Watch Out, YouTube! Facebook Wants Your Video Action
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It was only a matter of time before Facebook figured out a way to make money from the videos that are played on their platform. As Fortune points out, before now, video creators didn’t have a way to make money on the Facebook platform. That all changes today, with Facebook’s new plan to monetize videos and share the revenue with creators. The revenue arrangement is the same as YouTube’s: 55 percent of the money earned from ads goes to the creator, and 45 percent goes to Facebook. So far, the program has a couple of dozen partners who have signed up, including the NBA, Fox Sports, Hearst, and Funny or Die.
Related: Facebook gaining ground on YouTube in video ads, report says
Prior to the new plan, Feed videos would only play mutely until the user clicked on them. Now, when users play a video on mobile, they will get a feed of “Suggested Videos.” It’s not until a few of these videos play, that the user will see an actual ad. And these ads, unlike Facebook’s autoplay videos, will play with the sound turned on.
In the past few weeks, the social media giant has tested the “Suggested Videos” product with a small number of iOS users. Today the test goes wider, and will eventually expand to include Android and desktop users.
Unlike YouTube, which gives content creators 55 percent of the revenue from the ads it plays before videos, Facebook will divvy up the 55 percent in revenue among multiple creators or partners. For example, if you watched a three-minute video from the NBA, and a two-minute video from Funny or Die, the 55 percent in ad revenue would be split proportionately between the NBA and Funny or Die.
Related: Will Facebook Kill the News Media or Save It?
Industry experts fully expect video—especially mobile video—to be a major source of revenue for Facebook in the future since users already deliver four billion videos views daily. The company made $3.3 billion in ad revenue in the first quarter of 2015, 73 percent of it from mobile ads alone. For now, Facebook says it is focused on shorter video formats, not long-form video formats like TV shows and movies.
To date, YouTube has been the only major player in user-posted video, but Facebook is stepping up its game. It just announced to advertisers the option to pay for video ads only after a video has played for 10 seconds. It’s a response to announcements that Snapchat and Twitter are rolling out video divisions too. In May, Spotify added video-streaming to its music-streaming app. And Hulu, Yahoo, and AOL are also pushing their video strategies.
For content providers, it’s a new way to play—and pay.
Why Craft Brewers Are Crying in Their Beer
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It may be small beer compared to the problems faced by unemployed federal workers and the growing cost for the overall economy, but the ongoing government shutdown is putting a serious crimp in the craft brewing industry. Small-batch brewers tend to produce new products on a regular basis, The Wall Street Journal’s Ruth Simon says, but each new formulation and product label needs to be approved by the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, which is currently closed. So it looks like you’ll have to wait a while to try the new version of Hemperor HPA from Colorado’s New Belgium Brewing, a hoppy brew that will include hemp seeds once the shutdown is over.
Number of the Day: $30 Billion
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The amount spent on medical marketing reached $30 billion in 2016, up from $18 billion in 1997, according to a new analysis published in the Journal of the American Medical Association and highlighted by the Associated Press. The number of advertisements for prescription drugs appearing on television, newspapers, websites and elsewhere totaled 5 million in one year, accounting for $6 billion in marketing spending. Direct-to-consumer marketing grew the fastest, rising from $2 billion, or 12 percent of total marketing, to nearly $10 billion, or a third of spending. “Marketing drives more treatments, more testing” that patients don’t always need, Dr. Steven Woloshin, a Dartmouth College health policy expert and co-author of the study, told the AP.
70% of Registered Voters Want a Compromise to End the Shutdown
An overwhelming majority of registered voters say they want the president and Congress to “compromise to avoid prolonging the government shutdown” in a new The Hill-HarrisX poll. Seven in ten respondents said they preferred the parties reach some sort of deal to end the standoff, while 30 percent said it was more important to stick to principles, even if it means keeping parts of the government shutdown. Voters who “strongly approve” of Trump (a slim 21 percent of respondents) favored him sticking to his principles over the wall by a narrow 54 percent-46 percent margin. Voters who “somewhat approve” of the president favored a compromise solution by a 70-30 margin. Among Republicans overall, 61 percent said they wanted a compromise.
The survey of 1,000 registered voters was conducted January 5 and 6 and has a margin of error of 3.1 percentage points.
Share Buybacks Soar to Record $1 Trillion
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Although there may be plenty of things in the GOP tax bill to complain about, critics can’t say it didn’t work – at least as far as stock buybacks go. TrimTabs Investment Research said Monday that U.S. companies have now announced $1 trillion in share buybacks in 2018, surpassing the record of $781 billion set in 2015. "It's no coincidence," said TrimTabs' David Santschi. "A lot of the buybacks are because of the tax law. Companies have more cash to pump up the stock price."
Chart of the Day: Deficits Rising
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Budget deficits normally rise during recessions and fall when the economy is growing, but that’s not the case today. Deficits are rising sharply despite robust economic growth, increasing from $666 billion in 2017 to an estimated $970 billion in 2019, with $1 trillion annual deficits expected for years after that.
As the deficit hawks at the Committee for a Responsible Federal Budget point out in a blog post Thursday, “the deficit has never been this high when the economy was this strong … And never in modern U.S. history have deficits been so high outside of a war or recession (or their aftermath).” The chart above shows just how unusual the current deficit path is when measured as a percentage of GDP.