook may be playing catch-up on video, but it is going all in

It’s often difficult to figure out exactly where some social services are headed, since they seem to be going in half a dozen different directions at once. But that’s not a problem with Facebook. Co-founder and CEO Mark Zuckerberg has made it crystal clear for some time that he sees video—and particularly live video—as the future, and the social network is busy doubling down on that bet. And given its size and reach, it would be unwise to bet against the big blue machine.

Zuckerberg’s clearest statement about where he sees Facebook going came last year at the social network’s F8 developer conference in San Francisco. Asked about the future of the news feed, the Facebook CEO said: “Fast forward five years, it’s going to be [mostly] video. If you look out even further, it will be more immersive content like AR and VR.” According to some recent reports, Zuckerberg is “obsessed” with live-streaming.

In the meantime, the network’s engineers have been busy tweaking the algorithm to push videos—especially news-worthy or popular ones—higher in the news feed. And all that tweaking has had the desired effect: Facebook now gets more than 8 billion video views a day. A view is defined as anything longer than three seconds, but that is still a massive amount of video content being watched on the platform (Snapchat is also close to this number).

It’s not as though the power of video—or the fact that video views still monetize better than just about any other form of content—is a big secret in social media-land. YouTube is a massive revenue generator for Google (now known as Alphabet) and has been for some time, pulling in about $7 billion in revenue last year according to some estimates. With those kinds of numbers, YouTube could easily be worth as much as $70 billion if it was a standalone business.

In fact, Facebook has been taking a very similar approach to video as YouTube took in its early days, in the sense that much of the most popular video content on the network consists of bootlegged or “freebooted” clips of the latest viral event. The company says it is working on its own version of YouTube’s Content ID for copyright holders, but in the meantime it is getting massive video numbers, and it is becoming known as the place to go for that kind of content.

So in video, as in so many other things, Facebook is playing catch-up. But some of the best technology companies out there (including Google) have done the same thing: Wait until a trend becomes fairly obvious, and then throw everything you have at it, including acquiring whoever seems to have momentum. It’s why Facebook was willing to pay so much for both Instagram and WhatsApp, and combining those businesses with the network’s massive reach has been like pouring gasoline on a fire.

In December, Facebook boosted its video bets by rolling out live video for all users, something it had been beta-testing with celebrities such as comedian Ricky Gervais and media entities like Univision, where anchor Jorge Ramos has been using the feature to do live reporting on breaking news stories. And this week, the social network announced that it is tweaking the news feed again, to make live video reports more prominent. It described the new feature in a blog post.

“We are considering Live Videos as a new content type – different from normal videos – and learning how to rank them for people in News Feed,” Facebook said. “As a first step, we are making a small update to News Feed so that Facebook Live videos are more likely to appear higher in News Feed when those videos are actually live, compared to after they are no longer live. People spend more than 3x more time watching a Facebook Live video on average compared to a video that’s no longer live.”

As with virtually everything that Facebook does, the end goal is to drive engagement—to keep users on the platform longer, so that they become more valuable to advertisers. And there are reports that Facebook is courting Hollywood stars with offers to pay them to use the live-video feature, just as it has been trying to convince newspapers and other publishers to provide content via Instant Articles.

Facebook may have started out trying to make the news feed “the best personalized newspaper,” as Zuckerberg and product head Chris Cox once described it, but it’s clear that the future of the news feed looks a lot more like TV than it does like a newspaper.

The giant social network is far from alone in planning for this future, obviously. Even newspapers are trying to become video platforms. Twitter has a live video platform called Periscope that it has been trying to get some traction for, but Facebook’s network effects are so powerful that it could easily leapfrog over everyone else. The effect of having more than a billion people a day using your platform and sharing videos is a huge competitive advantage.

So what comes next? It’s not hard to see Facebook following the YouTube model even further. Just as the Alphabet subsidiary is making the transition from being a free-for-all video platform to a more subscription-based future with services like YouTube Red, it wouldn’t be surprising to see Facebook at some point forming partnerships with video creators or media outlets and giving them a platform for their own TV-like creations, and possibly even subscription services.

If the future of the web looks like the early days of cable TV, as some media-watchers have argued, then Facebook doesn’t just want to be another channel—it wants to be the TV set, cable box and the platform for all the channels at the same time. And it has a market cap of $300 billion and about $17 billion worth of cash on hand that it would be more than happy to spend in order to buy that future.

This rant reads like a parody of a print-media dinosaur, but it’s not

Jim Romenesko got an email from an ex-USA Today newspaper executive who was up in arms about comments made by the current editor-in-chief of the paper, David Callaway, who said that he could see the paper stop publishing daily in “five or six years.” This former ad-sales manager, Jim Gath, wrote a long rant on Facebook — which Romenesko also published on his blog. I’ve read a lot of pro-print and anti-digital invective from newspaper executives over the years, but this one takes the cake.

In a nutshell, Gath says the biggest problem with print newspapers isn’t a secular or systemic decline in print advertising because of the internet and competing platforms like Facebook. It’s the lack of executives with “guts,” he says. Oh, and also too many corporations that are run by “bean counters.” The fact that print media may be on the down-swing business-wise is nothing but an excuse, he says:

“That’s the excuse of losers. The excuse of hand-wringers who have no idea what to do. The excuse of the unimaginative. The excuse of those who don’t have the thrill of challenges & of competition coursing through their bloodstreams. The excuse of people who buy into the notion that ‘it just can’t be done’. The excuse of big corporations run by bean-counters.”

2583886589_01ce541f8a_z

Gath goes on at length about the guts and determination of the early USA Today staff, from the “delivery people who drove through the morning darkness” to the people who slept “4 to a room for 3 hours a night just to get the paper out.” If it wasn’t about a newspaper, it would sound an awful lot like the big speech made in every cheesy war movie. I kept waiting for him to repeat the line from Animal House: “Was it over when the Germans bombed Pearl Harbor? No!”

USA Today founder Al Neuharth got the “bean counters” in a room and “read them the riot act.” But the great franchise is dying, Gath says — because no one has any guts any more. There’s “No imagination. No competitive spirit. No drive.” Nothing about the way that advertising has changed with digital, nothing about competitive pressure from online platforms, nothing about the loss of a print-based monopoly or the evolution of information distribution. Just no one with guts, and too many bean-counters.

If I hadn’t seen it on Romenesko, I would have thought it was a post on Clickhole, the parody site run by The Onion. Unfortunately, it’s not a parody. At least we can rest easy knowing that Jim Gath doesn’t run a real newspaper any more.

How early newspapers were like the Internet

It was a common practice for 19th-century newspapers to republish poems, fiction excerpts, and even lists of facts that were originally published elsewhere. Editors would subscribe to many newspapers and would cut out things they thought were interesting, relevant, or fit a space on the page that they needed to fill and then republish them in their own papers, Cordell explained.

“Many 19th-century newspapers are comprised primarily of content from other newspapers,” he said. “They were more aggregators than producers of original content. And often they were created by very small staffs, and scholars such as Ellen Gruber Garvey have shown that this aggregation is what allowed newspapers to spread as rapidly as they did in the 19th century, because you didn’t have to produce the whole thing.”

Source: Listicles, aggregation, and content gone viral: How 1800s newspapers prefigured today’s Internet » Nieman Journalism Lab

Young Saudis Find Freedom On Their Phones

This is a fascinating New York Times piece about how Saudi teens use apps to get around the conservative culture in that country:

Life for many young Saudis is an ecosystem of apps. Lacking free speech, they debate on Twitter. Since they cannot flirt at the mall, they do it on WhatsApp and Snapchat. Young women who cannot find jobs sell food or jewelry through Instagram. Since they are banned from driving, they get rides from car services like Uber and Careem. And in a country where shops close for five daily Muslim prayers, there are apps that issue a call to prayer from your pocket and calculate whether you can reach, say, the nearest Dunkin’ Donuts before it shuts.

Source: Young Saudis, Bound by Conservative Strictures, Find Freedom on Their Phones – NYTimes.com

Twitter’s multibillion-dollar mistake happened five years ago

There’s been a lot of attention paid to Twitter recently, thanks in part to a disappointing earnings report that caused the stock to fall by more than 20 percent, wiping about $8 billion from the company’s market value. But this is about more than just a quarter that failed to meet the market’s expectations for profit or revenue growth — it’s about whether Twitter can ever meet those expectations, given the way the service is constructed and the strategy that it has chosen to follow.

Ironically, many of the things that currently hinder Twitter’s success arguably originated because of the company’s attempts to generate the kind of financial results that would meet Wall Street expectations.

Freelance tech analyst Ben Thompson has written about many of these issues recently, both on his Stratechery blog and in his email newsletter . In one of the latest, Ben argued that Twitter needs new leadership, in part because it can’t seem to figure out how to generate enough growth in new users and because its advertising strategy is all over the map. The current leadership of the company simply hasn’t shown that it can meet either challenge, he says:

The trouble for Twitter is that awareness of the service has long outstripped its usability. And yet, despite the fact that Twitter has struggled with new user growth for years, almost nothing was done to improve the product or on-boarding experience until just the last few months, when the company finally rolled out a new logged-out page meant to entice people with Twitter’s content, as well as an instant timeline that helped people get started. Unfortunately, both efforts seem to be too little too late: Twitter admitted on the earnings call that neither improvement had increased retention.

Bulldozing the third-party ecosystem

In addition to all of that, Ben also focuses — both in his latest post and in some of his more recent writings — on something that I’ve thought a lot: Namely, a crucial turning point in Twitter’s evolution that arguably helped put it where it is today, both in a positive sense (it is a publicly-traded $25-billion company) and a negative one (its growth potential is in question and its strategy doesn’t seem to be working). And that turning point happened about five years ago, when Twitter decided to turn its back on the third-party ecosystem that helped make it successful in the first place.

Screenshot from 2015-04-30 13:18:40

This process began gradually, with the acquisition of Tweetie — which became Twitter’s official iOS client — and restrictions on what third parties could do with tweets, including selling advertising related to them. But it escalated quickly, and arguably became an all-out war with Twitter’s moves against Bill Gross, the Idealab founder and inventor of search-related advertising, who was busy acquiring Twitter clients and trying to build an ad model around the public Twitter stream. The idea that someone could monetize Twitter before Twitter itself got around to doing so was what one investor called a “holy shit moment” for the company. As I wrote at the time:

Critics have accused the company of “nuking” the developers and services that helped it achieve its early growth in its drive to monetize its network, in much the same way that Hunch founder and angel investor Chris Dixon criticized the company last year for “acting like a drunk guy with an Uzi” after it acquired Tweetie. Anyone who is still under the impression that Twitter is the friendly, touchy-feely company that co-founder Evan Williams used to run — the one that admitted it “screwed up” relations with developers by moving too quickly — is living in a dream world.

The board of directors and Twitter’s executive team clearly believed that in order to manage the growth of the company — and in order to generate enough revenue to justify the multibillion-dollar valuation given to it by its investors — Twitter needed to take full control over every aspect of the service. So third-party clients were shut down or restricted, API access and advertising rules were strictly enforced, and so on. For many of the developers and startups that helped generate user growth for Twitter in its early days this was a kick in the teeth, but that didn’t matter. Twitter was going public and getting a good valuation was top of the list of must-have items.

Could it have taken a different path?

Twitter obviously felt that this was the only route available to it — but is that true? I don’t think so, and neither do others, including one of the earliest Twitter employees: Alex Payne, who ran the developer and platform side of the company for a long time. After he left in 2010, he described a letter that he had sent to the executive team arguing that Twitter was making a mistake by closing down the network, and that it should have made the opposite decision: that is, by becoming as open as possible. In a nutshell, he said, Twitter’s choice was to become more open — to decentralize the network — or die like other walled-garden platforms before it.

3922769600_6ba6363e7d_z (1)

Ben makes a somewhat similar argument in his “Twitter and What Might Have Been” post: although he doesn’t say Twitter will die because of the decisions it made, he does say that the company could arguably have generated as much or more value by taking the open path rather than shutting down the ecosystem. And that’s because the core value of the service is the “interest graph” of its users, not the app itself or timeline views or whatever other metrics the company has come up with to satisfy Wall Street. And monetizing that interest graph might actually be better accomplished with partners rather than trying to do it all within the native app or website:

I would argue that what makes Twitter the company valuable is not Twitter the app or 140 characters or @names or anything else having to do with the product: rather, it’s the interest graph that is nearly priceless. More specifically, it is Twitter identities and the understanding that can be gleaned from how those identities are used and how they interact that matters. If one starts with that sort of understanding — that Twitter the company is about the graph, not the app — one would make very different decisions. For one, the clear priority would not be increasing ad inventory on the Twitter timeline (which in this understanding is but one manifestation of an interest graph) but rather ensuring as many people as possible have and use a Twitter identity. And what would be the best way to do that? Through 3rd-parties, of course!

Last year, Twitter effectively admitted that it needed third-party developers and apps to achieve its growth potential: the company had a developer conference and talked about how it wanted to work with outside entities to build things that would work with the API, including some new ventures aimed at turning Twitter into a single-login identity service and other initiatives collectively known as Fabric.

For anyone who had worked with Twitter in the past, however, this was a little bit like Fox Inc. asking for chicken volunteers to help it build a new hen-house. As far as I can tell, there’s little or no evidence that Twitter’s outreach program is working.

What would Twitter be like today if it had embraced its ecosystem and tried to build on it instead of cutting it off at the knees? I don’t really know, and I’m not sure anyone does. But I think it would have a lot more goodwill to spend — both with developers and with users — than it does now, and I think many aspects of the service that it is now trying to build up, including smart recommendations and curation, would be a lot better off with outside input than they are now.

Would that help Twitter justify its multibillion-dollar market cap? I don’t know. But as a user, I think it would ultimately be a better service, and maybe even a better company.