From Fake News to Real Murder: Facebook’s Incentive Problem

Fake news did not originate with Facebook, nor with the 2016 presidential campaign. Planting damaging stories of dubious provenance about a political opponent in the newspaper  is a tradition nearly as old as newspapering itself. And spreading false rumors is as old as human society.

But as we saw in last year’s election, Facebook and other social media platforms have elevated merely spurious information into a weapon of mass dysfunction. During the final three months of the 2016 campaign, the top 20 fake news stories circulating on Facebook racked up 8,711,000 shares, reactions, and comments on the platform, including such classics as “Pope Endorses Donald Trump” (960,000), and “FBI Agent Suspected in Hillary Email Leaks Found Dead in Apparent Murder-Suicide” (560,000).

BuzzFeed, which compiled those data, notes that those 20 fake stories attracted nearly 1.5 million more instances of engagement than the 20 top-performing stories 19 major news outlets over the same period. But the issue here isn’t so much real vs. fake but the role that Facebook’s massive scale played in encouraging the production of fake stories.

While some of the top fake news items were created by partisan outlets (or foreign intelligence agencies) for expressly political purposes, far more were created for profit, by people like Bela  Latsabidze, a 22-year old computer science student in Tbilisi, Georgia.

“In Tbilisi, the two-room rented apartment Mr. Latsabidze shares with his younger brother is an unlikely offshore outpost of America’s fake news industry,” the New York Times reported shortly after the election. “They say they have no keen interest in politics themselves and initially placed bets across the American political spectrum and experimented with show business news, too.”

Their pro-Hillary Clinton site did not attract many readers and its made-up news stories rarely went viral, so the brothers shifted their focus to making up positive stories about Donald Trump, where they found a more avid and engaged audience. More engagement on Facebook meant more hits on Google, which translated into more ad impressions, which in turn translated into more revenue for the brothers.

“For me, this is all about income, nothing more,” Latsabidze told the Times. Had his pro-Clinton site taken off, he added, he would have pressed on with that.

Facebook is now taking steps to try to limit the amount of fake news on its platform. This week it shut down 30,000 fake accounts in France ahead of that country’s upcoming national elections, and is currently looking to hire a head of news products to help it deal with the problem. It’s also trying to teach its algorithm to better recognize fake news stories and either flag them or deprecate them in users’ news feeds.

But no algorithm can solve the underlying incentive problem created by Facebook’s sheer size. It’s so big, and it’s reach is so vast and indiscriminate that even reaching only a small percentage of Facebook users adds up to substantial audience. You only need to fool some of the people some of the time on Facebook to make money pedaling nonsense.

Facebook obviously didn’t set out to create a platform for pedaling fake news. Nor is it the only social media platform with a fake news platform. But it’s size and scope make fake news profitable. And so long as that profit motive exists, entrepreneurs like Mr. Latsabidze will find ways to defeat whatever tweaks Facebook makes to its algorithm.

A far more chilling example of the unintended effects of Facebook’s ubiquity occurred on Easter Sunday, in Cleveland, when Steve Stephens broadcast himself on Facebook Live as he shot and killed a 74-year old man, seemingly to make some sort of depraved point.

Stephens explained in a rambling narration to the video that he had just broken up with the “love of [his] life” and had recently lost everything gambling. “I’ve run out options,” he could be heard saying. “Now I’m just doing some murder-type shit.” He then picked out his victim at random, forced the victim to say his ex’s name, and shot him dead.

Stephens eventually took his own life, after being cornered by police. Fortunately, he did not broadcast his suicide, but others have, along with beatings, torture, and rapes.

It is neither possible nor reasonable to try to pin responsibility for those horrific acts on Facebook; Facebook did not cause anyone to commit those crimes, any more than it compelled anyone to create fake news sites.

But for better worse, Facebook is becoming the media platform of choice, by dint of its size, for the depraved as well as the decent. Act out on Facebook and you act out in front of the world. And it’s hard to see what Facebook can do to prevent that.

Facebook will try because it must. “We have a lot of work and we will keep doing all we can to prevent tragedies like this from happening,” CEO Mark Zuckerberg said at the company’s F8 developers conference this week. But scale is now the essence of Facebook’s business model, as Snapchat is now learning.

While good for Facebook’s share price in the short term, that scale has begun to generate forces that do not easily yield to algorithms. And in the wake of last year’s fake news controversy and this week’s very real horror show it’s hard not to wonder whether Facebook is still in full control of its own platform.

 

The Net Neutrality Paradox

One of the more unfortunate wrinkles in the long debate leading up to the Federal Communications Commission’s 2015 Open Internet Order, better known as net neutrality, was its increasingly commercial focus. There were important civil liberties issues at stake, to say nothing of the interplay of engineering and regulation of critical infrastructure and the private ownership of public goods. But much of the public debate boiled down to an argument over streaming — Netflix streaming in particular.

That was due in no small part to the efforts of Netflix founder and CEO, Reed Hastings, who made himself and his company the poster-children of the net neutrality cause by loudly proclaiming Netflix’s oppression at the hands of ISPs looking to impose interconnection fees on the streaming service.

Although net neutrality proponents eagerly embraced Netflix’s cause and Hastings’ pubic advocacy they worked to color the issue as essentially a commercial dispute between different types of service providers, which, paradoxically, is actually an argument against what the FCC did. Disputes between buyers and sellers are not really the FCC’s bailiwick; that’s more a matter for the Federal Trade Commission and the antitrust division of the Justice Department.

It also, ironically, helped set the table for what is shaping up to be another pitched battle over net neutrality, this time over a new FCC chairman’s plan to turn the issue into an explicitly and exclusively commercial matter.

Chairman Aji Pai, who strongly opposed the FCC’s 2015 order while in the minority under previous chairman Tom Wheeler, is moving quickly to try to settle the score. His plan, basically, is to vacate the current rules, then ask the ISPs nicely to commit to certain net neutrality “principles” in their terms of service and turn over resolution of any commercial disputes or consumer complaints that arise to the FTC.

That will require reversing his predecessor’s decision to reclassify ISPs as “common carriers” under Title II of the Communications Act. Under the so-called “common carrier exemption” in the Federal Trade Commission Act, the FTC has no legal authority over services classified as common carriers, like telephone networks, and to give it jurisdiction Pai will have to un-reclassify ISPs.

But the new chairman could find himself looking through the other end of the net neutrality paradox this time. While he may view the issue as fundamentally a commercial matter that the government should largely stay out of, the commercial and strategic interests now at stake in the streaming economy are orders of magnitude greater than the last time around, and their resistance to any change from the current rules is likely to reflect that increase.

Consider the members of the Internet Association, the Washington, DC, lobbying group formed in 2012 by Facebook, Amazon, Google and eBay. Since the current rules went into effect Google’s YouTube has launched a paid music streaming service, YouTube Red, and this month began rolling out an over-the-top pay-TV service, YouTube TV, that competes directly with the cable TV services operated by the largest ISPs.

Amazon has emerged as a formidable competitor to Netflix in the subscription VOD business and has launched a paid music streaming service. That paid streaming service is tightly connected strategically with Amazon’s Echo voice-activated speaker, which is a pillar of the retailer’s in-home strategy. Amazon also signaled its strong interest in live video streaming earlier this month by spending $50 million for rights to the NFL’s Thursday Night Football franchise.

Facebook has made live video streaming the centerpiece of its strategy to grab a chunk of the $70 billion spent annually in the U.S. on TV advertising, some of which is currently spent with ISP owned pay-TV services. Twitter, another member of the Internet Association, is also placing big bets on live video.

This week the Internet Association sent a letter to the FCC declaring its opposition to any change in the current rules:

IA continues its vigorous support of the FCC’s OI Order, which is a vital component of the free and open internet.  The internet industry is uniform in its belief that net neutrality preserves the consumer experience, competition, and innovation online.  In other words, existing net neutrality rules should be enforced and kept intact.

New players like Roku are also thought to be eyeing the live-streaming business. Last month Roku hired a team of lobbyists in Washington specifically to focus on net neutrality.

(Ironically, Netflix, although a member of IA, is likely to sit this round out, having made its separate peace with the ISPs .)

Major media companies have also seen their direct stakes in the streaming economy grow since the current net neutrality rules were implemented. According to the RIAA, streaming now accounts for more than half the music industry’s revenue and that share is growing rapidly. The major record companies are equity investors in Spotify, the leading streaming service, which is currently valued at $8.5 billion and is preparing to go public.

Likewise, Fox, ABC and NBC own Hulu, the subscription VOD service that is also gearing up to launch a virtual pay-TV service (NBC is barred from having a direct operational role in Hulu under the terms of its merger with Comcast).

Those examples just skim the surface of what the streaming economy has become over the past three years premised in part, at least implicitly, on the current net neutrality rules. Undoing those rules at this point, paradoxically, could represent an even greater intervention into the commercial arrangements of the internet by the FCC than implementing them in the first place.

 

Amazon in Good Field Position After NFL Deal

Amazon won the auction for live-streaming rights to this season’s Thursday Night Football franchise with a bid of $50 million dollars for a package of 10 games. That’s 5 times what Twitter paid last year for essentially the same deal: Amazon will share the games with NBC and CBS and will stream the networks’ feeds, including their ads. Amazon will also be able to sell a handful of ads per game itself.

The games will be available for free to Amazon Prime members.

Although the 5X increase in price is impressive — and was probably too rich for Twitter — $50 million is still pretty small beans, both for the league — whose deals with the broadcast networks run into the billions — and for Amazon, which has $20 billion on its balance sheet. For both, it’s largely an add-on business at this point.

For the NFL, streaming is still largely an experiment aimed at finding a way to reach cord-cutters and out-of-home viewers, and to test the viewership waters outside the U.S., not to supplant its traditional broadcast deals. For Amazon, the NFL deal is a way to enhance the value of a Prime subscription and to attract to new subscribers at a relatively modest price. Read More »

NBC, Rio, And the Long-Term Value of Televised Sports

NBC’s Olympic efforts in Rio are falling short of its previous best. Through the first 10 days of the games, the broadcaster’s prime time coverage has averaged 27.8 million viewers, according to Nielsen. That’s more than enough to trounce CBS, ABC, and Fox, but it’s down 17 percent from NBC’s coverage of the 2012 games in London, despite a more favorable time zone that allowed for high-profile events where American’s typically excel, like swimming, to be shown live in prime time.

usain_bolt_smileThe fall off among viewers 18-34 has been even steeper, down 25 percent from London.

NBC execs are quick to point out that the ratings for its prime time coverage on its broadcast channel don’t tell the whole story. NBC Universal is showcasing the games live across its entire suite of cable networks throughout the day, some of which have drawn strong ratings in their own right. The final of the men’s golf competition, shown live on NBCU’s Golf Channel on Sunday, delivered the second highest ratings for any 90 minutes of televised golf this year after the final round of the Masters, despite the absence of many high-profile players. Between noon ET when it started, and 3:10 p.m. when it ended, the competition earned the highest household rating (1.02, with 1.6 million viewers) since Tiger Woods and Phil Mickelson went head to head at Pebble Beach in 2012. Go figure.

NBC also points to record-breaking digital viewership of this year’s games. Through Aug. 14th, NBC had delivered 1.86 billion live-streaming minutes, besting the total from the last three Olympics combined by more than 25 percent. NBC is live-streaming all the events in Rio as well as simulcasting it’s prime time coverage. Read More »

When Live-Streaming the News, Who’s Working for Whom?

Last month, from the floor of the House of Representatives, Twitter’s Periscope app and Facebook Live cemented their place within the news media ecosystem. Exactly where that place is, however, is up for debate.

As discussed in a previous post here, House Speaker Paul Ryan (R-Wisc.) had ordered the cameras in the House chamber used to feed C-Span turned off, just as Democrats, frustrated over the majority’s legislative stonewalling, were staging a sit-in on the floor. Rather than simply going off us-senate-debates-defense-authorization-bill-video-c-span-org_758399the air, however, some Democratic members then whipped out their phones and started live-streaming their protest using Periscope and Facebook Live, in violation of House rules that prohibit the use of electronic devices on the floor. Here in Washington, the live-streams quickly became the talk of the town on social media.

Frustrated by its inability to cover breaking news on its own turf, C-Span broke with protocol and began re-broadcasting the Periscope and Facebook Live streams. That got the attention of other news organizations, especially the three big cable news networks, which also began picking up the members’ streams, turning what might have been a minor political skirmish into a major national story.

For Periscope and Facebook Live it was a breakthrough moment. Not only did the episode showcase their potential as tools for both news gathering and dissemination, the House members’ use of the apps, and especially C-Span’s decision to defy the Speaker by re-broadcasting the live streams, became part of the story itself, drawing huge national attention to the live-streaming apps just as Twitter and Facebook are each making a major push to become the dominant live-streaming platform. Read More »

Live From Capitol Hill: The Triumph and Tragedy of Twitter

Political movements have long relied on the media, particularly mass media like television, to amplify their messages. The methods of political protests — sit-ins, marches, demonstrations — are staged as much to draw the cameras as draw a crowd.

Over the past decade, social media has emerged as an important adjunct to the mass media for protesters and dissidents around the world, as well as a critical tool for organizing political movements and activity. But on Wednesday this week, on the floor of the House of Representatives, social media actually replaced the mass media.

c-span_periscopeAs House Democrats staged their unprecedented sit-in to protest Republicans’ refusal to allow votes on three gun-control bills, House Speaker Paul Ryan abruptly gavelled the session to a close and ordered the cameras used by C-Span to broadcast proceedings from the floor to be turned off, citing House rules.

Whether the cameras stay on or not is under the control of the House majority, so Ryan could have left them rolling. But he clearly wanted to deprive the Democrats’ protest of media oxygen and thought, presumably, that turning them off would produce a media blackout. What he got instead was a media firestorm. Read More »

Ticket To Stream

One of the business challenges that has held back the direct-to-consumer streaming of ticketed events — whether live concerts, Broadway shows, or first-run movies — has been the lack of an effective ticketing mechanism for over-the-top video. As there was no way to know how many people might be gathered around a particular screen rights owners and event producers had little choice but to charge an arbitrary price for the stream, usually high enough to account for the possibility of multiple viewers but at the cost of turning off people viewing alone or perhaps with only one other person.

home-theater-lightingSean Parker’s Screening Room, for instance, plans to charge a flat $50 per movie for in-home access to first-run films, which research shows could limit the market for the service.

The inability to know how many people are in the room also makes it difficult for providers to sell advertising or sponsorship in the stream because they cannot offer advertisers an accurate count of how many people were exposed to their messages.

In-home ticketing may be poised to have its moment, however, due to some recent technological advances. Read More »

The Impoverishment Of Live TV

Live programming, particularly live sports, is widely seen as the last major thread still holding together the pay-TV bundle. Apart from news, nearly all other types of programming are just as enjoyable viewed on demand or time-shifted, perhaps even more enjoyable given the prospect for commercial-avoidance.

Live events, however, especially sports, are more valuable and enjoyable when viewed in real time, providing an incentive for consumers to coachellacontinue to pay their cable or satellite bill, particularly so as more live sports programming moves off free broadcast channels to pay-TV channels.

Live sports are also increasingly available over-the-top, of course. But for the most part those streams are simply retransmissions of existing linear broadcasts targeted at fans who can’t watch the games on their native broadcast platforms either because the games are not available in the viewer’s home market or because the viewer doesn’t have access to a big screen TV at game time. Issues with Given the option, most people would still choose to watch most sporting events on their native broadcast platforms.

Recent developments in the world of live streaming hint at how that could start to change, however. Read More »

From Winky-Dink to Facebook Live: Social TV’s Next Chapter

Broadcasters have long dreamed of making TV interactive and social. From the days of “Winky-Dink & You,” which encouraged its young viewers to draw on the TV screen along with the show’s host (much to their parents’ dismay), to Time Warner’s Full Service Network in Orlando, Fla., to the short-lived flowering of second-screen apps, broadcasters and their technology partners have tried for decades to make watching TV a more engaging experience by giving viewers the means to interact directly with their programming, and with others watching at the same time.

Most of those efforts have failed to catch on as their backers had hoped, largely because broadcast platforms are inherently uni-directional. They’re winky_dinknot networked to support much beyond overlaying some pre-baked interactive elements. Even today, when second-screen use while watching TV is a mainstream behavior, most of that activity involves something other than the content on the TV screen, or happens on unrelated social media platforms like Twitter and Facebook that are opaque to the broadcaster until after the fact. Dedicated second-screen apps allow for greater dialog between broadcaster and viewer but don’t really capture the broader conversation around the content.

This month, however, we’ve seen the first steps toward what could be a new and more promising stage in the evolution of social TV. Last week, Twitter landed a deal with the NFL to live-stream a package of 10 “Thursday Night Football” games next season. Though Twitter was not the highest bidder for the streaming rights, the micro-blogging service is a natural online home for the NFL. Nearly 50 percent of the conversations on Twitter are sports related and the NFL is one of the most frequent topics of those conversations. Read More »

How Twitter Beat Out Rivals For NFL Deal

Twitter this week landed streaming rights to a 10-game package of Thursday Night Football games next season for a surprisingly modest $10 million, edging out rival bids from Verizon, Amazon and Yahoo, at least one of which reportedly came in 50 percent higher than Twitter’s offer. Another rival, Facebook, reportedly dropped out of the bidding last week over objections to the advertising framework imposed on the deal by the NFL.

Twitter, in fact, will get minimal advertising rights as part of the deal. As a technical matter, it will be rebroadcasting the CBS and NBC feeds of the nfl_gamegames, which the networks will also be streaming over their own, authenticated TV Everywhere platforms as part of their $450 million deal to broadcast the games, and the networks will be handling the bulk of the ad sales for both broadcast and digital channels. Twitter will get a little bit of inventory around the margins to sell, plus some pre-game, player-created spots on Periscope. The deal is basically a $10 million brand-building exercise for micro-blogging and live streaming platform.

The games, in fact, will be available for free, without authentication, both on Twitter’s own platform and across its entire, syndicated global footprint.

That last point was obviously critical for the NFL, which has been working feverishly to expand its audience outside the U.S. and sees streaming as a way to reach potential fans in territories where broadcast rights would be a tough sell. Read More »

Fighting Piracy in Real Time

Ever since Meerkat and Periscope popped up on the scene, live event producers and rights owners have worried about the potential for piracy from mobile live-streaming apps. In fact, Periscope more or less made its bones, with the public at least,  during the Floyd Mayweather/Manny Pacquaio title fight last year, when the Twitter-owned app led to so much re-broadcasting of the HBO and Showtime feeds of the bout that then-Twitter CEO Dick Costolo, rather indiscreetly, declared Periscope the real “winner” of the night.

Since then, the threat has only grown greater as live-streaming apps have proliferated.

iphone_TV“We saw a lot of new live-streaming apps at CES that are just around the corner,” Clint Cox, VP of technical operations at the Ultimate Fighting Championship said at the Copyright & Technology conference sponsored by GiantSteps Media and the Copyright Society in New York this week. “It’s fairly common technology and it’s becoming a unique challenge for rights owners. It’s a very easy place to put infringing content quickly.”

The problem is doubly complicated by the fact that not all unauthorized streaming of live events is clearly infringing from a copyright perspective, particularly when it comes to live sports. While a licensed broadcaster’s pictures, descriptions and accounts of a sporting event are clearly copyrighted, the game itself — the action on the field, court, ice or ring, as it unfolds in real-time — is not.

Someone sitting in the stands pointing a Periscope-enabled smartphone at the field, therefore, may be violating the venue’s terms and conditions printed on the back of the ticket, but they may not be infringing anyone’s copyright. Read More »

The Bills, Jaguars And Peak-NFL

Given how little good news Yahoo has had to share with investors lately it’s no surprise that the company is trumpeting the results of Sunday’s first-ever globally live-streamed regular season NFL game, between the Buffalo Bills and Jacksonville Jaguars, which attracted 15.2 million unique viewers and 33.6 million total views. Those numbers make it one of the biggest live-streamed events to date, and compare favorably with the TV audience for  a typically Thursday night or Monday night regular season game, according to the NFL.

“We’re thrilled with the results of our initial step distributing an NFL game to a worldwide audience and with the work of our partner, Yahoo,” NFL senior VP of media strategy, business development and sales,Hans Schroder said in a statement. “We are incredibly excited by the fact that jaguars-billswe took a game that would have been viewed by a relatively limited television audience in the United States and by distributing it digitally were able to attract a global audience of over 15 million viewers.”

Yet as others have pointed out, the reported numbers don’t tell the whole story. Yahoo had to resort to some trick plays to score some of those points, like putting a muted auto-play video of the game on the home pages of several of its properties, which means your Aunt Minnie, who has never watched an NFL game in her life but uses Yahoo as her personal home page, is somewhere in that 15 million. The comparison with broadcast TV viewership is also overstated. As Brian Stetler of CNN pointed out, the 460 million total minutes of football Yahoo claims to have streamed, over the course of a 195-minute game, implies an average of just 2.36 million concurrent viewers, the streaming metric most comparable to TV ratings. Read More »

The Co-Dependent Marriage Of TV and Sports

According to a report released this week by PriceWaterhouseCooper, the revenue earned from media rights by the North American sports industry will surpass the revenue earned at the gate by 2018, when they’ll reach $19.95 billion and $19.72 billion, respectively, fulfilling the old adage that the sports business is really the TV business.

Increasingly, the reverse is also true: The TV business is really the sports business.

More than a third of all TV advertising in the U.S. today goes to live sports, and that doesn’t include ESPN, which shows a mix of live sports and sports-related programming. Add in ESPN and the share of advertising going to sport programming would top 40 percent, Advancit Capital partner and former Fox Digital president Jonathan Miller estimated from the stage at the New York Media Festival earlier this month. Franklin_Gutierrez_hitting_HRAt the same time, according to SNL Kagan, sports networks account for nearly 20 percent of the carriage fees paid by cable and satellite operators, and that doesn’t count the portion of the carriage and retransmission fees paid to broadcasters and general-interest cable networks that can be attributed to the sports programming they carry. According to an analysis last year by MoffettNathanson analyst Michael Nathanson, the aggregate of sports rights account for as much as 50 percent of the cost of the average cable bill. Read More »

For Amazon, Live OTT Comes With A Twitch

At his Streaming Media blog, Frost & Sullivan analyst Dan Rayburn adds a new wrinkle to the ongoing debate over why Amazon kicked Apple TV and Chromecast products out of its online store. According to Rayburn’s sources, Amazon has been chatting up content owners about offering a live, over-the-top video service of some kind.

Rayburn speculates that such a plan could help explain why Amazon recently acquired the cloud-based live streaming platform provider Elemental Technologies at an unusually high valuation:

cable_TV_not1Insiders say Elemental is on a run rate to do close to $100M in 2016. So if the rumors of Amazon valuing Elemental at $500M are correct, Elemental is getting about 5x projected 2016 revenue, a rather high valuation, unless Amazon is also placing value on them for other reasons, like the ability to power their own live OTT service.

I’ll add another data point in support of the notion: Twitch, which Amazon acquired last year for close to $1 billion. As noted in a post here last week, Twitch is rolling out a new set of tools to help its broadcasters linear-ize their channels, by mixing live and on-demand content and creating playlists that turn the channel into a 24/7 experience. Read More »