By Steven Perlberg and Deepa Seetharaman
Facebook Inc. has inked contracts with nearly 140 media
companies and celebrities to create videos for its nascent
live-streaming service, as the social network positions itself to
cash in on a lucrative advertising market it has yet to tap -- and
keep its 1.65 billion monthly users engaged.
The company has agreed to make payments to video creators
totaling more than $50 million, according to a document reviewed by
The Wall Street Journal. Its partners include established media
outfits like CNN and the New York Times; digital publishers like
Vox Media, Tastemade, Mashable and the Huffington Post; and
celebrities including Kevin Hart, Gordon Ramsay, Deepak Chopra and
NFL quarterback Russell Wilson.
The arrangements are a way to encourage publishers to produce a
steady stream of high-quality videos until Facebook figures out a
more concrete plan to compensate creators, such as through sharing
of ad revenue.
In March, Facebook said it would start paying some creators to
use its live-streaming product, and some publishers have
acknowledged being paid by Facebook. But the document reviewed by
the Journal is the most comprehensive list so far of participating
content providers and their specific financial dealings with
Facebook.
"We wanted to invite a broad set of partners so we could get
feedback from a variety of different organizations about what works
and what doesn't," Justin Osofsky, Facebook's vice president of
global operations and media partnerships, said in a statement.
The value of individual contracts varies widely, with 17 worth
more than $1 million, according to the document. The highest-paid
publisher is BuzzFeed, slated to receive $3.05 million for
broadcasting live between March 2016 and March 2017. Just behind
BuzzFeed is the New York Times, which is to receive $3.03 million
for a 12-month deal. CNN is third, with a $2.5 million
contract.
The document isn't a full accounting of all of Facebook's
dealings with video creators, but it shows the broad scope of the
tech giant's efforts to promote its Facebook Live product.
Facebook is already a major video hub -- its users watch 100
million hours of video daily in their news feeds. Chief Executive
Mark Zuckerberg is betting that live videos will provide a further
lift in user engagement, getting people to come to the service more
often and stay longer.
One indication of the importance of live video: when publishers
stream something live, Facebook automatically sends a notification
to their Facebook fans.
Though Facebook is an advertising powerhouse -- it accounts for
nearly 20% of U.S. mobile ad revenues, according to eMarketer -- it
has yet to tap into digital video as a major revenue source, unlike
Alphabet Inc.'s YouTube. That market, which is worth $9.8 billion
in the U.S. alone, represents a big opportunity.
Most publishers -- traditional and digital -- already are
pouring resources into online video to capture the attention of
their audiences and grab high advertising prices. Facebook is a
major source of traffic to their properties. Becoming one of its
live-streaming partners in the early going could give their videos
enormous exposure, and could be lucrative once selling ads in the
platform is allowed.
In May, 44% of the top 500 Facebook pages maintained by media
companies posted at least one live video on Facebook, up from 11%
in January, according to an analysis by Socialbakers, a
social-media metrics company.
Facebook is a "relative rookie" to live-streaming compared to
rivals including disappearing messaging app Snapchat, Twitter
Inc.'s Periscope app and YouTube, RBC Capital Markets analyst Mark
Mahaney in a note this week. But given its large user base,
"Facebook should be a viable competitor for consumer attention,"
Mr. Mahaney wrote.
Facebook invited publishers to be part of the program based, in
part, on their track record with live video, Mr. Osofsky said.
Among other factors, Facebook also looked for public figures who
were able to "easily produce and test a variety of live
programming."
Facebook is "highly incentivized to get good content in there,"
said Jesse Hertzberg, chief executive of Livestream, a live-video
company and maker of a $400 wide-angle Mevo camera that's directly
integrated with Facebook Live.
The contract values are based on publishers' popularity on
Facebook and the number of broadcasts they are willing to stream,
according to Facebook and people familiar with the terms of the
deals. Some contracts include requirements related to the length of
individual broadcasts; in other cases, some additional payouts are
available to publishers who exceed their minimum requirements.
The list reviewed by the Journal also includes the Metropolitan
Museum of Art and American Museum of Natural History in New York;
internet celebrities like Logan Paul, Andrew Bachelor and Lele
Pons; dance music DJs Armin Van Buuren and Hardwell; and sports
teams such as FC Barcelona.
Food-centric web video specialist Tastemade, which in April
announced it would produce more than 100 Facebook Live shows a
month, is set to receive about $1 million from Facebook for videos
produced in a 12-month period ending in March 2017.
News Corp's Dow Jones & Co., publisher of The Wall Street
Journal, has no arrangement with Facebook to create videos for
Facebook Live, a company spokeswoman said.
The potential power of Facebook's platform has been evident in
early experiments. In April, two BuzzFeed employees streamed a
Facebook Live video showing them placing rubber bands around a
watermelon until it exploded. It was Facebook's most-watched live
video, until it was beaten out by Facebook user Candace Payne, who
in May filmed herself in her car, laughing uproariously over a
noise-making Chewbacca mask.
As of June 21, the nearly 45-minute watermelon video was viewed
10.8 million times; Ms. Payne's four-minute video has been viewed
157.6 million times.
After a live video is over on Facebook, it is stored so Facebook
users can watch it later. About two-thirds of the watch time for a
Facebook live broadcast happen after the fact, Facebook executives
say.
Live videos are intended to be exclusive to the Facebook Live
platform. Based on early testing, Facebook has said it found that
the average user watches live video three times longer than other
types of video.
Write to Steven Perlberg at steven.perlberg@wsj.com and Deepa
Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
June 21, 2016 18:33 ET (22:33 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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