Will Facebook’s Nine Steps Give Distributors an Opening?

By Paul Maxwell Report Archives
Cover image for  article: Will Facebook’s Nine Steps Give Distributors an Opening?

The Russians have come!  The Russians will be back … often ... because (surprise, surprise) it seems to have worked.  Their emphasis will be (once again) on social media along with some controlled noise via their own TV outlets.  Facebook, the global behemoth with tentacles in as many countries as have mosquitoes, got burned by first dismissing the idea of social media contributing to the political discussions … then saying, well, maybe it did “some” ... and now admitting it did lots.  The latter comes with an internal program to do something about it … just as TV and radio have for years – by law – kept track of who bought what.  So, once again, it’s time to take a look at how the social media “edge” Internet companies – a.k.a. Facebook, Twitter and Google et al – impact media today.

Just for starters, Facebook and Google are the largest media companies in America and they have the ad revenues to prove it.  Twitter, while a bit of ways behind, is similar.  Classic media -- magazines, newspapers, radio and television -- have suffered declining ad revenues even as they’ve tried to ride the changes underway in distribution of content.  It hasn’t been easy, as the resignations of four major magazine editorial leaders in the past few days suggests … Vanity Fair, Elle, Glamourand Timeso far.

But let’s add another aspect of the modern media universe to the conversation:  The infrastructures and connections provided by cable, satellite, telco and wireless companies.

There is an existential battle just beginning over who pays whom for what.  The social media giants don’t directly pay for Internet access or distribution.  Many pay to move content via fiber companies to enter the public Internet from multiple locations and they also pay for systems to help speed distribution.  But they don’t pay for infrastructure they directly use.  Instead, subscribers must ante up to gain access to the content … some distributed linearly via land lines or satellite … the so-called “cable networks.”  But the business model that has long supported those networks is beginning to crumble thanks to streaming or so-called “over-the-top” services as well as from a trickle of resurrected over-the-air broadcasters.

The folks who have built the to-the-home infrastructure aren’t too happy about that over-the-top free ride.  The folks in D.C. aren’t too happy about the “Who? Us sell to the Russians?” attitude from the social media guys.  So what do you think is gonna happen?  I say watch for a whole slew of new regulations that could upend the traditional as well as new challenging economic models.

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