New Study Explores How Meta Profits On News Providers
When it comes to Meta, particularly its platform Facebook, news matters—not the fake stuff but the real kind generated by working journalists. That’s the takeaway of new research by Yu Song, a Michigan Ross doctoral student, and Professor Puneet Manchanda. The study sought to examine how news content affects news aggregators and how its presence affects user engagement and the generation of non-news content. Specifically, the research finds that news content on the global social media network is economically beneficial to the platform itself.
The findings offer new and useful data as many countries seek to develop regulations perceived as fair to both aggregators and publishers, such as changing copyright laws, as shared by Song and Manchanda. The researchers took advantage of a “natural experiment” in 2021, when Facebook blocked all news from being seen or shared by users on its platform in Australia for several days. That was in response to the Australian government approving legislation aimed at compelling tech giants to compensate news publishers for featuring or sharing their news content.
Song and Manchanda found that during the shutdown, total user engagement with non-news content decreased by nearly 11%, and the number of daily posts generated by non-news declined by almost 9% in the short run. During the same period, news aggregators and publishers in Australia’s neighbor, New Zealand, which served as a control, did not experience changes.
The study also reveals that featuring news has an economically significant impact on Facebook Australia’s advertising revenues: It calculated the loss of advertising revenue accounting for 4.3% of Facebook’s annual advertising revenue in Australia.
The research fills a knowledge gap on how news content affects news aggregators. Even less is known about how the presence of news affects user engagement and the generation of non-news content on major social media platforms such as Facebook.
The results, they say, “indicate that carrying news benefits social media platforms through positive spillover effects on non-news content.” The study results also provide a useful estimate for regulators as they consider whether or how much compensation should be provided to news publishers.
“Facebook’s current narrative suggests it benefits news publishers, but our study reveals that it also gains from carrying news,” the authors say in the study.
Song and Manchanda note some limitations of the study, including the short shutdown, so that they couldn’t provide insights over the long term. In that case, Facebook could alter its algorithm to display content differently, and consumers could change channels through which they consume news.
The study has been accepted for publication in Marketing Science. Manchanda is the academic journal’s editor-in-chief, though the research paper was submitted before his appointment was announced and was handled by the previous editor-in-chief.
