Facebook (NASDAQ:FB) wants to get more interesting content into its users' news and Instagram photo feeds, and the social network appears ready to start paying for some of that work.
The move in some ways would seem like a major departure for Facebook, which has long relied on free content posted to its platform by users looking to share and connect. But it's not that much of a stretch from programs it's been working on more recently, and it would seem to make sense at this stage in the social network's maturation.
So what is Facebook up to?
Carolyn Everson, the company's vice president for global marketing solutions, told Bloomberg TV recently that the company is working on plans for sharing revenue with those who create a range of content for the Facebook and Instagram platforms, from news and live video to content related to sports and celebrities.
"Content is incredibly important on Facebook and Instagram," Everson said in the interview. "We want to be a major distribution platform and we are trying to find different ways to help content producers monetize that content. We are exploring revenue-sharing models."
We've seen this already ... sort of
It's definitely a departure from what Facebook has been doing for years -- populating your feed with content that was shared for free -- and it's reasonable to question if Facebook really needs to pay for content when it already has more than 1.6 billion users creating it at no cost.
But the move to share revenue would not be too different from what it's already doing with news publishers through its Instant Articles platform.
Facebook is building a walled garden. And one goal of the company is to keep extending the walls of that garden higher. It's been successful so far; the average user spends more than 50 minutes a day inside Facebook's three key mobile apps: Facebook, Instagram and Messenger. That's an amazing number, given everything that's vying for our time over the course of the day.
To extend those walls, Facebook needs to keep users on the platform viewing and reading content, rather than venturing off to proprietary web sites that content creators link to in their posts. And to do that, it needs higher-quality content.
You attract more publishers with honey
But content creators have had little reason to not use their posts to link out to their own sites and apps. Those platforms are usually monetized, as are their YouTube videos. On top of that, getting users to visit a propriety website or app is an important way for publishers to promote their brands.
Although Facebook could provide reach, that reach mattered less if users weren't recognizing where the articles originated from, let alone visiting the publications' websites.
So, Facebook has had to make them an offer they found hard to refuse. Today, it shares 70% of the revenue from the ads it places on Instant Articles pages, and offers publishers the opportunity to sell their own ads and keep every dime of revenue those generate.
Publishers bought in quickly, with big names like The New York Times and The Washington Post becoming major users of the platform. Their early success prompted Facebook to open up its Instant Articles revenue-sharing platform to smaller publications and bloggers.
It may be time to extend that model
Although the details of the pending move to share revenue with other content creators is still vague, it's easy to see how the Instant Articles model could be applied to a wider variety of content, including video. Where Facebook announced plans nearly a year ago to begin working on a revenue-sharing video model with key creators, it may now be willing to begin letting that trickle down to smaller creators.
Facebook is making video a cornerstone of its growth plans, and with good reason: Advertisers love video, and they're willing to pay more for video and interactive ads that use video than they are static display ads.
There have been promising early signs. Its users created and shared nearly three times more video on Facebook than they did a year ago, the social network reported this April.
But Facebook needs to convert that increasing use into revenue, and that means attracting creators of video content that people will want to watch -- and selling ads to appear with those videos. Offering creators a share of that ad revenue is an approach that makes sense. It would serve to attract more quality content to boost those garden walls a step higher.
John-Erik Koslosky owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.