Facebook Live Is Paying For Internet Personalities to Live Stream, Here's Why

Facebook (FB) is prioritizing live streaming lately with its latest venture. The social media giant reported it's paying 140 media companies and digital creators more than $50 million to produce content on Facebook Live. 

The feature was first launched in January for all users, and has since been fighting tooth and nail with Alphabet's  (GOOG) YouTubeSnapchat and Twitter's  (TWTR) Vine and Periscope to widen it's streaming following and monetize its content.

The company will report its second quarter earnings later this month. In a note on July 15, analyst Stephen Ju with Credit Suisse noted that he projects ad revenue to grow at about 82% and 13% year-over-year to reach $4.68 billion and $1.04 billion, respectively, in the second quarter.

The Wall Street Journal reported on Tuesday the company will commission internet personalities to stream live video five times a month until September. Out of all the partners Facebook recently charged with this, 15% make up these digital creators, many of whom originally gained popularity from YouTube, Vine, Snapchat or Instagram. Of the $50 million of total spending on the project, $2.2 million will go to these personalities.

The Journal originally reported last month that the Menlo Park, Calif.-based company would pay more than 17 internet personalities and some digital media platforms to use Facebook Live. 

Participants include Michael Phelps (earning $224,000), Gordon Ramsay, Kevin Hart, Deepak Chopra, Vox, Mashable, The New York Times and BuzzFeed -- who by the way, started this craze when 800,000 Facebook users live streamed two BuzzFeed employees trying to burst a watermelon using only rubber bands. 

Facebook and Twitter are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells FB or TWTR? Learn more now.

Krishna Subramanian, co-founder of Captiv8 social media analytics platform, said capturing the excitement surrounding a live stream is when the tool is most successful, which is exactly what BuzzFeed was able to accomplish.

"The excitement of live happens when everyone [logs] on at the same time -- there's all that interaction that happens right there," he said.

To capture a larger audience Subramanian said digital publishers, or some of these larger companies, need to focus on user interaction -- like commenting, sharing and liking on Facebook -- in order to successfully keep users' interested in live streaming.

"Right now, there's a lot of focus on production quality, but not really increasing interaction on the content itself," he said. "Those are some things that need to get improved for live to really take off."

Subramanian said Captiv8 reports that as late these personalities prefer pre-recorded video, as opposed to live streaming. There's no way for them to be paid -- except when Facebook agrees to ahead of time -- unlike YouTube that collects advertising revenue from its content and gives creators a cut. 

"We have an early beta program for a relatively small number of partners that includes a broad range of content types from regions around the world," spokesperson Justin Osofsky told TheStreet. "As part of this early test program we're working with these partners to offer temporary financial support to encourage experimentation with this new format."

But Facebook's 1.65 million user base is one of the largest across any platform, and Subramanian said its millennial following is most likely to engage with these digital celebrities commissioned to live stream. The creators may draw that larger audience that Facebook is looking for in live right now, and from users who are likely to engage with it across multiple platforms.

There's an "emotional connection" between these creators and their audiences, Subramanian added, because the personalities are famous based on what they have done on these channels, and how viewers responded in the past. Targeting these creators, rather than larger media corporations, is a smarter investment, he speculated.

"You've gotta be really really interesting to produce live content in a better fashion than actual video," he said.

Facebook shares closed up 1% to $120 per share. The company has a market cap of $352 billion.

More from Opinion

Tuesday Turnaround: Google Gets Grilled

Tuesday Turnaround: Google Gets Grilled

Why Tech Giants Like Amazon Are Designing Their Own Chips -- And Who Benefits

Why Tech Giants Like Amazon Are Designing Their Own Chips -- And Who Benefits

China's Ban on Apple's Older iPhones Is Deeply Ironic -- and Unsettling

China's Ban on Apple's Older iPhones Is Deeply Ironic -- and Unsettling

Qualcomm's Latest Notebook Chip Could Be a Sign of Things to Come from Apple

Qualcomm's Latest Notebook Chip Could Be a Sign of Things to Come from Apple

Broadcom Gains on Solid Results and Guidance: 5 Key Takeaways

Broadcom Gains on Solid Results and Guidance: 5 Key Takeaways