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What YouTube's and MySpace's TV Lessons Can Teach Facebook About Online Video

Last week, Facebook's CEO Mark Zuckerberg admitted that over the past few years he's suffered from Twitter envy, probably focusing a bit too much on the media darling that has changed communications and media sharing, aspects that Facebook itself  wanted to own and dominate in the 21st century.

Today, with location-based startups getting all the attention, one would think that Zuckerberg is about to let history repeat itself by worrying too much about how to recalibrate Facebook to clash against upstarts Foursquare, Gowalla and company. 

Choosing the Right Battles

That's not the battle Zuckerberg needs to focus on, at all.

Truth is, while Google is planning to launch Facebook competitor Google Me, Zuckerberg should focus more on online video, in particular the lessons that both YouTube and MySpace learned along their inverse trajectory.

If an Image is Worth a Thousand Words, a Video is Worth a Million

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With nearly 500 million worldwide users, Facebook touches all aspects of communications and media-sharing, and once it enters a space, it's easy for it own the category; years ago it launched its Photo feature and quickly became #1. But, photo-sharing and viewing are perfectly complementary with Facebook's mission and experience; your family and circle of friends are the very same people you take pictures of and then share them with. 

What about videos?   For one, photos are not monetizable the way videos are.  So while videos of friends and family do and will make their way onto Facebook, that kind of UGC won't be what Facebook can monetize over time. 

Facebook needs to decide what its video strategy will be, and that isn't an easy question to answer.

Facebook Cracks the Top 10 List

When comScore unveiled its May 2010 rankings of the largest video sites in the U.S., Facebook  emerged in the #10 slot with 245 million monthly streams, right behind Fox Interactive, which had 328 million streams in the same period. 

ComScore and Nielsen measure online video views differently: ComScore includes video ad views, Nielsen doesn't. 

To Embed, or Not to Embed ---That Is the Question

Either way, the views that Facebook gets credit for on comScore's top-10 list are limited to the video views generated in Facebook's player.  In other words, the site generates a lot more streams -- probably twice as much -- but most come in video players of third-party aggregators that Facebook now looks to overtake in the months to come.

Indeed, it's worth noting that Fox Interactive -- whose properties include MySpace and IGN -- was ranked #2 back in February 2007, and even as late as April 2009 owned a larger share of video streams; today, it's clearly in Facebook's cross-hairs.

As Facebook marches toward 500 million users and consumers continue to embrace videos in their lives, it's inevitable that Facebook's share of online video continues to grow at a torrid pace.  In fact, many would argue that Facebook will probably become the #3 video site by 2015 (if not sooner).  Again, note that from February 2007 to May 2010, MySpace fell from 462 million to 328 million monthly views, but the overall U.S. market grew from 13 billion to nearly 34 billion, with leader YouTube exploding from 5 billion to nearly 6 billion.  The only other site to grow at a ferocious rate has been Hulu, which has leveraged the rights to super-premium it earned via its pedigree to become the #2 video destination in the world after YouTube, the only other site topping 1 billion monthly views.

Value is Relative, Crap is Absolute

We already know that not all video streams are equal.  In fact, not all pageviews are equal, either.  A pageview on CNN, IGN, Wall Street Journal etc. is arguably worth more to an advertiser than a pageview on Facebook, especially if it contains a random picture of a friend or family member (or any UGC). 

Facebook's revenues have grown rapidly, to roughly $800 million last year and $1.1 billion this year, but its  success is a function of its massive size and omnipresence. It has become successful despite the fact that social media and branded advertising don't go hand in hand. 

In other words, as it starts to think increasingly about video content and advertising, Facebook needs to ensure that each incremental pageview adds valuable inventory.  If it simply duplicates the content it houses in photo and text format in videos, then it's not really doing much to address its long-term problem of monetizing its burgeoning inventory.

To Branded Advertisers, UGC is Worth a Warm Bucket of Spit

The problem is few advertisers want to advertise next to random photos -- and even less will want to get near random videos, which is what videos uploaded through Facebook's player will include. 

The fact that a lot of the videos that are streamed on the Facebook.com property are embedded video players from YouTube and others means that Zuckerberg needs to also revisit MySpace's history What led to YouTube's early growth was the fact that MySpace users embedded YouTube players on their profile pages, much the same way Facebook users do today.  MySpace could have become a massive repository of online video content (even if it meant via YouTube players), but then the powers-that-be at Fox decided to initially block YouTube and then enforce its own player.  The result didn't really hurt YouTube's growth over time and further ensured that people didn't share videos on MySpace, but rather, YouTube.  MySpace then set out to build MySpace TV, which never matched YouTube's online video mojo.

Of course, if the video player being used on Facebook remains YouTube's, then Facebook cannot monetize the videos as successfully.  However, encouraging people to use Facebook's player means they are going to build a library of personal (or pirated videos). 

What the F is a Social Utility Anyway?

Ultimately, the bigger issue has to do with Facebook's DNA, which is a desire to remain a "utility" and platform, instead of morphing into an entertainment portal.  To be fair, Yahoo and MySpace focused on the entertainment side of things, which hurt them over time; for evidence, look no further than the average time spent and pages generated on Facebook relative to the traditional portals. 

Content is King, But So What?

But more eyeballs doesn't translate into more ad dollars.  Considering that 47% of people's time online is spent consuming content, and premium and super-premium video content will garner higher ad rates than UGC (which advertisers don't want to touch anyway), then perhaps Zuckerberg needs to start thinking and worrying about online video a bit more instead of the latest fad.

The answers aren't obvious and the strategy to execute won't be easy, but Facebook has an interesting opportunity with video. Whether or not it realizes a fraction of that potential remains to be seen.
1 comment about "What YouTube's and MySpace's TV Lessons Can Teach Facebook About Online Video ".
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  1. James Wood from HD Productions, June 28, 2010 at 6:01 p.m.

    Great Post Ashkan regarding the lessons that Facebook learn from Myspace and Youtube.

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