Facebook will share ad revenue with video creators in the hope of attracting better content and more advertising, a move aimed at smartphones on which 75 per cent of its videos are watched.
In total, videos are watched around four billion times a day on the social network.
The new feature, called suggested videos, will likely put pressure on YouTube, which generated around $4 billion in revenue in 2014, according to a RBC Capital Markets report covered in the Wall Street Journal, although only 50 per cent of its videos are watched on smartphones.
The company said it is “running a new suggested videos test” and a “monetisation test where we will show feed-style video ads and share revenue with a group of media companies and video creators.”
Facebook mobile users will be directed to recommended videos every time they view one in their news feed, with ads interspersed in the middle, much like TV commercials, while sound which was muted by default for videos will now be automatically switched on.
Initial media partners are thought to include the National Basketball Association, Hearst Corp., Fox Sports, Funny or Die and Tastemad..
Facebook will divide 55 per cent share of ad revenue among all the videos that appear around the ad, based on how long each video is watched.
If users “spent one minute on a few NBA videos and two minutes in a couple of videos from Funny or Die, we would take that 55 per cent of the revenue we’re sharing, and give a third of it to the NBA and two-thirds of it to Funny or Die,” the report quoted Dan Rose, Facebook vice president of partnerships, as saying.
The model is similar to YouTube’s but video producers will have to split their share with more entities, meaning they may get a smaller cut.
“During the first phase of this test, while we fine-tune this experience, we are not generating any revenue for Facebook or for our partners” the company said, adding that “if the test is successful, we will open it up to more partners in future.”
Facebook reportedly wants to see how users react to the new feature and then work on how to package and price the ads as well as offer metrics in addition to current targeting options.
Facebook also announced that App Links, which it launched at its F8 2014 event as a cross platform standard for deep linking, has seen more than 1,000 developers create more than seven billion App Links-enabled URLs, contributing to the global growth of the open standard.