August 3, 2016
To compete with YouTube, social platforms Facebook, Instagram and Twitter have set their sights on attracting Internet celebrities, also known as creators, to their sites. Internet stars with millions of followers bring audiences and ad dollars, a major incentive for all three platforms to rethink their current business models. They all want original, unsponsored content, but also have to deal with sponsored content that doesn’t generate revenue for them. The solution all of them are arriving at is to split revenue with creators.
Bloomberg quotes Krishna Subramanian of Captiv8, a company that “connects influencers with brands. “At the end of the day, content creators control engagement and control eyeballs,” he says. “The more content they upload, the more engagement that happens on Facebook. And if they split revenue with creators, that will solve a huge problem creators have with the platform. People will start to post more.”
Because sponsored content doesn’t bring in revenue, the platforms have a two-pronged approach: convince creators to label their content as ads and the brands behind the ads to pay to promote them.
Twitter, which has a new revenue-sharing program called Amplify, and its short video app Vine have been meeting with stars on their site “to understand how they want to build their brand.” Twitter head of content partnerships Mike Park says the company has also been “hiring experts from YouTube who already have relationships with creators.”
Twitter has begun pre-roll advertising, taking 30 percent of the revenue and leaving the rest to creators, “the same deal it makes with such media companies as BuzzFeed and National Geographic.” Park, who says this model is being tested, notes that Twitter’s creators made it clear that “the thing that’s missing is the revenue opportunity.”
Facebook, where executives believe pre-roll ads risk losing viewers, is trying a different tack. “We just want to find a model that’s going to be much more appropriate for our platform,” says head of video Fidji Simo. Facebook pays cash to some stars; The Wall Street Journal reports the company has a $600,000 contract with Kevin Hart. The company is also looking to create “a long-term solution to share revenue that would benefit a wider swath of creators, including the more unconventional types.”
“We’re going to be experimenting with a bunch of different formats for creators in the coming months,” Simo says. “It’s likely not going to be a one size fits all.”
Creators are already making their own direct deals with brands to do sponsored posts. Captiv8 reports that brands are now spending more than $255 million on this kind of marketing every month — not including the “partnerships” not disclosed to users.