Does news content from traditional media outlets help Facebook's bottom line, or is it the other way around? That’s what researchers from the University of Michigan’s Ross School of Business sought to pin down in a new study.
To do that, they looked at what happened to overall Facebook engagement and content creation when the social media giant briefly stopped sharing news content in Australia in 2021. That was in response to an Australian government effort to get the social media giant to pay media outlets for sharing their content.
Puneet Manchanda, a UM-Ross marketing professor who led the research along with PhD student Yu Song, said their data showed that news blackout led to significant declines in both user engagement and content creation on Facebook — even for accounts totally unrelated to news.
“When news was shut down there was a drop in content production of 9%,” while engagement with posts (such as liking or reposing) fell 11%, Manchanda said. “So both engagement in existing content and creation of content went down quite dramatically.
“So essentially what the bottom line is that there's a material difference in activity on Facebook on non-news accounts when news was shut down.”
To verify their findings, the researchers looked at whether New Zealand, which did not experience a news shutdown, experienced similar drops during that same period. They found that engagement in that country remained unchanged.
Manchanda said this suggests that sharing traditional news content benefits Facebook economically, boosting its revenue by around 4%. Facebook, in its efforts to resist compensating media outlets for sharing content, has argued that the opposite is true — that traditional news sources benefit more by having their content shared more widely than they could through other means.
Manchanda and Song said their findings are inherently limited, since the news shutdown was only about a week long. However, when it comes to some national governments and U.S. states like California that have tried pushing Facebook to compensate producers like news outlets for monetized content, it could prove a key finding.
“Now there's a starting point,” Manchanda said. “A news publisher can come and now start complaining with some evidence, saying ‘We need some kind of compensation.’”
