Facebook (NASDAQ:FB) is paying nearly 140 publishers and celebrities over $50 million total to post Facebook Live video content, according to a document reviewed by The Wall Street Journal. Named partners include BuzzFeed, actor Kevin Hart, celebrity chef Gordon Ramsay, Seattle Seahawks quarterback Russell Wilson, and various YouTube stars.
The terms of each deal vary widely, with BuzzFeed's deal reportedly being the most valuable at $3.05 million for content from March 2016 to March 2017. At least 17 of the partnerships are reportedly worth more than $1 million. Those payments depend on the size of their audience and the number of videos they agree to make.
Declaring war on Periscope and YouTube
Periscope arrived last March, and was acquired by Twitter shortly before the app launched. Last August, Periscope claimed that it had 10 million registered users, but only 1.9 million were daily active users. In January, it finally inserted the live videos directly into Twitter's timeline. This March, it announced that its users had created over 200 million broadcasts, but didn't update its user count.
YouTube offered the ability to live-stream before Periscope, but only from PCs. To catch up, it recently announced that it will add live-streaming capabilities to its mobile app in the near future. But that might be too little and too late, since Facebook has apparently poached some of its YouTube stars.
Facebook Live was initially launched last summer as an exclusive feature for celebrity users and publishers, and Facebook offered it to all users in April. It's unclear how many people use Facebook Live, but it was notably used alongside Periscope during the recent Democratic protest for a vote on gun control in Congress.
A small price to pay for lots of publicity
Fifty million dollars is pocket change for Facebook, which generated almost $18 billion in revenue last year. It's arguably a small price to pay to pull live broadcasters away from Twitter and YouTube, which both threaten the expansion of its video ecosystem. Hiring popular content creators is a smart move the leverages the size of its social network to widen its competitive moat, and should be monitored closely.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Twitter. 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.