Facebook wants to compete with YouTube in video, so it’s asking for a little help from its media company friends — and even a few YouTube stars.
The social network has in recent months been wooing publishers’ video teams, selling them on the advantages of uploading videos directly to Facebook’s proprietary video player. Advertisers are clamoring for “premium” (i.e., publisher-made) video — Time Inc. has sold 99 percent of its video inventory — and Facebook wants to ensure that it is a primary destination for it.
“Facebook is intent on working more closely with content and media producers,” according to one publisher who recently met with the social network.
The move comes as no huge surprise. Facebook CEO Mark Zuckerberg, during an open Q&A with users, said he expects the sprawling social platform will carry mostly video content in five years’ time. This would put it in direct competition with Google-owned YouTube.
And while conversations with Facebook have mostly centered around how Facebook can better serve media outlets’ video goals, the publisher said Facebook seems to be preparing itself for, one day, serving ads against publishers’ Facebook videos and splitting that revenue with them. That is, Facebook is ripping a page from YouTube’s video advertising playbook.
Which would make sense considering video on Facebook is currently similar to the nascent days of YouTube, when the video-sharing platform was long on user-generated content but short on the professional-grade videos that advertisers want to be next to.
More recently, YouTube has invested more than $100 million toward the creation of highly polished original video since 2011, be it made by individual superstars such as Bethany Mota and Michelle Phan or media companies like Grantland and Vice. Just this month Google opened YouTube Space NY, a studio in Manhattan for YouTube creators to use. YouTube generally takes a 45 percent cut of channels’ ad revenue.
The investment seems to be paying off, with YouTube expected to generate $1.13 billion in ad revenue after content-acquisition costs (that is, after paying out its creators) this year.
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If Facebook wants to contend with YouTube for those ad dollars, it will need to start serving more premium video through its own video player instead of having creators and media companies upload videos to YouTube and subsequently post them to Facebook.
Facebook was able to convince Time magazine — which, like all Time Inc. titles, has heavily invested in video production — to be the first publisher to upload to Facebook’s video player in March when it posted this 30-second video about the construction of One World Trade Center.
But like all the videos Time has posted directly to Facebook, the One World Trade Center post was just a snippet of the larger film. Rather than post full-length videos to Facebook’s video player as Time does with its YouTube channel, Time has been using the player as an effective way to “tease” a larger story, hoping Facebook users will be enticed to click through to Time’s site, according to Callie Schweitzer, Time’s director of audience strategy.
Vice has also started experimenting with uploading video directly to Facebook, albeit on its own accord and not at Facebook’s behest. And Vice, too, has seen Facebook video as merely a way to generate interest in larger stories, such as this 52-second Vice Sports video about Seattle Mariners second baseman Robinson Cano, which functions as a trailer directing Facebook users to watch the entire production at ViceSports.com
Vice, meanwhile, has also been a showpiece for YouTube, hinting at the intensifying platform rivalry: YouTube prominently features Vice News in its ongoing campaign to promote select YouTube channels to advertisers and the public.
But Vice, like all creators, has no exclusivity clause with YouTube, leaving it free to distribute its video wherever it desires. YouTube might have paid to advertise Vice’s channel, but it didn’t buy loyalty. Indeed, Facebook successfully recruited YouTube superstar Michelle Phan in October, convincing her to use Facebook video to market her new book.
Facebook has not mentioned instituting a YouTube-like advertising program for its video player, but it’s not hard to imagine that is its endgame. It might first have to convince publishers that Facebook can be used for full-length videos, though. Time digital editor Edward Felsenthal said Time is only running full-length versions of its videos on YouTube and Time.com where they can be monetized.
Time Inc.’s Andy Blau said that while the publisher would be open to an ad revenue arrangement with Facebook, the splits would need to be better than YouTube’s offer. “YouTube’s revenue share is pretty lousy for publishers, so lots of publishers have chosen not to use it,” Blau said. While retaining 55 percent of ad revenue may work for individual creators, it’s less enticing for large publishers that have their own sales staffs.
There is, of course, a looming risk in working too closely. Like with its current video pitch, Facebook is seeking publishers willing to publish articles directly on Facebook’s app in exchange for a cut of ad revenue. Publishing directly to Facebook could provide an ad revenue boost for publishers, but ceding too much control to Facebook is a Faustian bargain, some have said. The fear is that Facebook will itself become the leading text and video publisher, allowing it to dictate ad revenue share terms to publishers, which, in the meantime, will meanwhile see their prestige and bottom lines further whither.
In the meantime, publishers, especially ones with quality video, are in demand.
Update: A previous version of this article labeled YouTube’s studio in New York as Ignite NY. The name of the studio is YouTube Space NY. Ignite NY is a series of events held at the studio.