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Facebook Wants More Live Content, and It Will Pay Cash for It

By Adam Levy – Mar 11, 2016 at 11:45AM

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Facebook COO Sheryl Sandberg is willing to pay celebrities to live-stream video on Facebook.

Source: Facebook.

This year is all about real-time live content for Facebook (META 2.79%). CEO Mark Zuckerberg has reportedly redirected resources to help build out Live, the company's live streaming video product. The company launched a real-time sports forum just ahead of the Super Bowl. On the company's fourth-quarter earnings call, COO Sheryl Sandberg told investors, "We feel pretty confident that real-time sharing is an increasingly important part of the platform and one we'll continue to invest in."

Now, Sandberg is reportedly in Hollywood schmoozing with talent agents in an attempt to convince celebrities to start using Live. Facebook might even pay some of them to create content for the social network.

The reasoning is that a larger celebrity presence will draw more attention to Live and help Facebook compete with Twitter's (TWTR) Periscope and YouTube, a subsidiary of Google, the Alphabet (GOOG 1.56%) (GOOGL 1.61%) company.

Something to spark interest
Video on Facebook has quickly ballooned from nothing to an average of 8 billion video views and 100 million hours per day. Video on Facebook didn't really take off, however, until the Ice Bucket Challenge took over the Internet in the summer of 2014. Suddenly, users were seeing more videos and felt comfortable posting their own videos.

Facebook needs something similar for live videos. The company is reportedly pushing live videos higher in users' news feeds so that they can see the videos as they're being broadcast. If the live videos feature celebrities that users follow, users may be more likely to watch.

Live videos already perform better than pre-recorded video. Users watch live videos more than three times longer than pre-recorded videos, according to Facebook. Users are particularly interested in live content as it's happening, so generating more content and getting it in front of users should help Facebook capture mind share from competitors such as Periscope.

The promise of revenue
Facebook released a statement to Re/Code about its plans to court celebrities for Live. The statement noted Facebook will "explore with them [celebrities] potential monetization models."

Investors have been betting that video content would generate additional revenue for Facebook, but so far that hasn't really been the case. While an advertiser might spend more for a video ad compared with a static ad, Facebook hasn't developed any ways to directly monetize video views on its platform.

Developing a way to generate revenue and share that revenue with creators will ultimately be the key to attracting more creators to Live. YouTube is currently able to hold on and attract new talent because of its revenue sharing program. While Periscope doesn't generate any revenue, it was early to market and had the support of Twitter to overcome early competition. Twitter may use its Niche property, an online talent agency for social-media celebrities, to monetize high profile Periscope users.

An advertising solution, or other form of monetization, will open the doors for more creators to experiment with Facebook videos and Live broadcasts. The viewers will follow. Paying celebrities up front to get content could kick-start the feature, but a sustainable monetization model is the only thing that will keep it going. If Facebook figures it out, Periscope and YouTube had better watch out.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Twitter. 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.

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