Since Facebook (NASDAQ: FB) changed its News Feed algorithm to include more videos, many Pages have adopted the medium to increase their engagement with fans, and draw in new ones. This has led to an explosion in video content and video views on the platform, with users now watching more than 4 billion videos per day on Facebook.
But desperate Pages may resort to desperate measures. Now, there's an increasingly prevalent trend of Page owners uploading videos that they've ripped off from somewhere else. The process, called "freebooting" by tech-savvy Internet dwellers, involves ripping videos from YouTube or any other online video platform and removing any branding from the original creator before uploading the video to Facebook.
These freebooters are stealing ad revenue from Google (NASDAQ:GOOG) (NASDAQ:GOOGL), and more importantly, the creators. Meanwhile, Facebook is benefiting from it; but it needs to get this piracy under control.
Piracy is behind the rise of...
Interestingly, piracy is often one of the few factors that has a major influence on technological shifts. Napster led the music community to adopt a pay-per-download model, and eventually, streaming services. YouTube became popular only after users started uploading clips from The Daily Show and Colbert Report. Most recently, Periscope received a lot of press and a bump in downloads after users live-streamed episodes of Game of Thrones and the Mayweather-Pacquiao fight in May.
The fact that piracy is behind the rise of Facebook's video views -- growing from 1 billion per day last September to 4 billion per day in the first quarter of 2015 -- isn't all that surprising. Facebook has reportedly tried courting popular YouTube personalities to upload content to its platform; but without a revenue-sharing model, Facebook has remained unappealing to most.
But Facebook is starting to get serious about video. It's working on a Suggested Videos feed that will enable creators to partake in a portion of revenue. It's also working with advertisers to ensure that their video ads are seen, a move that's expected to draw more businesses to its video ad units. These moves could do a lot to attract higher-quality content creators to the platform.
But not if other people get the credit (and the cash)
Facebook's early revenue-sharing tests will be with select content creators. If all things go well, it's easy to see it opening up revenue sharing to all video creators. This makes it vitally important for Facebook to ensure that it's sending those checks to the rightful owners of the content its users are watching. Otherwise, it risks facing legal action, which plagued YouTube for years -- and is the reason it had to sell to Google.
Google implemented a system called Content ID, which enables it to quickly identify content that uses copyrighted material (video or music), and allows the rightful copyright owners to either remove the content, monetize it for themselves, or simply monitor it. Facebook could easily implement a similar service, or just buy or license one if it's too busy building other cutting-edge things.
In that way, content creators can benefit from added exposure on Facebook, which is much better at driving views compared to YouTube. A recent Slate article by Will Ormeus points out one video that received just 600,000 views on YouTube, but 10 million on Facebook within 24 hours. Facebook's passive feed of recommended content is great for getting things to go viral; but unless it can assure content creators that they will see the benefits, and not some random radio station, it will have trouble attracting them to its platform.
On the flip side, if Facebook can implement some form of Content ID and revenue sharing, it could put YouTube in a position where it must play defense to keep content creators from abandoning its platform, or splitting time with Facebook. There's seemingly no way for YouTube to match Facebook's ability to drive views for videos, which may be why it's already started investing in exclusive original content.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). 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.