Facebook launches a 'full-on attack' against YouTube

By Jillian D'Onfro

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, the company 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. 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 video a user watches between ads. If a user watches three snowboarding videos, and then an ad plays, 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.

"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. "That's exactly what we're hoping for."

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."