Facebook signs celebrities to boost live video

Jun 22, 2016

Nearly 140 contracts with video creators total more than $50 million

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 includingKevin 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.

Source: THE WALL STREET JOURNAL