26 April 2016 13:48:22 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Is the end of the website era near?

Facebook’s new instant articles feature may well alter the media landscape like never before

When America’s most respected news outlets write similar stories, you know it is time to pay attention — especially when they talk about how their existence and potentially, the very future of old-world media, could be at stake.

The common threat is competition from two of the biggest names in the internet business: Facebook and Google.

Facebook has been particularly aggressive in encroaching into the world of old-media. From a website which started off with allowing members to share photos, it has now developed into a space that has an ecosystem of its own. Its messaging service provider, Whatsapp, now offers encrypted text, voice, picture and video messages on mobiles for free — even for those who do not have a Facebook account. If a telecommunications company still counts on bringing in significant revenue from voice calls and SMS, someone needs to give it a good shake and bring it back to reality.

Read: WorldView The bottom is falling for the telecom sector

Hard to beat features

Now, with Facebook’s ‘Live’ offering, people can live-stream events and instantly share them with friends or the world. Anyone can become a TV producer and broadcaster. And the best part? It is free! Events don’t have to pass through an editor’s definition of newsworthiness.

Take the recent event, for example, that featured an exploding watermelon. This was streamed on Facebook, with a million people watching it as it burst live, and 10 million people watching it afterwards. TV stations would kill for that kind of an audience.

Major newspapers have already been in a quandary for some time, even before the onslaughts by Facebook, about investing in online news websites. They did it hoping that these sites would not cannibalise revenue from their printed editions. But that is exactly what happened — millions of customers are now used to the convenience of consuming news instantly, for free, without having to wait for tomorrow’s printed editions.

The second hope was that online advertisements would help subsidise the cost of maintaining websites, even if they do not bring in a profit. But online ads can be invasive and even annoying. On a recent visit to Zee News , the website threw up 26 ads on load; the Times of India site popped up 12 ads.

It must be kept in mind that ads eat up bandwidth — they slow down the loading process, thereby driving away fickle, impatient customers. Persistent customers, who want the best of both worlds (no ads but free content) simply install free adblock extensions on their browsers.

The media companies lose, no matter what the customer does.

The final blow?

What has been saving media companies from advertisers has been the difficulty in gauging the number of adblocks in force. Without this information, advertisers are forced to meekly pay up for display ads (although click revenue is down because of the adblocks).

In this context, Facebook’s latest Instant Articles offering is a major threat to media companies. What it entails is media companies posting articles which can be read on a person’s news feed, within Facebook. The site hates the idea that people leave Facebook to go read a news article link posted by a friend.

FB monopoly

If articles appear on Facebook, what happens to the media company’s website? The social media giant understands this is a sensitive question, which is why it is pitching it to the media houses as a technology advancement. Publishers need not write different articles optimised for PC, tablet or mobile, because, Facebook says, its advanced technology will take care of it all. The publisher doesn’t even have to concern himself about the user experience because Facebook’s technology will allow rich video content in articles to load up to ten times faster than on a conventional website.

And Facebook controls the marketing of the article, so media companies don’t have to.

This is powerful and could well alter the media landscape like never before. Media companies will have to become subservient to Facebook and provide it with content, hoping that any revenues from Facebook are large enough for them to survive. The New York Times reports that Mashable, a site that had just raised $15 million, laid off 30 people last month, diverting its resources to increasing the audience on Facebook. It did this in the hope that enough money — through revenue-sharing arrangements with the company — will follow.

Across town from Facebook, Alphabet’s Youtube now has over a billion users. The company says that the number of users who start at the YouTube homepage, similar to the way they might turn on their TV, is up by more than three times, year over year. Google has already cornered the market in ‘search’, with three of every five searches going to it.

This kind of market domination is simply mind-boggling. How bad is it? Brian Nowak, a Morgan Stanley analyst, told The New York Times that in the first quarter of 2016, 85 cents of every new dollar spent in online advertising, will go to Google or Facebook. Scary.

The New York Times website has been around for about 20 years. It is hard to believe, indeed even accept, that this era may soon be over and there will be just a handful of web properties left.

The Washington Post , which was rescued from financial failure by a personal cheque from technology titan Jeff Bezos (who now owns it), said it best: Facebook wants to become “the” Internet.