Facebook is trying to woo YouTube stars with new ways to make money

Key Points
  • Facebook is hosting its "Facebook Creator Day" on Tuesday ahead of online video industry conference VidCon.
  • The company is rolling out new tools to help video creators make money on Facebook.
  • It is testing, for example, an expansion of "Facebook Stars," a way to let fans give a few cents to a creator for a certain piece of content.
Logan Paul is seen on August 08, 2017 in Los Angeles, California.
PG | Bauer-Griffin | GC Images

For many online video stars, YouTube is top of mind when it comes to the best place to post a video. Facebook is trying to change that.

Facebook is sweetening its offerings for video creators, whether they're viral video stars or media companies, luring them to its platform with new tools to help them make money through advertising and direct payments from Facebook users.

The new or updated offerings are similar to some already offered on YouTube and start-ups such as Patreon. The changes were announced at its "Facebook Creator Day" in Malibu, California, on Tuesday, held ahead of VidCon, a conference for the online video industry that starts Wednesday in Anaheim.

Facebook Watch, the platform's video offering that includes original programming and uploaded video from creators, launched globally last year after being introduced in 2017. In June, Facebook said it had reached more than 720 million users monthly and 140 million users daily who spend at least one minute on Watch. In comparison, Google-owned YouTube says more than 1.9 billion logged-in users watch video on the platform every month.

Some advertisers said that even though Facebook's numbers were up, they wanted more specifics on the data, as well as better functionality for users to discover videos.

YouTube has spawned a class of superstar creators, some of whom rake in millions of dollars every month. Instagram has been a boon for influencers, but IGTV, Instagram's answer to YouTube, has struggled to find the same kind of success. Creators have also complained about finding their revenue footing on Facebook Watch.

"A lot of creators are focusing almost all of their attention on YouTube, Instagram and emerging platforms," said Joe Gagliese, co-founder and managing partner of influencer marketing agency Viral Nation.

Gagliese said part of the difficulty in implementing new features is that people aren't used to seeing certain types of ads or subscriptions on Facebook. YouTube, on the other hand, has been more focused on monetization for creators since the beginning, he said.

"Changing a human's opinion on anything can be difficult," he said. Facebook's algorithm changes have also affected the reach of content, which has been a turnoff for creators, he said.

Facebook's slew of updates include new ad options — for instance, letting creators show only ad formats that don't interrupt the video, such as a pre-roll ad. That feature is available now, the company said.

Facebook will also update its "Brand Collabs Manager," which lets advertisers find creators for branded content partnerships. For instance, creators can share their own audience for ads targeting. It's similar to YouTube's lucrative Preferred product, which connects big-name advertisers with YouTube's hottest creators.

Facebook is also tweaking how much creators earn from their fans through more direct payments. The company's "Fan subscriptions" program lets viewers pay creators each month for exclusive content and other rewards. It's similar to the start-up Patreon, which lets an individual collect payments from fans.

But while Patreon takes up to a 12% cut, Facebook starting next year will take a 30% cut from these subscriptions on its web platform. Facebook won't take a further cut where mobile platforms are already taking a 30% transaction fee from creators. Currently, Facebook doesn't take a revenue share for fan subscriptions, so creators keep 100% of their earnings on the web platform and 70% on mobile platforms. Going forward, creators will keep a 70% cut of the revenue from fan subscriptions regardless of whether it's on web or mobile platforms.

Facebook is also testing an expansion of Facebook Stars, a program it already has for creators who stream video games. Stars lets users buy packs of virtual stars that can be given to creators. Facebook takes a cut of each Star pack purchase. For example, if a Facebook user buys a pack of 100 stars for $1.40, Facebook keeps 28.6%, leaving the user $1 to gift to creators. The more a Facebook user spends on Stars, the less share Facebook will take. Creators get 1 cent per Star sent by a fan.

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