Facebook’s video ads will kick off a new breed of video networks

I was heartily enjoying my European vacation the day that Facebook announced its plans to launch video ads as part of its offering. As the founder of a company in the video distribution space, you can imagine my reaction when my inbox was suddenly flooded with emails from VCs and friends all with the same question,

“How will the Facebook video ads announcement affect you?”

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History Lesson: The Multi-Channel Network

When Google decided to purchase YouTube back in 2007 for $1.65 billion, it had a major problem on its hands — massive copyright infringement. With billion dollar lawsuits coming at it from major companies like Viacom, it needed to quickly create a hands-off approach to managing content. By creating this distance between content management, YouTube was able to immediately take advantage of the Digital Millennium Copyright Act.

These moves paved the way for the MCN (Multi-Channel Network). Hundreds of MCNs started receiving financing with one major objective — exclusively manage as many YouTube creators and channels as possible. Each MCN took on slightly different approaches, whether they focused on gaming channels or lifestyle channels, they all sliced up YouTube in different ways. This race led to companies like Maker Studios and Fullscreen with near billion dollar valuations.

Fast Forward to Today: The Rise of Facebook Video

With Facebook heading in the same direction for monetizing video, given its potentially bigger audience than that of YouTube, who truly stands to benefit? First we need to look at each product and ask, “What type of video proliferates on each platform?” When YouTube emerged it was mainly TV shows, movies, and music videos that gave it a massive jump to fame. This was the very type of content that sparked that previously mentioned billion dollar lawsuit.

Facebook is somewhat different in that it doesn’t face the same problem in lawsuits from major studios given its users aren’t likely to share these kinds of videos on their mobile phones. Instead, more social and viral videos are being shared on the platform — you know, the stuff that people like you and I can create from our own homes without expensive production software.

One of the major issues that social video creators encounter on Facebook is when one decides to upload a video without the proper license or consent. For example, a video creator managed by Rumble.com had captured a cute clip of his young son flexing his muscles, only to have it stolen by several of the highest ranking Facebook Pages, including Fox & Friends, Perez Hilton, several top radio stations, and countless other media outlets. The video generated well over 50 million streams on Facebook in less than 48 hours. The examples don’t stop here, it’s a daily occurrence and well documented in the media and discussed voraciously on public forums.

Had Facebook implemented content ID and video ads from the start, the father with the “flexing son” video might have had his son’s college education paid for rather than the owners of the large companies who owned the Facebook Pages that lifted his content grow their audience at his expense.

The Big Winners from Facebook Video Ads

So will users who upload content to Facebook with the hopes of making a bit of scratch start to see some profits from this new announcement? Or is it still truly just those large companies hijacking videos who will reap the benefits of Facebook video ads?

I believe we’ll start to see a new type of player emerge in the video content ecosystem. I like to call these potential game changers Multi Video Networks (MVNs). They will usher in a new generation of billion dollar companies who represent social and viral videos en masse. There are only a handful of reputable companies like this now, including Rumble.com, America’s Funniest Home Videos, Jukin, Storyful, Viral Spiral Group, and Newsflare.

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A single video on YouTube such as the example I noted above of the “flexing son” received 1.1 million streams at a CPM less than 50 cents within the first 48 hours. It did over 50 million streams on Facebook with unknown CPMs, but it’s safe to presume that, with Facebook’s targeting, it will be even higher once they roll out the ads. On Facebook, the video delivered over 45 times more views in the first 48 hours. If we assume an extremely conservative CPM of $1, it means a 90 times multiple over YouTube, which is an infinitely better payout for Rumble and our creators on one asset alone.

Unlike the typical Multi-Channel Networks, these companies don’t represent channels; they represent videos — popular social and viral videos that work best on mobile devices. Each manage thousands of valuable social video assets, and combined, I’m willing to bet, exclusively represent the largest chunk of Facebook’s video traffic. MVNs are in the best position to capture these revenues and deliver any profits gained back to the creators. The key is for Facebook to deploy a Content ID system, similar to YouTube’s to ensure that anyone who infringes on video content ownership can’t benefit.

So my answer to all of those emails from family, friends and VCs asking “How will the Facebook video ads announcement affect you?” is this:

The numbers have yet to come in and things are purely speculative at this point, but clearly this is an absolute game changer. Although Rumble is not dependent on a single platform like most MCNs are (such as YouTube), Facebook is going to be as big for us as YouTube was for the MCN.

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Chris Pavlovski is founder and CEO of Rumble.com, an agnostic video platform that helps creators host, share, monetize, and manage distribution around the web and television.