On Monday, Recode reported that Facebook will begin sharing video ad revenue with media partners. However, of all the recent updates, Facebook’s decision to begin sharing revenue with media partners is the most important. Facebook is now a legitimate revenue creator for partners Since Facebook first introduced its native video player, back in 2014, the majority of media partners (both larger companies and independent creators) have published videos on the platform without receiving any compensation. That means that video businesses can see immediate returns, just like on YouTube. As the chart below shows, Facebook has wider operating margins than all but five U.S. companies. That’s going to change now that it will share ad revenue with partners. Facebook counts a video view as three seconds; YouTube uses 30 seconds (though it is possible to pay per 10-second views). Media buyers are used to placing video ads before, during, and after long videos that consumers have deliberately selected, rather than short videos that autoplay without sound. It’s possible, however, that Facebook has cracked a newer, mobile-first form of video viewing that will be irresistible to media and advertising partners. If anyone is going to change digital video and advertising, it’s Facebook.
For years, Facebook has denied that it’s a media company.
Sheryl Sandberg, COO; Chris Cox, CPO; and Mark Zuckerberg, cofounder and CEO, have all flatly said that Facebook is a tech company. But over the last few years, that position has become less tenable.
Now, it seems that Facebook has finally accepted the premise that it is, at the very least, inextricably linked with the media industry. In December, Zuckerberg made some telling remarks in a video chat with Sandberg:
Facebook is a new kind of platform. It’s not a traditional technology company. It’s not a traditional media company… We don’t write the news that people read on the platform. But at the same time, we also know that we do a lot more than just distribute news, and we’re an important part of the public discourse.
That changing perspective continues to evolve. Last week, Facebook hired former NBC anchor Campell Brown for a “Head of News Partnerships” position. On Monday, Recode reported that Facebook will begin sharing video ad revenue with media partners. And on Wednesday, Facebook announced “The Facebook Journalism Project,” an initiatives that will include products and training for both journalists and audiences.
However, of all the recent updates, Facebook’s decision to begin sharing revenue with media partners is the most important. Here’s why.
Facebook is now a legitimate revenue creator for partners
Since Facebook first introduced its native video player, back in 2014, the majority of media partners (both larger companies and independent creators) have published videos on the platform without receiving any compensation. The company paid an exclusive set of partners to post Facebook Live videos, but otherwise creators have seen exactly zero revenue.
Now, partners will begin to monetize the audiences they’ve built on the platform. According to reports, Facebook is planning to offer a 55 percent revenue share—exactly in line with what YouTube offers its creators. That means that video businesses can see immediate returns, just like on YouTube.
It’s possible that Facebook has cracked a newer, mobile-first form of video viewing that will be irresistible.
As a result of the new system, YouTubers and other digital video organizations may begin to focus more of their efforts on Facebook, which boasts a larger user-base and, despite controversy over inflated view metrics and measurement mistakes, has touted explosive growth in video viewing. It also means that competition for views will ramp up immensely among Facebook pages, which should only be a good…
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