Facebook’s news ban may be over, but opportunities for startups remain

Facebook has agreed to reinstate sharing of news posts in Australia, but the damage has been done and users are rattled. For media startups, that means opportunity.

Already, media startups are seeing an influx of subscribers following Facebook’s removal of news stories last week, which caused mass disruption in the industry, particularly for publications that rely on the platform as a major source of traffic.

The blanket ban also saw government services and small businesses caught in the crossfire until Tuesday, when the social media giant backed down and agreed to reinstate news posts on its platform. The backflip came after the federal government announced it would make some amendments to the media bargaining code.

But is this a case of ‘all’s well that ends well’? Or, has Facebook irreversibly changed the way its users consume news?

Gautam Mishra, founder of media startup Inkl, tells SmartCompany his service saw an “extraordinary” influx of subscribers following Facebook’s news ban.

The team even had to make some emergency upgrades to the back-end systems, due to excessive demand.

When it comes to news consumption, there has previously been a sense of inertia among the general public, Mishra suggests. People are set in their ways and “make do with what’s around”.

A highly-publicised event like this can give them “a jolt”, suddenly causing people to think about where they’re getting their news from, and why.

“Right now, Facebook is giving everyone a really good reason to stop and think about that,” the founder says.

Mishra had predicted that Facebook would come to some kind of understanding with the government, and perhaps for some people, things will go back to normal now.

However, he suggests the whole saga has highlighted changing appetites among readers. He doesn’t see people going back to getting all their news from one source or one publication.

People’s appetites are broader than that. They’re after celebrity gossip, local and international sports news, and content related to their professions, as well as general news updates. It’s unreasonable for all of that to come from a single source.

“The question is, where do you get it from?” he says.

No news is good news

There’s a clear opportunity here for Inkl, and for other startups in both the media and social networking sectors.

Perth-based alternative social media platform Litt, which is designed to help connect people with local businesses in their community, says it has seen an 83% increase in members and a 72% increase in businesses signing up.

The startup is currently in the early stages of launching an equity crowdfunding campaign through Birchal. In the wake of Facebook’s news ban, it also saw a 153% increase in expressions of interest from potential investors.

Many small businesses had their content caught up in the ban, but even those that didn’t likely saw a drop in engagement, Litt co-founder Brent Thompson said in a statement.

“I wouldn’t be surprised if [Facebook] also saw a significant amount of people finally using this as the reason to delete their accounts,” he said.

Flux, a media startup aimed at helping improve financial literacy, says it saw a 30% uptick in its newsletter subscribers in the three days after Facebook announced the news ban.

Co-founder Justin Joffe suggests Aussies — and particularly younger Aussies — realised they could no longer rely on the Facebook algorithm to deliver the news they wanted to see,

“They actually had to be a lot more deliberate,” he tells SmartCompany.

“People had to make choices they haven’t had to think about before.”

Joffe also noted a significant uplift in downloads of Flux’s daily business news podcast, showing, perhaps, that not only are people looking to new sources to read news, they’re open to consuming it in other ways too.

Now Facebook has agreed to reinstate news, some users may go back to the way things were, but Joffe suggests people will now be more cautious, and pay attention to where their news content comes from.

“It’s brought to light a lot of the issues around distribution of information through the internet ,” he explains.

“The feedback that we’ve received is that a number of Australians will start to proactively seek out news more than they had previously,” he says.

Was Facebook in the right?

Billionaire Canva co-founder Cliff Obrecht has suggested Facebook was right to remove news from its platform last week

In an interview with The Sydney Morning Herald, Obrecht called the government’s proposed media bargaining code “stupid”.

“Good on Facebook for just saying: ‘we’re not going to put up with your bullshit policies’”, he reportedly added.

“Which unfortunately means Australian consumers, Australian internet users, are going to have a poorer experience.”

While Obrecht said he isn’t against tech regulation as a rule, he called for more consultation with both startups and actual users of the internet before rushing in new rules.

To an extent, Mishra agrees. The legislation is “problematic”, he says — parts of it are simply unworkable.

It also favours incumbents, and would likely work out much better for Facebook and Google than for any new players entering this space with less cash to spare. It had much more to offer large media organisations than smaller publishers, too.

He also argues that, although it did previously, Facebook doesn’t really need news content anymore. This, he explains, is what the government misunderstood.

At the same time, however, Facebook is merely acting in its own best interests.

“They’ve shown they’re a large profit-seeking organisation doing what’s in the interest of making money,” Mishra says.

“That’s good in the long term, but is that the right stewardship of the brand and the company?”

Mishra can see why Facebook did what it did, but he believes it has also shown its true colours and its PR spin for what it always was.

“It was lip service to ideals and principles that supported its brand position.”

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