How Technology Is Disrupting Social Media with Sahil Patel

Every day in the digital world the bar is set a little higher. Once you have figured out the desktop, you have to figure out mobile. Once you have figured out text content, you have to figure out video. The list goes on. As technology and social networks continue to progress, at STN Digital, we turn to Digiday to stay on the cutting edge of industry trends.

For this edition of the Business of Social podcast, we chatted with Sahil Patel, Senior Reporter at Digiday, who leads coverage on the video industry. While covering TV and online video at VideoInk and Cynopsis Digital, Sahil got the inside scoop on technology, publishers and social network benchmarks and future planning. 

Listen to the full show here: (and please subscribe to our podcast!)

Here are the highlights:

[00:01:04] - What’s the most disruptive factor in media today?

"It’s tech. Over the past few years, the conversations have been about the power of Facebook as it relates to publishers and the more traditional media companies. But when you look at companies like Amazon and Netflix, there's a reason you see big consolidations happening. It's not because they’re getting bigger for the sake of getting bigger, it's because they feel they need to get bigger in order to protect themselves."

[01:56] - Where is linear TV going in the next 5 to 10 years?

"I think we’ll stop talking about linear. Instead, it’s going to be 'what's the total viewing?' The TV show Roseanne is a great example. 18 million watched the show on linear, but as we record this podcast, we don’t yet know how many people on top of that 18 million watched it on all the other video platforms.

NBC just came out with a new metric. They’re not going to give just the Nielsen ratings anymore. Instead, they’re going to give the total viewership of a show across all the different screens and platforms. It's no longer about same-day viewers, it's about how many people have been watching over the first week, or whatever that parameter is."

[03:23] - How will one big viewership number affect advertising and monetization if they don’t segment by platform?

"Unfortunately, we have to wait and see, but the networks are going heavy into it. They are beginning to experiment a lot with ad loads. The networks want to be able to charge higher and measure effectively so they can work with advertisers across the different platforms. But at the moment, the understanding and knowledge aren't completely there.

It’s still too easy to say, 'I'm going to buy a thirty-second spot on this network that everyone knows and I’m probably not going to lose my job because I based it off of GRP.' That's the reality that we're in, but it is moving in the right direction. It just takes more education, more time, and a better understanding of the market."

[05:46] - For the future of Facebook, is the Cambridge Analytica scandal a huge deal or is it being blown out of proportion?

"I don't think it's being blown out of proportion. However, It’s not just a Facebook problem, it’s an online advertising problem. Now, everybody knows how online advertising works. In the past, people didn’t know, so they didn’t pay attention to a lot of the common practices.  But all the sudden, people know what cookies mean.

I think we’re finally at a time where it’s being covered in a way it should be covered. In the past, it was treated at arm’s length just because people didn't know what was actually happening.

In terms of Facebook losing a large number of users, I don't think so. Facebook isn’t just a platform anymore, it's becoming a utility. It's like the White Pages. You are basically proving you are human with a Facebook, so I don't see it meaningfully hurting their user numbers."

[08:43] - How have the Facebook changes affected publishers and media conglomerates?

"When talking with publishers off-the-record, the consensus about Facebook is that Facebook only cares about people spending more time on Facebook. Originally it was video because they thought people would spend more time watching video. Now it's Watch because it’s like a television platform with shows and longer episodes.

In general, it’s a matter of finding new ways for people to spend more time on Facebook.  Since the beginning of the video-wave in the news feed, it’s been a series of large product tests that has, unfortunately, swept up a lot of publishers."

[12:00] - Has Facebook Watch become a pay-to-play model for publishers?

"Facebook shifted their attention to Watch after the LIVE news feed video subsidies ended. At first, they started paying for a few shows.  Now, they want to own the shows. So, if you're a publisher trying to make money off the stuff you’re doing on Facebook, you sell them the shows.  By the end, the publisher is only making the money off the margins they were able to negotiate between the production costs and the producer fees.  Facebook is going to end up owning the show, so you can’t take the intellectual property and sell it elsewhere later down the road. There are some deals where publishers are able to retain ownership, but more and more Facebook is owning it."

[16:10] - In terms of overall strategy, is Facebook sending the same principles over to Instagram or are they siloed?

"Overall I think Instagram is siloed and they can do what they want, but it’s a bit of both. A great example is when Instagram Stories launched and everyone said they stole from Snapchat.  Facebook also launched the Stories on their app and Whatsapp. Just from that, you can see how the companies are still connected because they can do that very quickly.

Overall, Instagram still has some independence.  There is a level of understanding that they are a different product and they want to maintain that experience.  But because Facebook is the parent, they are connected in many ways."

[18:09] - Twitter had their first profitable quarter in over twelve years, what’s next for them?

"They are trying to work very aggressively with publishers. The strategy became, 'oh Facebook won’t let you do that, we’ll let you do that.'  They started pouncing on the opportunity. Facebook has their terms, Twitter will give you better terms. Snapchat is doing the same thing. Snapchat is releasing products and reaching out to Discover publishers in a way that is outwardly trying to make the publishers more money. Twitter and Snapchat see the opportunity from an advertising perspective and the publisher’s perspective."

[20:45] - Snapchat has been going through an identity and PR crisis, what’s next for them?

"Snap in the past has been very restrictive with terms, with distribution, and the partners they worked with.  I get the sense that they're loosening up a bit and giving publishers more options to make money.

Snap is going through changes right now, just like Facebook did when they were constantly tweaking their platform. The data I've received from third-party providers is that Snap’s installs are still going up. They say there’s no noticeable dip with people deleting the app or not using it as much. Ultimately, we'll see what they say when the next earnings report comes out."

[22:50] - Recently, ESPN went to Snapchat to put original content from Sportscenter. Is that a big deal that ESPN went to them rather than the other way around?

"I think the bigger deal is what ESPN is doing in terms of their overall change in the company. Their launching ESPN+, doing deals with Snapchat and Facebook, and trying to figure out different ways to have the Sportscenter brand outside of just news highlights. I think that's part of the bigger picture and how they are figuring out new ways to modernize ESPN.

I did a recent interview with John Martin, the CEO of Turner, and he said not long ago at CNN the television side was separate from the editorial and digital team.  Now they are are all together in the same building. It's only been within the last two years that the big guys are getting really serious about implementing changes."

[25:42] - What are your thoughts on the new streaming apps, Bleacher Report and ESPN+?

"The Bleacher Report app is interesting because they're going to experiment with subscription options where you can buy leagues or pay per game and things like that. People are used to buying individual games through their television but we'll see if it works in a streaming capacity.

In terms of seeing significant growth in those areas, I believe it's going to take some time. Take ESPN+ for example, it does not have the most important content that ESPN has. I think some people will pay for it, but I don't see it being a massive subscriber generator in the first year.  It’ll take some time."

[27:14] - Is there a conflict of interest when the NBA is on ESPN, for example, but the NBA is also streaming using OTT for a small fee?

"When you talk with any of these companies, they’re very quick to point out that it’s not going to eat into their existing partnerships. There's no way that they’re going to have this cannibalize their partnerships with the cable distributors, it’s only extra stuff.

ESPN is not putting Monday Night Football on ESPN+ anytime soon.  Their biggest properties are still going to be on linear. But, I think we'll start see more of those conversations in a few years when the media rights coming up again."

[29:00] - What would happen if Amazon or Facebook begin bidding for live sports?

"I might be proven wrong, but I think we’ll see the leagues using the Tech companies as leverage to get more money. I don't deny that Facebook, Amazon, and Twitter are interested in live sports, but I don’t see the tech companies coming forward.  They would have to hire a studio team and create the content themselves, so I don't see them doing that. I see them becoming syndicators of content shot by someone else.  I’m more likely to believe that the networks will buy exclusive rights versus an Amazon or Facebook doing it."

[30:48] - When it comes to monetizing social platforms, is there a fear of relying too heavily on that as a main revenue stream?

"Fear has become the industry standard. As a media company, It's an environment that you don't own and your business relies on to find your audience and make money.

Most are hedging bets across the board. You’re not relying solely on one platform.  That way if one changes, it might hurt a bit but it’s not going to wreck your business.

The core focus should be stuff you own.  That could be in a variety of ways like an app, website, or a subscription offering.  It could also be content you own the rights to that you could sell to different places.  That should always be the core focus where it makes sense.

If you're focused on doing longer form programming, you may not need to be on Facebook Watch outside a deal or two, but instead you focus heavily on distributing through YouTube. The goal should be to find distribution opportunities with syndication OTT platforms.  Build it in a way that’s right for you.

That's finance 101, find a way to diversify your income."

[33:10] - Do you see potential for a new platform to break out into the market?

"There are a few platforms with interesting audiences like Musically, Twidge, and a few others, but I don’t see them significantly challenging the major social platforms.   

Recently we’ve heard a lot about Flipboard becoming a big driver of traffic at our recent Publishing Summit. So, they may be making a resurgence.

Apple News is a big one. People are getting a lot of traffic and viewership there, but they are actually really behind on modernization.  Personally, I don’t see it because Apple doesn't want to be heavily involved in the advertising business.

Overall, you hear ideas that make sense but I don't think in a way that is significant to the sizes we see with the major social platforms."

[35:05] - Is it a great time for original content?

"It's a great market for original content.  Last year, there were around 450 scripted shows on television alone. Netflix is doing 700 original productions this year. But, it really depends on the type of content creator you are. If you're making unscripted, lifestyle, short-form, YouTube stuff, there’s not a lot out there right now besides Facebook Watch and Snapchat. Snapchat also doesn't pay for the most part.  Usually, you get paid if you’re making an original show for a buyer.

If you're making premium longer-form TV shows, Facebook is looking to buy those. You have Netflix, Amazon, and other networks, so there is a great opportunity.

On the flipside, Netflix is not the only one that's looking to own content or produce in-house.  Amazon wants to do that more and more, Netflix wants to do that more and more, even Facebook wants to do that more and more.

So now, you must have serious internal conversations about how you treat intellectual property (IP).  Is it better for us to be a producer for hire or do we find ways to retain some of the ownership so we can find additional revenue streams down the road?"

[37:42] - Can you equate views on social to views on linear TV?

"No, not right now. It’s as simple as why you can’t equate short-form views to a viewer.

Facebook Watch gets 5 million views, that sounds great. Views on Facebook are counted at 3 seconds.  That means that you are only guaranteed that 5 million times your video was played for at least 3 seconds.

Now, let’s say you have 800k views on linear. You would think 5 million is better but that's 800k viewers per minute on average across the telecast. It's simple math, do you want 800k people on average for an hour, or do you want 5 million for 3 seconds?

That's why we can’t equate them, a lot of people would call them vanity metrics since they aren’t on the same playing field."

[41:59] - What are you looking forward to in 2018 for social and digital?

"I am curious to see which platforms will continue to succeed with high-quality video. Whether it's Facebook Watch, YouTube Red, or the scripted stuff Snapchat is launching soon.

I'm looking forward to seeing if the Department of Justice approves the AT&T/Time Warner merger and how that will shake things up.

One of the most fascinating stories is Netflix versus the world right now. And let’s not forget about Amazon either. They seem to be competing with everybody. They compete with Netflix, with YouTube, with retailers. It seems like they’re in every market and every industry. So, while Netflix is in the entertainment, I’m curious to see how Amazon does."