Facebook, a social media site, has millions of subscribers who stream videos four billion times a day across the network. So, why not make a business out of it?
This is no joke, and Facebook is definitely serious. The social network company says it will begin sharing video ad revenue with video creators, according to Market Watch.
This aims to attract more ads and more refined content. This will be a serious threat to Google Inc.'s YouTube, if successful.
This will be possible through suggested videos, a new feature that will include ads with contents that are professionally produced by major media companies. This is pretty much the same with television advertisements.
This move is aiming at smartphone users, the source of 75 percent of Facebook video views. Mark Mahaney, analyst of RBC Capital Markets, said that YouTube was showing similar number of videos, but the views coming from phones are only about 50 percent.
Just like YouTube, Facebook will keep 45 percent of the revenue — offering the remaining 55 percent to its contributors, New York Post has learned. The difference is, Video producers on Facebook will have a potentially smaller cut because they have to split their share more ways.
Analysts are now doubting if this business move hits the market. See, YouTube's revenue-sharing model favors the advertisers more.
The video-streaming site's policy is, Advertisers only need to pay if the video ad has been watched for at least 30 seconds or in full, as per Slash Gear's report. This provides the users option to skip ads after five seconds.
Contrary to YouTube's ad platform, Facebook will be basing the revenue sharing on how long the video ad was played. This leaves two options for the advertisers.
They pay as soon as the video starts, or they can start paying if the video ad has been played at a minimum of 10 seconds, not to mention the video ads start to autoplay when the video is already video on the screen. This kind of setup may be less favorable to advertisers.
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