Facebook needs to crack down on its 'massive' piracy problem if it wants to wipe out YouTube
The Information's Tom Dotan reports that the Californian social media giant is in talks with "at least one" of the major record labels to allow its music to be used in videos on the site.
This is a big deal: Right now, videos on Facebook uploaded by ordinary users that contains parts of copyrighted music are often flagged up and automatically deleted, because the social network doesn't have the rights to it.
In contrast, YouTube videos can contain snippets of copyrighted songs (within reasonable limits,) because the Google-owned video giant has come to an agreement with the labels to share advertising revenue with videos that contain their music. It took YouTube a long time there: At one point it was even sued for $1 billion by rights-holder Viacom over copyrighted content appearing on its platform, leading to a seven-year legal battle that was finally settled in 2014.
To avoid similar lawsuits, Facebook currently has to police for any such infringing content. But in doing so, it places restrictions on the kind of videos that are uploaded, which don't exist on YouTube - automatically that makes the latter site appear to be a more attractive platform for content creators.
If Facebook can come to an agreeable arrangement with the record labels, however, this may not be the case for much longer.
The elephant in the room: Monetisation
YouTube lets users take a cut of the revenue from ads served next to their content. But Facebook has nothing of the sort. For many of the most popular YouTubers, making videos is their full-time job, and so while Facebook can help boost their public profile, it won't currently make them any more money (directly). Ergo, they're not going to make the jump yet.
There's an obvious solution here: Just introduce adverts and monetise videos. However, this throws up another problem. Because perversely, although Facebook's strict anti-piracy takedown software is currently hampering its video growth, in some ways it's not strict enough.
Piracy runs rampant on Facebook video
With no hard-and-fast metrics, it's difficult to quantify the scale of it - but it's clear that video piracy is rampant on Facebook Video. Also known as "freebooting," numerous high-profile users are uploading videos that don't belong to them and using their viral popularity to grow the popularity of their pages.
George Strompolos, CEO of massive YouTube network Fullscreen, thinks Facebook has the potential to "eclipse" YouTube - but only if these problems are fixed. In a recent tweetstorm, he said he "regularly" sees his network's videos stolen, and that "frankly I'm shocked that a rights holder with deep pockets has not sued yet."
Right now, if Facebook introduces monetisation before clamping down on freebooting, it risks letting unscrupulous users profit from other people's content. And if that happens, viral video creator Jay Lichtenberger told me he will be "extremely upset" - and he'll "look into filing a class-action lawsuit."
A Facebook spokesperson previously told me that the social network "respects the intellectual property rights of others and is committed to helping third parties protect their rights."
"Our Statements of Rights and Responsibilities prohibits users from posting content that violates another party's intellectual property rights," they added. "No content or ads may include content that infringes upon or violates the rights of any third party, and upon notice of such impermissible content, we stand ready to respond including by removing the content from Facebook."
It's about striking a balance
Facebook clearly wants to become the destination for online video - it indicated as such in a recent big feature in Fortune. To do so it needs to allow for legitimate use of copyrighted material, and The Information's report suggests it's making good headway.
But, as content creators point out, it needs to clamp down on blatant theft too.