Facebook’s Paywall Feature Will be a Double-Edged Sword for Publishers

Facebook has reportedly been working on building support for paywalls and subscription models into its mobile-first Instant Articles platform. And as with so much of what the social network offers to publishers, it will be a giant double-edged sword.

The company is hoping to roll out support for third-party subscriptions by the end of this year, according to a recent report by the Wall Street Journal.

The proposed feature is still in the development stages, so it’s unclear whether Facebook is planning to take a percentage of the revenue from subscriptions that are activated through Instant Articles (as Apple does through Apple News) or allow publishers to keep all the money.

As far as the structure of the feature goes, Facebook reportedly prefers a metered approach where users would get a certain number of articles free every month before being asked to pay. This is the kind of paywall the New York Times offers.

Imposing such a feature could rankle some other publishers who have harder paywalls, however, such as the Journal itself, or the Financial Times.

There’s no question that support for subscriptions, in whatever way Facebook chooses to implement it, could be hugely beneficial to many media companies. As the social network and Google have increased their dominance in the advertising industry, many publishers have turned to subscriptions as a way of boosting their declining revenues.

According to a recent estimate by industry analyst Brian Wieser, the two digital giants now control more than 75% of the digital advertising business, and last year they accounted for almost 100% of the growth in that industry in the U.S.

Subscriptions have also become more appealing because outlets like the New York Times and Washington Post have been having so much success with them, thanks to what appears to be a backlash against President Donald Trump’s attacks on the media.

The risk in Facebook’s new feature, however, is the same as it is with almost every other Facebook offering: Namely, that it will pull media companies even further into the giant social network’s orbit, and thereby give it even more control over their fate.

Instant Articles itself, which formats news articles so they load faster on mobile devices, is exactly this kind of Faustian bargain. It solves a huge problem for many media companies, many of which can’t afford to come up with their own mobile solution, and it offers the potential of reaching Facebook’s massive 1.8-billion user base.

At the same time, however, it gives Facebook an enormous amount of control over the content that publishers produce and how they make money from it. And over the long term, it risks turning media companies into commodity suppliers of news to the social network.

Surveys show that large numbers of people who get their news from Facebook—including the millennial audiences that many media companies are so concerned about reaching—can’t remember the original source of the news they read on the site. The only source that matters is Facebook. What effect does that have on a media company’s brand?

The social network also has a history of changing its mind when it comes to features it offers to publishers. A number of years ago, many bet their future on so-called “social reader apps,” which lived on Facebook and for a time brought in millions of new readers.

That worked until Facebook decided to de-emphasize those apps in the news-feed algorithm, however, and all of a sudden huge numbers of users never saw those apps or the articles within them.

Reaching the billions of users Facebook has is a huge lure for publishers, and understandably so. But building your business—or at least a significant part of it—on someone else’s land can have very real consequences. Facebook may genuinely want to help media companies. But it also wants to help itself. How long until the latter clashes with the former?

Trump’s Own Tweets Help Kill His Government’s Travel Ban, Again

As a number of legal experts warned they might, Donald Trump’s tweets about his “travel ban” helped convince an appeals court to block the controversial order. It’s the second time his own comments have helped the courts knock down the proposed legislation.

The 9th Circuit Court of Appeals issued a decision on Monday, ruling that the Trump’s attempt to block immigration from six predominantly Muslim countries “exceeded the scope of the authority delegated to him by Congress.”

In their ruling, the judges cited a tweet from the president that was posted after the recent terrorist attack in London, in which Trump argued that the U.S. needed a travel ban “for certain dangerous countries.”

The Trump tweet was cited in a footnote in the decision, at a point where the court was questioning the justification for the ban.

“The Order seeks to ban people from specific countries, but it does not provide any link between an individual’s nationality and their propensity to commit terrorism or their inherent dangerousness,” the judges said. “In short, the Order does not provide a rationale explaining why permitting entry of nationals from the six designated countries… would be detrimental.”

The court also noted that press secretary Sean Spicer recently confirmed that Trump sees his tweets as official statements from the president of the United States, and therefore they should have the same effect as a statement from the Oval Office.

Immediately after the president posted his thoughts on the travel ban in the wake of the London attacks, a number of people were quick to respond that this was probably unwise, given the fact that the immigration order was still before the courts.

The American Civil Liberties Union, for example, warned in a tweet that it was planning to use Trump’s tweets as evidence in its ongoing fight against the order.

Even someone fairly close to Trump — George Conway, a New York lawyer and husband of Trump adviser Kellyanne Conway — suggested that posting such a comment was unwise. “These tweets may make some ppl feel better, but they certainly won’t help OSG get 5 votes in SCOTUS, which is what actually matters. Sad.”

Conway went on to say that he was a big supporter of Trump and of the immigration ban, but added that tweets on legal matters “seriously undermine Admin agenda and POTUS.”

To make matters worse, Trump didn’t stop at one tweet about the ban (which his own administration had argued vociferously was not actually a ban, and shouldn’t be referred to with that term). The president said that he supported his original order, not the “watered down, politically correct version” that his own advisers had convinced him to sign.

That earlier version of the law was struck down by two lower courts because it was targeted at Muslims, and blocking travel based on a person’s religion is unconstitutional.

“I think he shot himself in the legal foot,” Cornell Law School immigration professor Stephen Yale-Loehr said of Trump’s comments about his preference for the original version of the ban.

One would think that the Trump administration or the president himself might be more careful with posts on Twitter about a legal case, since this isn’t the first time that his tweets have been used against him in a court decision blocking his immigration order.

A lower court in Hawaii that blocked the most recent version of the order, in the case that led to the current ruling by the court of appeal, also cited tweets from the president, as did an earlier 9th Circuit decision on the previous version of the ban.

Twitter Accounts of Journalists, Activists Hacked to Spread Fake News

Two of the most difficult problems in the current world of always-on communication are hacking and the spread of “fake news” or misinformation. In some cases, these two very different problems are combining to create one big headache.

In Venezuela, for example, digital-rights group Access Now says it discovered recently that Twitter accounts belonging to a local journalist and a member of parliament and human-rights activist had been hijacked, using a procedure it calls “the Double Switch.”

The hackers then used the accounts to spread fake news, something that has been particularly problematic in Venezuela because of the political unrest there, including a government crackdown that involves online surveillance and censorship.

The journalist and the politician/activist both got in touch with a digital help-line that Access Now operates in a number of countries and asked for help in getting their accounts back.

According to the group, the Double Switch begins when a hacker gets access to the login credentials for an account, whether through a “phishing” attack (which often involves a phony email request pretending to be from the service itself) or through other means.

The hacker then resets the login name and password, as well as the recovery email, so that the original user can’t get access. Then the “double switch” begins.

First, the hacker changes the name on the Twitter account, Access Now says. Then later, they change the name back to the original account-holder’s name or “handle.” They can do this because once a Twitter account is deactivated, the name on the account is freed up for others to use.

By the time the second switch is activated, the hackers have full control, so any attempt by the original account holder to regain access fails, since emails and other messages from Twitter with password-reset information etc. go to the hacker.

Access Now says in its report that the victims worked with Twitter to regain access to their accounts, and were ultimately successful in doing so. But by then, much damage had been done.

In one case, the user’s account was deleted. In the other, some of the account-holder’s original tweets were deleted, and the account was used to spread misinformation about events in Venezuela.

The digital-rights group — which said that similar methods could theoretically be used to hijack an account on Facebook or Instagram as well as Twitter — asked for social-media companies to do more to make it easier for account-holders to get access to a hijacked account.

The group also recommended that Twitter and others have different methods for restricting access to an account, apart from what is called “two-factor authentication.”

Two-factor authentication uses two different methods to verify a user’s identity, such as a password and a special one-time code sent to a mobile phone. Activists in countries like Venezuela, however, might not want to have their phone associated with such an account, Access Now said, because it could open them up to surveillance and harassment.

Google Slammed by the EFF for Blocking Ads but Allowing User Tracking

Google confirmed recently that it is coming out with a new version of its Chrome browser that will have ad-blocking features built in, which the company says will make it easier for users to surf the web without being annoyed by intrusive ads.

The search giant is coming under fire for not blocking another annoying and intrusive aspect of web browsers, however—namely, the fact that they track their users’ behavior.

As the Electronic Frontier Foundation pointed out on Wednesday, Apple just announced a new version of its Safari browser that will not only block certain types of annoying ads (including auto-playing video ads), but will also disable user tracking.

Google’s update is focused solely on blocking what it says are obtrusive ads such as unwanted videos, ads that have a timer that counts down before the user can see the content, and so on.

“At the EFF, we understand that advertising funds much of the media and services online, but we also believe that users have the right to protect themselves against tracking,” researcher Alan Toner wrote in an essay published by the foundation. “Advertising is currently built around a surveillance architecture, and this has to change.”

Google’s decision to block certain types of advertising by default has been criticized by publishers and antitrust experts because of its dominant position in the digital ad market.

According to a recent research report from Pivotal analyst Brian Wieser, Google and Facebook combined control more than 75% of the $70-billion digital advertising market in the U.S., and the two companies alone accounted for almost all the growth in the market last year.

That dominant position is likely also the reason Google doesn’t want to block user tracking, since advertisers rely on those methods to target ads effectively.

Apple has no real advertising business, and therefore it doesn’t mind cutting off tracking in its browser. And the company has made a point in the past of stressing that it doesn’t invade its users privacy the way that companies like Google and Facebook do.

In his essay, the EFF researcher also notes that in addition to blocking ads, Google is offering publishers a new feature called Funding Choices, which will allow them to offer users the ability to turn off third-party ad blocking software and pay the publisher directly for content.

Even if users choose to do this, however, they can still be tracked by advertisers, Toner says. The new feature lets people pay sites to avoid being shown ads “but does not prevent Google, the site, or any other advertisers from continuing to track people who pay.”

Toner says the advertising industry has repeatedly rebuffed efforts to come up with a standard for opting out of tracking, like the Do Not Track program that was initially proposed in 2011.

“The industry’s sole response has been to create a system called AdChoices, which offers users a complicated and inefficient opt-out from targeted ads, but not from the data collection and the behavioral tracking behind the targeting,” the EFF researcher said.

Snap Investors Should be Very Worried About This Number

When Snap went public in March, in one of the most eagerly anticipated tech IPOs in recent memory, some analysts expressed concern about a slowdown in the growth of its Snapchat messaging app. Now, a new number suggests those concerns may have been well founded.

In a note to Nomura Instinet’s invesment clients on Wednesday, Snap analyst Anthony DiClemente said that statistics from SensorTower—a company that tracks the popularity of mobile apps—shows that downloads of Snapchat have fallen by 22% in the last two months.

Downloads on Apple’s iOS platform have been even worse, the company found—they declined by more than 40% in the first two months of the second quarter.

By comparison, downloads of Facebook-owned Instagram have shown year-over-year growth, DiClemente pointed out in his note, “suggesting that competitive pressures may be intensifying for Snap, challenging the platform’s ability to attract and retain new users.”

The analyst has a “reduce” rating on the stock and a $14 price target, and said he has lowered both his revenue and profit estimates for this year and next year.

Snap’s stock [fortune-stock symbol=”SNAP”] traded as high as $27 after it went public, giving the company a market value of $18 billion, but it has fallen sharply since. Its share price dropped by another 6% on Thursday to trade in the $18 range, not far from its IPO price of $17.

In its first quarterly report as a public company last month, Snap said that it lost over $2 billion, primarily as a result of equity grants to executives like CEO Evan Spiegel.

Much of the pressure on Snap’s shares stems from concerns that Instagram is eating into the company’s user growth, and taking away advertisers as well.

Instagram added a feature called Stories earlier this year, which allows users to add multiple photos and videos to create a collection with a specific theme. The feature is essentially a carbon copy of a Snapchat feature with the same name.

Instagram said earlier this year that more than 200 million people use its Stories feature, which is more than Snapchat’s entire user base.

Snap and its defenders, however, argue that Snapchat functions differently from Instagram because it is much more focused on sharing among individuals, whereas Instagram has more of a public broadcast model, in which users track how many likes and comments they get.

According to a recent survey by App Annie, another app analytics company, about 35% of Snapchat’s daily users in the U.S. aren’t on Facebook the same day they use the app, and more than 45% can’t be found on Instagram on the same day they use Snapchat.

The risk for Snap, is that while Snapchat’s model may be more appealing to users, Instagram’s model may actually turn out to be more interesting to advertisers.