Facebook to Share Ad Revenue With Video Creators

Facebook said it would begin sharing ad revenue with video creators, a move designed to attract more polished content and more ads, the Wall Street Journal reported.

If successful, the effort will make Facebook a more serious threat to Google Inc.’s and Youtube in online videos.

Facebook users watch videos four billion times a day across the social network. Now, Facebook is getting serious about making money from that vast audience.

Until now, Facebook has slotted video ads into users’ news feeds. The new feature, called Suggested Videos, will include ads between professionally produced content from major media companies, much like TV advertisements.

The revenue-sharing model Facebook unveiled Wednesday is similar to YouTube’s, in that Facebook will keep 45% of the revenue. Unlike YouTube, however, video producers on Facebook will have to split their share more ways, potentially leaving them with a smaller cut.

“Facebook could now be very serious competition for YouTube,” said Jan Rezab, chief executive and co-founder of Socialbakers, a social-media analytics company. “If I were Google, I would watch out.”

YouTube declined to comment.

Under the new program, mobile users who view a video in their news feed will then be directed to videos that Facebook thinks they might be interested in. Video ads will be interspersed among these videos, much like TV commercials. Initial media partners include the National Basketball Association, Hearst Corp., Fox Sports, Funny or Die and Tastemade.

“There are use cases when someone wants to go into a video consumption experience,” said Dan Rose, Facebook vice president of partnerships. “Scrolling through your news feed is not the most efficient way of doing that.”

The initiative is aimed at smartphones, source of 75% of video views on Facebook, the company says. RBC Capital Markets analyst Mark Mahaney said YouTube shows a similar number of videos, but only about 50% of its video views come from phones.