By Laura Stevens 

LAGUNA BEACH, Calif. -- Tech giants Facebook Inc. and Alphabet Inc.'s Google will have to find better ways to share revenue with media companies to support quality content, said BuzzFeed Chief Executive Jonah Peretti.

"The business model of news is changing, and if Google and Facebook take all the revenue but don't want to pay for the fact checking, the reporting, the more-intensive investigations, who does that work?" Mr. Peretti said Wednesday at The Wall Street Journal's WSJ D.Live technology conference. "I think Google and Facebook are going to have to fix that."

News outlets increasingly are pursuing subscription models and putting content behind paywalls, which limits that news to a smaller portion of the population, Mr. Peretti said. Meanwhile, Facebook's news feed, in particular, tends to support low-cost content, Mr. Peretti said. He said he thinks Facebook is aware of this and will work on creating more ways for media companies to earn revenue on its platform.

More digital ad spending has been flowing to Facebook and Google, which are expected to eat about 63% of U.S. digital ad dollars this year, according to eMarketer. That means there's less money to go around for other publishers, like BuzzFeed.

Still, Mr. Peretti said BuzzFeed is confident advertising is still a good model. The company has worked to diversify its revenue streams with other business areas.

Facebook recently altered the formula for its news feed to punish publishers that churn out vague or misleading headlines designed to lure users into clicking. Under the new formula, posts from publishers that rely heavily on what Facebook considers click bait will be placed in fewer news feeds and appear lower in those feeds.

The big tech platforms are now a hybrid between a place where people are getting their news and entertainment and communicating, said Mr. Peretti.

"The platforms are finding themselves caught in the middle," he said. "They have a difficult job."

 

(END) Dow Jones Newswires

October 18, 2017 16:10 ET (20:10 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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