David Farnor | On 05, Jul 2015

Facebook has begun to introduce a way for content providers to earn revenue from videos, a step that could prove a killer blow in the site’s rivalry with YouTube.

Google’s streaming site has been the giant of the online video world for years, thanks to its accessible layout, compatible tech and established community of users. Facebook, though, has emerged as a challenger in the VOD race, serving up 4 billion views per day in the first three months of 2015.

The statistic should perhaps have come as no surprise: after all, Youtube and Facebook both have more than 1 billion users worldwide, while the prolific posting of YouTube videos on Facebook in the past proves the social network’s effectiveness as a place to share and watch videos. Its apps are as widespread as YouTube’s too.

But as Facebook increasingly focuses on its video platform, improving both discovery and the ease of publishing footage, the major difference between them has become apparent: the ability of uploaders to earn money from their content.

“Facebook is poised to take on YouTube’s dominance in video content,” argued a recent report by Ampere Analysis. “Currently viewed as a platform for building awareness, Facebook hasn’t yet been able to compete with YouTube’s ability to deliver revenue returns to content creators through its huge engaged audiences across the globe. But now it appears that Facebook is making a serious play for content owners.”

The site, which has reportedly been courting content creators and owners in an attempt to woo them from YouTube, has now started to introduce the most important and attractive feature of all: revenue.

“We’ve heard consistently from media companies and other video creators that if they were able to make money from their videos, they would publish more,” Dan Rose, Facebook’s VP of Partnerships, told Variety.

“We hear they get a lot of value from the distribution and promotion of their videos on Facebook… and we think this product will amplify that.”

Facebook’s platform relies upon autoplay videos in users’ timelines, something that earns it more views, but also makes it harder to introduce adverts: given that videos are initially muted, advertisers would be unlikely to pay for the traditional pre-roll method used by YouTube. The fact that Facebook’s videos can often be short, pre-roll adverts could also lead to user dissatisfaction, after waiting for half a minute to see what comes after an autoplayed ad, only to see a 10-second clip of a cat.

Instead. Facebook has been conducted a test through its iPhone app to display “suggested videos” to users, by recommending related content picked from Facebook’s streaming catalogue. It’s a feature that has been part of YouTube’s infrastructure for some time, but one that opens up space on Facebook for in-line ads to play between the clips.

Facebook will offer a 45/55 split with its partners – the same as YouTube. The larger half of the revenue will be divided between those whose videos are viewed in the suggested window, based on the amount of time users spend watching each clip.

There are “a few dozen” companies already signed up, including Fox Sports, the NBA, Hearst and Funny or Die. The videos displayed will be those already bought for Newsfeed, which means that clients will effectively receive bonus impressions without paying more.

“We think this will be net positive for partners,” added Rose. “They don’t have to publish anything more than they already are – and they’ll start getting checks from us.”

The NBA delivered more than 100 million views on Facebook during the 2015 Finals, up 180 per cent year-on-year, according to Melissa Rosenthal Brenner, Senior VP of Digital Media.

“We love how Facebook is thinking about how you provide a richer video experience… and create unique, valuable opportunities for advertisers,” she commented.

In the coming weeks, the site will expand its suggested videos to more users and begin to display adverts, although the test will only involve Apple iPhone users, with Android and web audiences to follow.

“We need to see how they perform before we start charging for them,” explained Rose, with pricing yet to be determined for future sponsors.

The move, though, marks a major step in the ongoing race with YouTube to win video users and creators to their platforms: why would they move from YouTube, where revenue is already possible, to an non-profitable alternative?

Could it be a killer blow? For now, YouTube has one other key advantage: its handling of pirated material. YouTube’s Content ID system automatically detects copyrighted material and notifies companies, if their content is posted without their permission. It then gives them the option to block it, or make money from advertising alongside it.

Facebook, though, has no such tool. Indeed, only last month, George Strompolos, CEO of multi-channel network Fullscreen, tweeted that the MCN’s content was being taken from YouTube and uploaded to Facebook without their permission – something that others have also complained about.

“I love FB video but getting very tired of seeing our videos ripped there with no way to monitor or monetize. Remember that YT was sued by Viacom for over $1BN for this,” he said on the social media site recently.

“I now regularly see our videos with 50MM+ view counts that are stolen by individuals on FB.”

“Frankly I’m shocked that a rights holder with deep pockets has not sued yet,”he added.

“I think FB video can truly eclipse YT over time with search, widespread embeds, a dedicated app, monetization and content ID,” he concluded.

One down. The race continues.

Photo: Courtesy of Variety.

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