The Internet has certainly wreaked havoc on the journalism industry. And yes, this will likely continue for some time, especially with the surge of mobile devices.
Well, Facebook Inc (NASDAQ:FB) is jumping into the fray.
The company has launched Instant Articles, which has the support of publishers like the New York Times Co (NYSE:NYT), the Atlantic, NBC News, National Geographic, BuzzFeed, the Guardian and BBC.
Articles will be published on the FB iOS app. NYT is also developing an app for Google Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Android.
It would seem that publishers would be skeptical, right? Absolutely. But so far, the Facebook Instant Articles program is highly favorable to them. First of all, there is no need to make any changes to the articles and a publisher can maintain its branding. There will also be access to detailed analytics, which will certainly provide for interestingly learnings about the mobile world.
But most importantly, publishers will keep all the revenues generated. Although, if there is unsold inventory, then FB will keep 30% of any revenues from its own network.
So yes, it’s seems hard to pass up. Besides, the publishers will get exposure on a massive platform, which has more than 1.4 billion users.
OK, then, so how will FB benefit? From a monetization standpoint, it will probably be minimal. But then again, FB realizes that the key to success is to make the user experience as strong as possible. This is how FB has turned into a global colossus, after all.
So with Facebook Instant Articles, the company will focus on high-quality content that’s streamlined for a mobile environment. The company has also developed a system to give higher visibility to articles that garner more likes and comments.
All in all, such a user-centric approach should help to boost engagement and stickiness, which is especially important for a mobile device. Keep in mind that linking to an article can be a frustrating as a user needs to leave the app and go to a browser. This can easily take 8 to 10 seconds. But with Instant Articles, the post will show up within less than a second — and the user will remain within the app.
While all this sounds great, FB may actually be responding to the popularity of SnapChat’s own news portal. Consider that it has resonated with the much-sought-after younger demographic.
In other words, Facebook Instant Articles may really just be a defensive move. But this was the same when the company made its late move to mobile — and that’s turned out quite well.
Now as for investors, the Facebook Instant Articles initiative will probably not have much of an impact on the stock price. If anything, the valuation is already at hefty levels, with the price-to-earnings ratio at 76.
But then again, it is encouraging to see that the company continues to take a user-centric approach to new offerings and is finding new ways to leverage its powerful mobile platform.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
