Dollar signs on Facebook users

Facebook’s Pursuit Of Ad Revenues Is Getting Ugly; It’s Missing A Chance To Make Users’ Lives Better

If you were a Facebook employee, Friday was a big day for you. If you were a developer outside of the platform looking in, not so much.

On Friday Facebook announced the launch of its new live streaming function, called simply, “Live”. The service allows celebrities to broadcast live-streamed footage to their fans via the social networking platform.

So how is this different from Periscope, or Meerkat, who have been doing the exact same things for months, I hear you ask?

Well, the difference is that Facebook will allow “Live” broadcasts to be distributed to users after the live-stream recording has finished, using its algorithm to push the content onto users’ newsfeeds, and users will be able to add comments underneath the broadcast.

Which is great, if you are a celebrity, or a fan of celebrities. But let’s just take a moment to consider what Facebook seems to have become, versus what it could be.

It’s interesting to read the first few comments posted in response to the Tech Crunch article that broke the “Live” story on Friday morning; they were written by the founders of 3 separate digital start-ups; Sywork, a live-streaming platform for illustrators and digital artists; Streamago, a live streaming app that allows you to broadcast directly to your Facebook profile, and NomadCast, a mobile streaming app aimed at Facebook and Twitter.

All three basically offer the same functionality as “Live”, but are unlikely to gain much traction on the Facebook site. As the founder of Nomadcast points out, “The only really frustrating part is that we – of course – can’t boost the initial reach of a livestream post, while they (Facebook) can (obviously).”

Too right. There is nothing really original or ground-breaking in what Facebook has done with “Live”, unless you count bringing its development in house, and promoting their own service whilst largely ignoring the efforts and achievements of those entrepreneurs and developers who have worked hard to build apps that seamlessly integrate with their platform.

Anybody who has been following the tech and start-up press this week will know that Facebook has form in this respect.

Earlier in the week, Facebook was forced to acknowledge and try to defend criticism from YouTube vlogging star Hank Green, one half of the “Vlogbrothers” duo whose YouTube channel has over 2.6m subscribers and has been viewed over 550m times.

Green’s complaint was that he received no credit for the countless videos of his which Facebook or other publishers have ripped from his YouTube channel and “freebooted” onto Facebook. Facebook prioritises and promotes the videos that are uploaded natively through its own video publishing platform, even when they are “ripped” from sites such as YouTube, over embedded YouTube links, whilst offering the original videos makers no compensation for their work.

In his blog post entitled “Theft, Lies and Facebook video”, Green shows that one of his “SciShows” (VlogBrothers publish mainly educational content) when uploaded via an embedded YouTube link reaches between 20,000 and 50,000 people, being viewed by hundreds of users, whereas when Facebook uploads the same video natively the reach increases to between 60,000 and 150,000 and is viewed by tens of thousands of users.

Another thing Green points out is that when reporting to advertisers, Facebook counts any video viewed for a period of just 3 seconds as “a view”, which, when you consider that Facebook videos on a user’s newsfeed begin playing automatically without being prompted, is likely to be most of the videos we see as we scroll through our newsfeeds. It is blatant misreporting, says Green. For comparison, YouTube calls anything over 30 seconds “a view”.

Finally, Green points out that of Facebook’s 1,000 most popular videos of Q1 2015, 725 were “stolen” uploads, having been “ripped” from another site and “freebooted” natively onto Facebook, through its own video player. Some of these videos become seriously popular, attracting millions of views in just a few days, and of course that is great news for advertisers, but the ad revenues belong to whoever “freebooted” the video, and not its original creator.

A case in point; Destin Sandlin, who runs the “Smarter Every Day” YouTube channel uploaded his most popular ever video, “Tattoo in slow motion”, to YouTube last year. The video was subsequently downloaded, stripped of all its educational content and sponsor information, and re-uploaded to Facebook by Bauer Media Group, to their verified Facebook page, effectively hi-jacking somebody else’s content to boost their own Facebook advertising revenues.

Destin was forced to launch a Twitter campaign backed by his legions of fans before Facebook consented to take the video down, by which time it had received over 17 million views.

Ok, so not everyone feels sympathy with people who create video content for a living and some might even feel that those with the wit to find and upload a popular video deserve to be the ones rewarded for their insight, after all the videos they “freeboot” may not turn out to be so popular after all, but in fact there is a much simpler way around the problem, one that YouTube has been using for years.

Introduced by Google almost as soon as they acquired YouTube, Content ID analyses every single video uploaded to YouTube and checks to see if it is original content. Copyright holders can then claim their videos back and be rewarded accordingly when the video attracts lots of views and advertising revenues. Pretty simple, so why aren’t Facebook doing it?

The reason I think that Facebook have paid so little attention to protecting the people that ultimately bring the views, and the advertising dollars to their site is that, ever since the company IPO’d at an almost impossibly large valuation of more than $104 billion, it has been struggling to find a revenue stream strong enough to create value for its shareholders.

The reason that Facebook got so big in the first place is because it beat off the competition of all the other social networking sites until it was undisputed no. 1 in its sector. Myspace, Bebo, Friends re-united, almost every site that enabled people to connect with one another online eventually failed, except for Facebook.

The trouble was, people mistook popularity for riches. So many people are using it, it must be worth a fortune, went the accepted wisdom.

But the reality is that friends connecting with friends and uploading personal content that would have no relevance to most people outside of their social network, does not translate into a profitable business, meaning that, in order to bring value to its shareholders, Facebook has fallen head over heels in love with video, and become, well, YouTube.

Facebook now claims that 3 billion videos are “viewed” on its site each day (that’s 3 second views in case you were wondering). Mark Zuckerberg has stated that “One of the big trends will be the growth of video content on our service,”

In order to satisfy advertisers and shareholders, Facebook has basically become YouTube with a news-feed (one wonders what might have happened to the social networking site had YouTube ever thought of introducing its own live news feed).

Its possible people will now check their Facebook less and less; the videos are by and large entertaining, but now keeping in touch with friends has become harder and harder, as in order to see photos of friends weddings or see news from people we don’t see on a daily basis, we have to wade through literally hundreds of videos, advertiser sponsored content or spurious political messages and statements which have no relevance to our day to day lives.

So what do we conclude from all this? Facebook needs to change, start thinking about its users again and leverage the help of the literally tens of thousands of programmers and developers out there who are coming up with great ideas for the platform, which are simply being ignored.

To illustrate the direction that, with a bit of forethought and a willingness to engage with those developers and start-ups who have been desperately trying to engage with them, and provide an alternative direction to what may turn out to be a short-sighted decision to pivot into a video streaming and sharing site, I want to draw your attention to a blog post written about Chinese social networking and messaging site WeChat, by Connie Chan of Venture Capital firm Andreesen Horowitz.

Entitled “When One App Rules Them All; The Case of WeChat and Mobile in China”, Chan discusses how WeChat, in many ways China’s answer to Facebook, or WhatsApp, the company Facebook acquired last year for some $19 billion, has transformed itself from a messaging / lifestyle app into a “mobile operating system”.

Chan says that WeChat is working towards “a far-off vision of a world managed entirely through our smartphones”, and that “it points to where Facebook and other messaging apps could head”.

She shows how WeChat has “leapfrogged over the PC era directly to mobile”, which has allowed it to achieve an average revenue per user (ARPU) of $7 dollars, a figure that Facebook in its current iteration could only dream of.

How has WeChat done this? Not by courting advertisers; that is a revenue stream they have only just begun to start looking at. The platform, owned by TenCent, one of the world’s largest internet companies and an active investor in tech start-ups, is only 4 years old, but already has more than a billion registered users across Asia.

What they have done instead is to bundle together many different kinds of functionality: “WeChat users in China can access services to hail a taxi, order food delivery, buy movie tickets, play casual games, check in for a flight, send money to friends, access fitness tracker data, book a doctor appointment, get banking statements, pay the water bill, find geo-targeted coupons, recognize music, search for a book at the local library, meet strangers around you, follow celebrity news, read magazine articles and even donate to charity”.

Quite a list. Chan goes on to explain: “while Facebook and WhatsApp measure growth by the number of daily and monthly active users (and the number of videos it can force them to watch), WeChat cares more about how relevant and central WeChat is in addressing the daily, even hourly needs of its users’ lives”.

In other words, WeChat puts its customers first, instead of its advertisers. It does this by creating “an app within an app. Millions of lightweight apps live inside WeChat, much like webpages live on the internet”. A messaging app with “its own proprietary app store”, WeChat is not afraid to put its money where its mouth is either, actively investing in young tech start-ups. “Imagine what would happen if Facebook or Snapchat ever decided to strike favourable deals through early stage investing?”, Chan asks. It would be seriously helpful for most budding tech entrepreneurs, and ultimately for Facebook, we can be pretty sure of that.

Finally, Chan says “WeChat accounts have become so popular in China that new start-ups sometimes test their version 1.0 product on WeChat’s platform before dedicating resources to building and marketing a standalone app.”

Message to Facebook: here is what you could have built. An intelligent platform that people want to become part of because it helps them manage their personal lives, and provides a one stop shop with open source functionality that means anybody can build almost anything on their platform (not just videos but practical, useful applications), and their efforts are recognised and rewarded accordingly.

A recent television ad campaign in the UK by Facebook has encouraged us to think about the value of friendship and the joy it can bring to our lives. But here’s the thing. Friendship existed a long time before there was Facebook, and, should Facebook disappear from our lives, friendship will continue to flourish. Facebook doesn’t need to concern itself with that.

What it needs to do is to start finding ways, as WeChat has done in half the time, to improve users’ lives, re-engage with the developer community, and to find a revenue model that doesn’t consist of bombarding us with video content that we can already watch elsewhere in a vainglorious attempt to keep its shareholders happy in the short term.

Don’t get me wrong, Facebook has been a phenomenon and a huge plus point in a lot of people’s lives and it can be once again, it has the captive user base to do so. But it is in danger not just of losing its cool, but losing its relevance and its usefulness too. What’s the point of connecting everybody in the world if all you then do is show them cat videos, celebrity chit chat and people falling off logs?

What a missed opportunity to listen to its audience and incrementally and practically improve all of our lives.

via Edmund Ingham Forbes