Facebook adds video sharing to Instagram

Facebook on Thursday added smartphone video-sharing to its Instagram photo-based social network, in a move challenging Twitter's popular Vine service. "We need to do to video what we did to photos," Instagram co-founder Kevin Systrom said while unveiling Video On Instagram at a press event at Facebook's headquarters in the Silicon Valley city of Menlo Park. Instagram video apps tailored for iPhones and smartphones powered by Google-backed Android software feature 13 filters for special effects and post to people's Facebook pages the same way pictures do. Video snippets can be 15 seconds or less, since the team saw that length as a "Goldilocks moment" not too long and not too short, according to the Instagram co-founder. Systrom said that Instagram has topped 130 million users and all of them have "access to recording the world's moments in real time" with today's launch. Instagram engineers worked with leading video scientists to develop a "cinema" feature that stabilizes shaking that is typical in smartphone video. Within hours of the new feature being added to Instagram, video clips began streaming in from locales around the world including a fish market in Japan, a space memorial in Russia and a surfing haunt on the California coast. Investors, however, seemed put off by the lack of a plan to make money from Instagram and Facebook shares were down slightly to $23.90 at the end of the official trading day on the Nasdaq. Facebook acquired Instagram last year. The original price was pegged at $1 billion but the final value was less because of a decline in the social network's share price. Twitter earlier this year launched Vine, a service that lets people share video snippets up to six seconds long. "Given the importance of mobile and video for Facebook, the prospect of video features in Instagram should come as no surprise," said Ovum analyst Eden Zeller. Facebook still needs to figure out ways to make money from Instagram, according to analysts. "We didn't design it with any advertising in mind," Systrom said of the video-sharing service. "I think, over time, we will figure out advertising." He stressed that Instagram users would own their videos and that Facebook did not intend to use them for marketing or advertising. The overall digital video advertising market in the United States is expected to surge more than 40 percent to $4.1 billion this year, according to industry tracker eMarketer. Video advertising on mobile gadgets is expected to more than double to $518 million this year and account for more than a quarter of all US digital video ad spending by the year 2016, eMarketer said. Systrom confided that he is eager to tinker with Instagram's potential on Google Glass Internet-linked eyewear but has not been able to get his hands on a pair, which has been made available to developers at a price of $1,500 each. Forrester analyst Nate Elliott noted that Facebook has done well by "borrowing heavily" from other Internet companies. Examples given by the analyst included Facebook adding Twitter-style hashtags and news feeds, and the social network letting mobile gadget users check-in at locations after Foursquare found success with the model. "This model of 'borrowed innovation' has worked well for Facebook -- bringing interesting new features to audiences that the social start-ups can only dream of," Elliott said. "It also keeps Facebook's services fresh, and is one of the reasons more than a billion people still use the site every month." Elliott added that "the greatest marketing value from social media isn't trying to market to people on social sites, it is learning from social sites how to market to them everywhere else. "Google figured it out and I am hoping Facebook figures it out." Google made billions of dollars last year powering advertising at other websites and Facebook could do likewise, using insights gleaned from users to better target ads at other Internet venues, the analyst reasoned. "The more social behaviors you get people to engage in, the more you learn about them and eventually Facebook will learn how to use this database of affinity to make money on it," Elliott said.