Move Over YouTube: Facebook To Give Video Creators Share Of Ad Revenue From New “Suggested Videos”

Facebook is turning up the heat on YouTube.

Starting this fall, Facebook will offer selected video creators — including the NBA, Fox Sports and Funny or Die — a cut of advertising revenue that appears with their content on the social network. That type of revenue-sharing arrangement has long been the province of YouTube, a platform that has cultivated a large network for creators who can make a living from publishing video on YouTube.

Facebook, on the other hand, has built video momentum by promising people the ability to get their videos in front of large audiences; the company says it receives more than 4 billion daily video views. Now Facebook is offering that huge reach with a cash bonus: a revenue split of 55% to the video creator and 45% to Facebook, which is the same as the terms on YouTube.

“Partners say they’d publish a lot more if they could get benefit of distribution but also make money,” Facebook vice president of partnerships Dan Rose told Forbes.

For Facebook, more professionally produced content could prove to be a more attractive target for advertisers. To make sure such video finds an audience, Facebook is creating a new video viewing experience called Suggested Videos. The new feature, being rolled out in the coming weeks on the iPhone app with Android and web being launched later, is essentially an alternate News Feed dedicated to videos.

[pullquote]”Partners say they’d publish a lot more if they could get benefit of distribution but also make money.”

–Facebook’s Dan Rose
[/pullquote]

When someone clicks on a News Feed video, he or she will be taken to Suggested Videos and see an algorithmically created set of videos similar to the original video. The video there will play automatically as the user scrolls. Video ads will be interspersed with the rest of the content — and unlike video ads in the News Feed will play with sound given that a user there has already chosen to hear audio.

Video publishers whose content is viewed during a session will receive a revenue share depending on how long someone watches their video compared to others. If someone watches a three-minute Fox Sports video and a one-minute Funny or Die bit, Fox Sports would get 75% of the publishers’ 55% cut of any advertising viewed during the session.

Facebook hasn’t worked out how it will charge marketers for ads that appear in Suggested Videos. During the first phase of the test, it will not be charging advertisers for these ads. Currently, Facebook has two ways to pay for video ads — by impression (based on a three-second view) or based on views of at least 10 seconds, an option that became public knowledge this week.

In an email to Marketing Land, a Facebook spokesperson confirmed the new feature and revenue-sharing test:

“We’re running a new suggested videos test, which helps people discover more videos similar to the ones they enjoy. 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.”