Facebook video deception throws fuel on media fire
Almost 2000 years ago Nero came to power as emperor of Rome. He was by all counts a nasty piece of work. As well as murdering his own mother, he murdered his first and second wives. But it’s the great fire of Rome that he is best remembered for. Legend has it that Nero chose to tune and play his lyre each day the fire raged, apparently completely unconcerned. Off the back of this event, ‘‘fiddling while Rome burns’’ has become the descriptor of irresponsible behaviour in the midst of an emergency.
If you haven’t noticed, there’s one hell of an emergency going on in media-land at the moment. In fact, it’s not a stretch to say that the news media is on fire.
The latest manifestation of that blaze is last week’s announcement that MediaWorks is putting its television business, including channel Three, up for sale. Its management has sought to position it as being a good business in a bad market, with some suggestion that the tilt of the playing field hasn’t helped.
But in more simple terms
MediaWorks is out of options for a free to air television station; and its private equity owner, Oaktree Capital, is out of patience. And having previously tried to bundle TV up with other assets, it has now decided it has no option but a fire sale of the least attractive one and its dated revenue model.
But this is really just the latest conflagration in a year of fires. A year that includes Nine Entertainment being unable to get a buyer for Stuff, Sky being outflanked by Spark and Netflix, and the continued bleeding of advertising revenue to the global web giants.
Close to half of New Zealand’s advertising revenue now goes to digital advertising, with Google and Facebook accounting for the lion’s share of that. Less than a fifth goes to TV.
But that’s not the whole story. The kicker is that it’s these two companies who hoover up around 80 per cent of all new advertising growth.
And while highprofile Democratic
senator
Elizabeth Warren is leading calls to break up the FAANG companies (Facebook, Amazon, Apple, Netflix and Google), most analysts are predicting more growth for these businesses. Despite a few bumps along the way.
One such bump coincided with the announcement by advertising-dependent MediaWorks’s announcement of plans to sell its TV assets.
Last week Facebook agreed to pay out US$40 million (NZ$62m) in a lawsuit over making false claims about its video metrics used to sell its advertising.
The lawsuit alleged that Facebook had been making inaccurate claims about the quality of their videos in terms of how long they were viewed by punters, commonly known as ‘‘watch time’’.
In simple terms they had fiddled the viewing figures which then allowed Facebook to make more money from the advertising they sold around the video. The lawsuit alleged this was not a small exaggeration, but rather by a factor of up to nine times and had been covered up for a number of years.
Last week Facebook committed to pay advertisers US$40m for inflating the video figures in 2016 and 2017. Observers reckon it could have cost the company more like US$200m if it had gone to court and lost.
Facebook described the snafu as an innocent mistake, but that doesn’t change the fact that those figures would have resulted in it sucking up advertising revenue away from traditional media, who weren’t misrepresenting their readership and viewership.who faced a massive competitor that was fiddling the video numbers. And then using those numbers to extend its already massive competitive advantage around reach and tax efficiency. All this while journalists were losing jobs.
And while US$40m might seem like a decent fine, it’s really not.
Last year Facebook had revenues of US$55.8 billion. So the US$40m fine for fiddling video numbers equates to just over 8 hours’ revenue. It’s not even wet bus ticket material.
Truly it appears that Facebook fiddled while the media burned.
Mike ‘‘MOD’’ O’Donnell is a professional director, writer and facilitator. He is a director of Radio NZ, has hosted a TV show for TVNZ and is a columnist for Stuff.