Facebook vs. YouTube, it’s ON!

Facebook will challenge YouTube with Ad Revenue (Photo: BI/Courtesy)

Look out YouTube, Facebook is out to swallow you!

Facebook will soon start sharing ad revenue with select people and companies that upload their videos to its platform, Re/code’s Kurt Wagner reports. This change constitutes a “full-on attack against YouTube,” according to Wagner.

Indeed, it’s a big move and in line with Facebook’s increasing focus on turning the social network into a video hub.

Facebook’s videos currently get about 4 billion views per day (a number that should be taken with a grain of salt, considering a “view” counts as three seconds of playing, and the videos autoplay), and about 70% of them are uploaded directly to the platform, instead of being shared from other sites, like YouTube.

Just this week, Facebook introduced a new ad-buying format that’s attractive to marketers because it lets them to buy ads based on time-viewed versus impressions (meaning any time they show up on someone’s feed).

One of the problems that Facebook has faced, though, is that a lot of its videos are amateurish — think about all the Ice Bucket Challenge videos, which garnered the site 10 billion views.

YouTube, on the other hand, has built up a pretty vast network of professional creators, ranging from viral gamers like PewDiPie to teen shopaholics like Bethany Mota. YouTube gives 55% of ad revenue it collects to video creators, meaning that many actually make their livings solely through the video site and have incentive to keep it stocked with high-quality content for Google to sell ads against.

Facebook wants to become similarly attractive to creators and, ultimately, advertisers. It’s using the same revenue model — 55% to creators, keeping 45% — but with a twist.

The revenue split will only apply to videos that show up in a new “Suggested Videos” newsfeed that Facebook plans to roll out. Whenever a user taps a video in their normal newsfeed, they’ll be shot over to the video feed, where an algorithm will curate a list of other videos Facebook thinks they’ll like.

Facebook videos don’t have pre-roll ads like YouTube videos do, and an ad won’t play between every video, so the site will actually split the 55% between all creators whose videos a user watches between ads. If a user watches three snowboarding videos and then an ad plays, for example, the creators will each get part of that 55%. Their share of it will depend on the amount of time the user spent watching their video.

So not as good a deal as what Google offers, but some money is better than no money. Plus, Facebook’s pitch is that it’s easy for the 1.4 billion monthly active users trawling its feed to stumble onto new videos. (They don’t have to go to a video-specific destination, like YouTube.)

“A lot of [our partners] have said this will be a big motivation to start publishing a lot more video content to Facebook,” Facebook’s VP of partnerships, Dan Rose, told Re/code’s Wagner.

The company is starting this initiative with a “few dozen” video publishers, like Funny or Die and the NBA, and will test the model out for several months before deciding how to move forward.

“We’re running a new suggested-videos test, which helps people discover more videos similar to the ones they enjoy,” a Facebook spokesperson told Business Insider. “Within suggested videos, we will be running a monetization test where we will show feed-style video ads and share revenue with a group of media companies and video creators.”


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