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Facebook's billion-dollar bet: Creators are the future of the internet

Facebook's billion-dollar bet: Creators are the future of the internet

Good morning! This Thursday, Facebook is doing what it does best, Netflix's pushing into gaming, Russian hackers spammed people on LinkedIn, and "5G" is now an official word in the dictionary.

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The Big Story

Facebook shows creators the money

You know what's cool? A billion dollars. That's how much Mark Zuckerberg said Facebook plans to give to creators between now and the end of next year, "to reward creators for great content they create on Facebook and Instagram through 2022."

  • What does that mean? Well, Facebook wants people to use Instagram Reels, Facebook Gaming and its other creator tools, and it's willing to pay handsomely for the creators who bring an audience to those products.
  • Creators can get bonuses for lots of things: hitting milestones on livestreams, running ads on their videos or creating hit videos on Reels. Not all creators can access the mountain of cash yet, but Facebook promised to explain more later.

Creators are the public future of Facebook. As more interaction moves to chat and groups, creators are the only ones left who can gather a huge audience. "Covid was an inflection point," Facebook's Chris Cox told The New York Times earlier this week, "where the industry and creators more generally started becoming more of a creative economy."

That's why Facebook is betting big on the creator economy everywhere it can. But Facebook is late to the party, as YouTube and TikTok rise, and Twitter, Snapchat and so many others look for their own slice. (Fun fact: TikTok just became the first non-Facebook app to hit 3 billion global installs.) So if you're Facebook, what do you do? You do what Facebook always seems to do when faced with a threat: spend your way out of the problem.

  • It's paying big-name creators like Malcolm Gladwell to use its newsletter service, Bulletins. (Although, uh, someone should remind Gladwell to update his, which he hasn't done since launch. Bad look for the flagship newsletter.)
  • It's also building new tools for creators to make money, and promising not to take a cut of revenue until at least 2023. "And when we do introduce a revenue share," Zuckerberg said a few weeks ago, "it will be less than the 30% that Apple and others take."
  • Gaming is also a big focus: Facebook's trying to poach creators from Twitch and elsewhere with commission-free subscription options and more.
  • And it has been changing the way Instagram works to make it more monetizable, more creator-focused and, well, more like TikTok.

The long-term math here doesn't seem crazy. If a billion-dollar outlay can help turn Facebook into, say, YouTube, that plan pays for itself pretty fast: Susan Wojcicki said earlier this year that YouTube has paid creators more than $30 billion over the last three years, and the company will do about $30 billion in revenue this year.

But Facebook's fortunes are complicated here. Pros: Instagram and Facebook are both huge, lucrative, mature platforms. Cons: It's ... Facebook. Facebook isn't cool anymore. TikTok is cool, YouTube is cool, Snapchat is cool in an under-the-radar kind of way. But between its years of privacy issues and the billions of users who are finding other places to hang out, Facebook's dominance doesn't feel inevitable the way it once did.

One thing's for sure, though: Nobody's taking as big a swing in this space as Facebook. It's copying and competing with everybody — from Clubhouse to TikTok to Substack — and taking them on with incentives and terms that are going to be brutally hard to compete with. If it doesn't work? Facebook will pivot, as it always does, to whatever else smells like growth and profit. And if it does work? That billion dollars will be money incredibly well spent.

— David Pierce (email | twitter)

A MESSAGE FROM ANT GROUP

According to a Nielsen Report, 94% of Chinese tourists said they would pay with their phones if the method becomes more widely adopted overseas; 93% said using that method would likely increase their spending. To meet them where they are, more and more U.S. companies — both here and in China — are embracing Alipay.

Learn more

People Are Talking

Dogecoin co-creator Jackson Palmer hates crypto:

  • "I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents."

The Bank of England's Jon Cunliffe doesn't think crypto is big enough to worry about:

  • "Were we to start to see it move out of retail more into wholesale and see the financial sector more exposed, then I think you might start to think about risk in that sense."

Caitlin Seeley George of civil rights group Fight for the Future said facial recognition tools do more harm than good:

  • "Companies say they offer facial recognition in the name of 'convenience' and 'personalization,' but their real priorities are protecting and predicting their profits, ignoring how they abuse [people's] rights."

Making Moves

On Protocol: Netflix hired longtime game exec Mike Verdu to be its vice president of game development. He previously served as VP of content at Facebook's VR unit, which shows how serious Netflix is about getting into games.

Discord bought Sentropy. The company uses AI to track down online abuse and harassment.

Jeff Bezos is giving $200 million to the Smithsonian Institution's Air and Space Museum. It's the museum's biggest gift in nearly two centuries.

Revolut is now a $33 billion company, after raising $800 million led by Tiger Global and SoftBank. We have a new fintech giant, folks!

On Protocol: Square bought Crew, a messaging app for frontline workers. It's looking less like a payments company every day.

Clubhouse rolled out a DM feature, Backchannel, which allows one-on-one conversations, group messages and the ability to send links.

Amazon launched Kindle Vella, which lets readers interact with stories by talking to authors and marking stories they like.

In Other News

  • Facebook doesn't want Lina Khan on its antitrust case. Like Amazon, the company is petitioning for the tech critic to recuse herself from a probe, saying Khan has probably already drawn conclusions about the case.
  • Amazon is being sued over hazardous products. The U.S. Consumer Product Safety Commission wants to force Amazon to recall broken carbon monoxide detectors, flammable kids' clothes and many other products. Amazon said it has already taken necessary actions, and isn't sure what the CPSC wants.
  • Twitter Fleets, we hardly knew you. The tool is being axed because Twitter said it didn't actually get new people posting, it just gave super-posters new places to do so. As far as we can tell, nobody's sad to see Fleets go.
  • Twitter challenged millions of accounts disputing COVID-19. The company also logged increases in the amount of content violating nearly every single one of its policies, from hate speech to harassment.
  • There's a fight inside Facebook over data sharing. The company broke up the team running CrowdTangle, the New York Times reported, and may be more concerned with people thinking it's an echo chamber than actually not being an echo chamber.
  • Walmart is using robots to speed up distribution. The company is partnering with Symbotic to put a couple dozen robots in its distribution centers over the next few years.
  • At least two Amazon employees quit in protest of a book the company sells that they said depicts transgender individuals as mentally ill, according to NBC. Hundreds of employees also backed an internal complaint about the book.
  • Russian hackers spammed officials on LinkedIn. The hackers sent European government officials LinkedIn messages that contained links to websites controlled by them, according to a Google report.
  • "5G" is part of the dictionary, at least according to Dictionary.com. You can thank social media for some of the other additions, including "DEI," "yeet" and "asshat."

One More Thing

Your wilderness toolkit

On Monday, Protocol's Anna Kramer led a team meeting by sharing that on a recent camping trip, she fought off a rattlesnake (and won!). If you want to be as brave as Anna for your next trip to the wilderness, check out the Netflix series "You vs. Wild." British adventurer and host Bear Grylls shows how to handle various wilderness obstacles, like harsh climates and rough terrain. Sounds pretty cool.

But what makes the show extremely cool is that it's interactive, kind of like "Black Mirror: Bandersnatch," but with an element of real danger. The audience weighs in on key decisions Grylls makes, like whether he should fly in a plane or take a helicopter, and as the show progresses, he reveals which was the right answer. At the end you can feel as brave as Grylls and Anna, without having to leave the couch — truly the best of all worlds.

A MESSAGE FROM ANT GROUP

According to a Nielsen Report, 94% of Chinese tourists said they would pay with their phones if the method becomes more widely adopted overseas; 93% said using that method would likely increase their spending. To meet them where they are, more and more U.S. companies — both here and in China — are embracing Alipay.

Learn more

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