Traditional news publishers have faced challenges from technological and market changes for more than a century. More recently, the internet has transformed the way people gather and process information and disrupted entire sectors of the global economy. One of the sectors most profoundly affected is the news industry, where changes in consumer behaviour have challenged traditional business models, reduced costs of gathering and distributing information have lowered entry barriers, and the proliferation of content has increased competition for audiences and, therefore, advertising spending.

Many publishers in the news industry have reacted to these changes by adopting a variety of new business models, including embracing new approaches to online delivery and monetisation, and by attempting to improve cost efficiencies. Some traditional publishers have flourished, such as the Financial Times and The Economist, but revenues and employment at other traditional news outlets have declined. Some in the traditional news industry have argued the growth of digital platforms is responsible for the economic challenges they are facing and alleged that digital platforms are profiting unfairly from the use of journalistic content. In response, policymakers in several major economies—including Australia, Canada, the European Union (EU), the United Kingdom (UK), and the United States (US)—have adopted or considered adopting policy changes designed to enable traditional news publishers to extract compensation from major online platforms, primarily Google and Facebook.

As part of a broader study of the value of news links on Facebook, NERA was commissioned by Meta Platforms, Inc. (“Meta”) to review the economic evidence on whether Facebook is extracting an unfair share of the value of news publishers’ links to their content in the UK. 

NERA’s findings are as follows:

Facebook is not the reason for traditional news publishers’ declining revenues. While the economic challenges facing traditional newspapers are complex, the primary cause of declining revenues is increasing competition from online content of all kinds, including blogs, “digital-first” and “digital-only” publications, podcasts, digital video, and online gaming.

Facebook receives little commercial value from news links. If news links were removed from Facebook Feed, many users would switch to viewing other Facebook content. Therefore, reduced time engaging with news would not necessarily result in a knock on reduction in user engagement on Facebook or in Facebook advertising revenues.

Traditional news publishers realise considerable commercial value from sharing their content on Facebook. We estimate that referral traffic to UK publisher websites from Facebook increases traditional publishers’ revenues by roughly 1.6% to 2.4% on average in the UK.

Thus, the evidence does not support contentions that Facebook obtains more value from news publishers than news publishers obtain from Facebook. Accordingly, the current situation where news publishers receive access to Facebook for free, while Facebook does not pay compensation to news publishers, represents a fair and reasonable division of the value created. conclusions suggest that government intervention to alter the commercial terms of trade between Meta and news publishers is unwarranted by economic evidence.