Facebook (NASDAQ:$FB) has disclosed that it will be launching a paid news model on its platform. And following the announcement, Facebook’s stock moved marginally higher.
The California-based company announced an olive branch of sorts after new media companies asked for antitrust exemptions from Congress to collectively negotiate with large networks like Google (NASDAQ:$GOOGL) and Facebook.
Facebook has plans to test a subscription and metered paywall service on its platform as early as October of this year, according to Leon Lazaroff of TheStreet.
The news came from remarks by Campbell Brown, who is Facebook’s head of news partnerships, at an industry conference on Tuesday, July 18. Brown stated: “One of the things we heard in our initial meetings from many newspaper and digital publishers is that ‘we want a subscription product – we want to be able to see a paywall in Facebook.’”
At the start of July, news publishers asked Congress for the right to negotiate as a group. According to the News Media Alliance, a group of almost 2,000 publishers, they are tired of being forced to “play by their rules,” referring to Google and Facebook.
So, what are the benefits of the paid news model? Well, the paywall service could help news media companies generate more revenue by placing their content on Facebook. It’s good to note that Facebook’s paywall service would be a part of the company’s Instant Articles platform. According to TheStreet, the paywall would start after a user has visited 10 stories from one single publisher.
As of right now, it is not clear as to how Facebook plans to split the revenue produced by a new paywall service with publishers.
On Wednesday, after the news service was announced, Facebook is up 0.60% and trading at about $163.88.
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