Commentary
Content Owners May Have To Diversify Away From YouTube To Win
- by Ashkan Karbasfrooshan , Op-Ed Contributor, August 1, 2011
I love YouTube. I love YouTube as a user and I love it even more as a video content entrepreneur. But, I'll be perfectly honest with you, I have no idea if YouTube will help me grow my business or force me to grow despite it.
Ok, What's Your Beef Now?
As recently as Q1 2010, our YouTube channel accounted for a third of our total streams; today, that number is just over half. In all likelihood, if you produce videos, you see a similar pattern: YouTube generates more views for you than it ever did, and probably generates 50% or more of your total volume.
The thing is, even though YouTube generates over 50% of our views, it generate less than 5% of our revenues in some months. That's either a problem or an opportunity (it's both). In the past I've outlined how YouTube is both a commercial and promotional platform; today, I'm less certain than ever about whether it will be more of one or the other.
YouTube's Awesome March
If the future of the Web is video, then YouTube is the road, car, driver and gasoline. YouTube's grip on online video only strengthens with each passing month, becoming the de facto monopoly on views and content.
Ah yes, the content. Let's first look at the noise factor on YouTube:
- in 2007, there was 8 hours of content uploaded to
YouTube every minute,
- in 2008: 13 hours/minute
- in 2009: 24 hours/minute
- in 2010: 35 hours/minute
- in 2011: 48 hours/minute.
That's right: each minute, two full days' worth of content is uploaded to YouTube. What kind of content? Well, all kinds of content, including:
- Hollywood and studios ("Super premium")
- Professionally produced content by new-media creators ("Premium")
- YouTube celebrities that are racking up views and building actual media businesses, if not shows ("Prosumer")
- Random individuals ("User-generated content")
- Illegally uploaded ("Pirated")
Therein lies one of the challenges facing content owners: while elsewhere they compete for mindshare and volume with other producers, on YouTube it's a bit of a free-for-all, where National Geographic competes with Buffy the cat (not the show, but the feline from North Carolina).
I should stress that in no way am I putting down the YouTube celebs. In fact, at this year's Vidcon, the number of YouTube partners doubled to 20,000, with "hundreds of them" making six figures a year, according to director of YouTube's content operations Tom Pickett, and the number of partners making $1,000 a month has tripled in that time. "There is a lot of money coming into the online video space and the creativity emerging is amazing," Pickett said.
Leveling the field is good for challengers, bad for incumbents -- but they're incumbents for a reason. Historically, it could be argued that professional content creators had an edge, since those with large libraries who refreshed their catalogues frequently enough at least had revenue-sharing commercial arrangements with YouTube, an economic incentive that gave YouTube a reason to promote them. The problem is that the majority of audiences on YouTube seem to favor the content that seems less than desirable from the big marketers.
This may explain why YouTube is trying everything: from rentals to branded channels. Smosh's President (and former Walt Disney executive) Barry Blumberg once stressed to me the importance of having been an early channel on YouTube: YouTube promoted a handful of channels early on, helping those channels land subscribers. Then as YouTube grew and got acquired by Google, its algorithms favored those channels with high subscriber counts. The cycle continued and became a self-fulfilling prophecy, a new-media video version of "it takes money to make money."
That means the opposite is also true: if you are starting to produce or distribute videos now and looking at YouTube as a channel, good luck. It's not impossible, but the odds are stacked against you. I guess that's why there's no business like show business.
Is it irony that perhaps one of the more compelling monopolies in history is also nearly revenue-free? You do mention some revenue above, but it is near nothing in the big picture, especially if one considers the revenue relative to the volume of activity that YT is getting.
Would love to see Youtube start charging even a mere 0.50 per upload. That's fifty cents. Half of a dollar (in all of its many equivalents across the planet). Tiddly winks for a good chunk of uploaders. What could be a decent revenue stream for YT. I think that alone would change the online video world. For the better in my opinion. The secondary effect would be the dropoff in traffic, which would lessen YT's costs of doing business. The remaining traffic would have skin in the game, a reason to pay to upload to YT.
And then there is the other revenue stream. If Google and YT want to "do no harm", then it is about time that YT leads the way into some sort of subscriber model. Again even a mere 5.00/month for unlimited viewing would change the online video world. It would give YT an Adwords sized income (well maybe not...but close :) and it would give the rest of the video world some valuation.
Then take that subscriber income and apportion it up and split it with the producers whose videos are being viewed. Now you have incentive for creators, so they can see a reason to upload to Youtube.
For all of its seeming good, to me YT is really a bad bad thing. It is doing GREAT harm to everyone but itself. It is doing harm to itself as well, except that Google is making so much $$ elsewhere they can afford to look the other way while YT loses gazillions.
Ad-generated revenue simply does not work in an increasingly fractured content world where 98+% of content gets viewed very lightly. Subscriber-generated revenue, in my opinion, levels the playing field and does the greatest good for the greatest number.
To me YT is propping up an artificial unreal sense of non-value. One that could be changed into a pretty decent revenue model. That new revenue producing model could still be the biggest show in town. At the same time that change would introduce a revenue model into online video that works for everyone, not just the top five biggest YT producers who draw enough eyeballs to pay out anything beyond fractions of a cent.
C'mon Google rollout "Checkout" (or something like it) in a form that works for monthly subscriptions and their renewals and video uploads. Change online video for the better and maybe even move online commerce forward a few steps. Quit doing harm.
Jeff, interesting observations. However, "ain't gonna happen":
YouTube's parent Google turned its back on its initial business model (licensing Google search to enterprises and websites) and adopted the free model which relied on advertising. It now generates over $25B as a direct result of that decision. Right or wrong, like it or not, it will adopt the same strategy with YouTube. It's not a bad strategy for pure reach, size and what works for platforms (tech strategy).
Problem is, in media, it doesn't work like that.
- In ad sales, for example, scarcity does wonders;
- with content rights, ditto.
It's YouTube's world, we just stream it. Content providers have to view YouTube as the great promotional platform that it is, but as a commercial platform... nyet. At least not yet (wow, it rhymes).
Depends (as the Tubes would say) what you want from life. YouTube as a SEO driver works like a bandit. 5 websites from dentists in Oregon - one has a video on YouTube (just one 3 minute video, mind you) and it goes to the top of the heap. As far a market for making money from video (say "How to Buy a Prom Dress") Hmmm, good luck on that. Use da tube for free hosting and SEO stuff - placing quality content that you want to have generate revenue on that slag heap is like hanging "Starry Night" on the wall of a strip joint. It looks good - but nobody will pay any attention.
Well written Ashkan. I've responded from a YouTube partner publisher point-of-view in an article at ReelSEO: http://rseo.co/oVMwcO