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YouTube Beware: Facebook Will Start Sharing Ad Revenue With Video Creators

No coincidence here: Facebook's revenue split is the same as YouTube's.

Maxim Blinkov/ Shutterstock

YouTube finally has some serious competition.

Facebook is offering video creators like the NBA, Fox Sports and Funny or Die a revenue split from ads sold alongside their videos beginning this fall. It’s the first time Facebook has done any kind of revenue share around video, and the pitch to content creators is pretty transparent: Share your content with us and we’ll share some of the money we make back with you.

The move is a full-on attack against YouTube, which has dominated the digital video market for the better half of a decade. Facebook has been able to attract content creators because of its massive reach, but now it’s offering them the one thing YouTube has offered for years: Money. YouTube also uses a revenue split to entice content creators — the same revenue split, actually — with 55 percent going to the video creator and the remaining 45 percent staying with the platform.

But Facebook’s argument is that it can get more eyeballs for your video. People don’t have to hunt to find your video — Facebook will show it to them. And those people don’t need to be following your Facebook Page, either.

“A lot of [our partners] have said this will be a big motivation to start publishing a lot more video content to Facebook,” Dan Rose, Facebook’s VP of partnerships, told Re/code about the new revenue model. “That’s exactly what we’re hoping for.”

It’s not quite that simple, though. The revenue share on Facebook doesn’t apply to all videos in News Feed. Instead, the company is rolling out a new feature called Suggested Videos, a News Feed of sorts that’s exclusively video content. For example, if you click on a video in your News Feed about snowboarding, you’ll be taken to the Suggested Videos feed where you can watch that video, then scroll down to see others that are similar.

This “suggested” videos feed will use an algorithm to find the related content. If you click on a video of your college friend, you’ll probably see more videos from that person. But if you click on a video from a larger brand or publisher, you’ll primarily see videos from bigger content partners, like those listed above, explained Rose.

Facebook

There will also be ads in this stream — standalone, autoplay ads like you might find in News Feed — and this is where the revenue share comes into play.

Again, though, it’s not that simple. Because it’s essentially a video version of News Feed, you may watch three videos and see just one video ad. In that instance, Facebook will divide that 55 percent among the three video creators based on how much time you spent watching each video. Facebook still gets its 45 percent.

The new format all but confirms Facebook’s push to make video a top priority. It also offers a new revenue stream the company wasn’t getting before. The video ad business is typically based around pre-roll ads, which Facebook doesn’t offer, and there’s also a limit to how many video ads it can cram into News Feed before turning people away.

Essentially, Facebook isn’t taking full advantage of its potential video ad business, which is a bummer for Facebook considering video ads are typically the most lucrative.

Suggested Videos gives Facebook another feed to show off ads that autoplay with sound. As a bonus, the new model provides incentive for big-time content producers to share more video on Facebook at the same time. Facebook gets a new ad stream and more video content in one fell swoop.

The social network has done other things as well to help make video a priority over the past year and a half. It tweaked its algorithm to show more video and started autoplaying video in News Feed to capture people’s attention. As a result, daily video views on Facebook have jumped from one billion back in the fall to four billion in April.

There are still a number of wrinkles to be worked out with Suggested Videos. For example, Facebook hasn’t decided how it will charge advertisers. The company currently offers two methods with video ads — pay by impression (a view is counted as soon as the video starts playing) or pay for views (a view is counted after 10 seconds).

It will test the Suggested Videos product for “a few months” while giving advertisers “bonus impressions” before deciding how to charge them.

It’s also unclear how many video creators will be able to take advantage of the revenue share element. Rose says the company will start with a “few dozen” partners and will add others along the way. But all content creators who want a paycheck from Facebook have to become official partners with the company.

Facebook is rolling the feature out on iOS over the coming weeks, and plans to launch it on Android and the Web in the coming months.

This article originally appeared on Recode.net.