Despite persistently declining trust, an aging audience, and a business model that can now be threatened by independent content creators on the internet, the legacy media is being propped up by the same tech companies that disrupted them, as outlined by a report in The Wrap. Although Facebook says it is supporting local media, the company is paying massive licensing fees to global media titans like the New York Times, Washington Post, Bloomberg, and Buzzfeed.
The Wrap reports that Facebook plans to pour $1.6 billion into the news media over a five-year period. Although little is known about which media organizations will receive the money, The Wrap found that a “handful of premium publishers” including the Washington Post, News Corp, and Bloomberg receive licensing fees from Facebook.
There aren’t many companies that can say they’ve poured hundreds of millions into journalism in the last few years. Facebook has — $600 million over since 2018 — and it is promising another $1 billion in the next three years.
A Wrap inquiry into the details of the $600 million found that many of those dollars are hard to track, except in the most general terms. When broken down into the main categories mostly based in the U.S., TheWrap could only specifically verify the expenditure of roughly $122 million — barely one-quarter of the pledged sum — begging the question: Where is the money going?
In addition to donating heavily to nonprofits and paying small grants to local newspapers (see graphic), Facebook pays rich licensing fees to a handful of premium publishers, like The New York Times, The Washington Post, News Corp, Bloomberg and BuzzFeed. Those deal terms are not publicly disclosed, but TheWrap has obtained documents of one agreement with a leading U.S. publisher for $5 million over five years.
None of these organizations can be said to be in need of money. The Washington Post’s subscription revenue was reportedly “in the nine figures” as of 2017. The New York Times took home $598.3 million in subscription revenue in 2020. Bloomberg is a giant in the world of finance and media, with over $10 billion in annual revenue. News Corp is an international media empire with over $9 billion in revenue in 2020. These are the companies that Facebook believes need handouts.- READ MORE
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