Facebook Sees an Opportunity with YouTube’s Content Creation Problems

By James DeRuvo (doddleNEWS)

While YouTube is struggling with “apocalypse” as it evolves, Facebook has an opportunity to poach content creators that their competition is leaving in its wake. And they could do it with over $1 billion in revenue sharing as motivation. Is Blue about to beat Red at its own game?

Facebook wants to create a system where creators can upload their shows for free, then earn a cut of the revenue from ads placed on content—similar to how YouTube pays its online creators. Another source with knowledge of the situation said Facebook’s ultimate goal is to create a sustainable ad-supported video platform, where it won’t have to pay for the majority of content. – CNBC

The report comes from CNBC, which reports Facebook is developing a so-called “tiered advertising model” which would enable content creators to share the ad revenue the social media giant can build a content slate for little to nothing and then share the spoils.

Facebook currently has a traditional Hollywood model paying anywhere from $10,000-500,000 for the per episode rights to popular partner web content. But the old school gate keeper style is kinda what gave birth to the democratic content creation movement. With YouTube dealing with disgruntled creators who find themselves without a paycheck, Facebook wants to add an additional partner tier giving disaffected creators from YouTube motivation to jump ship.

Additionally, to keep their advertisers happy, Facebook hopes to learn from YouTube’s troubles by giving them the option to choose which videos they want their ads to appear on. Naturally, the market will then determine which videos are worthy of being “advertiser friendly.” If a content creator wants monetization, they will naturally create content advertisers will want to reward.

The move is completely expected, as the universe hates the vacuum YouTube is creating. By cutting off mid and lower end content creators who have labored hard to qualify for monetization, the streaming video portal has received a ton of bad press. This was caused by YouTube moving the goal line further away multiple times, until ultimately requiring as much as 20x more viewing statistics before sharing a piece of the revenue. Even those who qualified under the old system and were part of the YouTube Partnership Program have found their accounts disqualified because they don’t have over 4,000 cumulative hours of viewing time over a year.

YouTube’s Ad Revenue isn’t keeping pace with Partner growth.
Image Credit – Corridor Digital

But there are some who believe YouTube is taking this step for a more bottom line reason. They need to make a profit, and it’s much more lucrative to keep 90% of the ad revenue by raiding the smaller content creator’s coffers, and reward your premium revenue sharing partners with a bigger piece of the pie.  Corridor Digital producer and business director Jake Watson shows in the video above that back in 2012, YouTube only had 15,000 partners in the program. After throwing the gates open, YouTube ended up with over 800x as many partners, a growth model outpacing their advertiser revenues, even though YouTube’s ad revenue has grown 10 times since 2012, it still means per capita, there’s less ad revenue to go around.

With even 1% of YouTube’s 1.3 Billion users seeking to monetize their videos, it’s almost impossible to balance supply and demand, while keeping viewers returning and advertisers happy.  But let’s face it. WHO WATCHES ADS ON YOUTUBE ANYWAY? We all hit “skip ad” don’t we? If I was an advertiser, I’d be more upset with that, before where my ad lands. If YouTube wants to make a profit and keep Google happy, then it makes sense to begin to cull what Watson calls “creators at the margins.” Ironically, though disciplined for their antics, Logan Paul and PewDie Pie are still enjoying ad-revenue on YouTube.

Facebook sees the opportunity, that’s why they may be looking to create a similar revenue sharing structure. Consequently, with the benefit of hindsight, they can avoid YouTube’s mistakes. It was when YouTube threw open the floodgates and allowed anyone to trigger monetization that the problems started. If Facebook is smart, they will be more discerning about who gets to monetize, and lure just the cream of the crop YouTube has left to curdle.

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About James DeRuvo 239 Articles
Editor in Chief at doddleNEWS. James has been a writer and editor at doddleNEWS for nearly a decade. As a producer/director/writer James won a Telly Award in 2005 for his Short Film "Searching for Inspiration. James is a recovering talk show producer from KABC in Los Angeles, and a weekly guest on the Digital Production Buzz with Larry Jordan.

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