The article will be broken up between the two top news stories in social media. The first is the news Vine is becoming a camera app. The second is the news Facebook is adding ads within videos.

Vine Will Be a Camera App

Twitter is finally shutting Vine down on January 17th. Vine will transition into a camera app which lets users film 6.5 second clips. Vine videos are still popular on Twitter, but the app usage has plummeted. This is why the action to keep the ability to create the videos makes sense. Vine’s community has been hollowed out, but the viral nature of short video clips will always make them a medium consumed by social media users. The problem with short videos is there isn’t much money in the concept. This is why YouTube has been focusing on watch time more than views. YouTube wants to keep viewers on the website as long as possible which is why it made its algorithm favor content which garners more watch time.

Besides the fact that short videos have a tough time integrating advertising within them, they also have a high variability in terms of what goes viral and what doesn’t. This variability was exemplified by the Vine app itself which gained and lost usage quickly. Many people want to question what went wrong with Vine. The answer is the creators gave up because they weren’t making money from creating Vines outside of brand deals. My question for Twitter is why it bothered trying to create a community on Vine. Instead it should have integrated it as much as possible and made sure all the young users on Vine were funneled onto Twitter. Facebook is trying to do this with Instagram, but it can take a measured approach because Instagram is more stable. It isn’t as much of a ‘flash in the pan’ like Vine was.

The reason why I discuss this is because Periscope is the next Vine. I expected more from Periscope, but I was wrong because it’s extremely difficult to keep people’s attention on a livestream if you aren’t already famous. There’s inherently less money in live content because it gets less traffic. Periscope becomes dead on arrival because there’s no way to monetize content. A lot of the internet content created is better geared towards being filmed and edited. Periscope mainly consists of users lying in bed, fielding questions. It never reached the popularity of Vine and never formed the community Vine did. Periscope needs to be scrapped as soon as possible. It needs to become a live camera app like Vine to avoid wasting time having them separate and seeing the Periscope community dwindle like Vine’s did.

Live video as a feature is way more valuable to Twitter than 6.5 second video clips because it generates more engagement (comments). There’s no reason to limit the conversation to Periscope when hosting it on Twitter will increase tweets and time spent on the platform. Considering there’s no ads on Periscope, the opportunity is being wasted. Twitter is experimenting with live NFL games on the website/app because Twitter has been the second screen for television watching for years. It only makes logical sense to bring user generated content to Twitter in the same manner as NFL games. User generated videos are better for Twitter because it doesn’t have to pay for the content like it does with the NFL. Twitter should experiment with this level of integration where tweets become stream comments with its top creators. It can feature the streams like it does with Cheddar. That would be a great reward for top Periscope creators. Notice how my plan engages talented creators and keeps them working with Twitter instead what happened with the top creators on Vine who left to create Instagram and YouTube videos.

The takeaway for Twitter investors is if you see Twitter making the changes I’m suggesting, the stock becomes a potential buy. I don’t expect Twitter to do this, which why it’s still a stock to avoid.

Facebook Video Advertisements

 Facebook (FB) is working on mid-roll ads for livestreams and regular videos. These new ads in the middle of videos will have a lot of restrictions on them to avoid abuse. The first is the video has to be played for 20 seconds before an ad is played. The total video has to be at least 90 seconds long to service a mid-roll ad. Finally, ad length will be limited to 15 seconds. Facebook is staunchly against pre-roll ads which makes sense because Facebook users scroll through their feed. They don’t actively click on videos like on YouTube. They may not be looking at that part of the screen when the video is playing. Video doesn’t auto-play with sound, so the ad won’t be heard. Even if Facebook decided to allow this function, it would be terrible to have it with sound because ads would be blasting at users without them tapping on anything. Twitter has pre-roll ads. This may be Twitter’s only option because users on that platform have a short attention span and don’t watch long videos.

Facebook tried using suggested videos to monetize video content instead of traditional ads, but that didn’t work. YouTube utilizes pre-roll ads and only has mid-roll ads with videos over 10 minutes. Mid-roll ads on Facebook video is intrusive because of the shorter length of the videos, but it’s the only option besides charging for the content. The reality is Facebook’s only competitive advantage is its knowledge on users which lets it cater highly targeted ads. Facebook has yet to create an innovative workaround for the monetization of videos. If Facebook did so, it would take a bite out of YouTube’s lead. Considering Facebook tends to copy Twitter, Snapchat, and YouTube, I’m not expecting anything better than mid-roll ads. It’s embarrassing that Facebook has had video on its site for years and only now is testing mid-roll ads. YouTube has been doing mid-roll ads for years.

While Facebook lacks innovation, when mid-roll ads are released it will help top publishers make more money on their content which will encourage them to post more. This will grow Facebook’s video watch time. Video is the most important aspect of social media, so it’s going to be a great step for Facebook. It will earn 45% of the ad revenues on videos like YouTube.