Georgetown University



Sarah ReifCreative Industries Final Project 11/19/15Seeing Red:Three Models for Creator Support on YouTubeLast month, Google announced a revolutionary update to the YouTube platform known as YouTube Red. Red is YouTube’s long-discussed and arguably long-overdue subscription streaming service. At face value such a service seems ideal. Content creators would have a more structured and reliable revenue stream and more tangible creative support from YouTube itself. Similarly viewers would have more unfettered access to video streaming, including ad-free content and offline content as well as access to a collection of tangential apps including Google Play and the new YouTube Music. Though this streaming service seems like the natural next step for YouTube, I am not without reservations. Historically, changes in infrastructure like this, even when done with the best intentions, can have unintended consequences. Ultimately I want to examine existing revenue streams for YouTube content creators – from the classic ad model, to direct Patreon Support, to this new YouTube Red streaming service. I will consider what this change means for the content creator. How will this affect their revenue stream? Is this the best model to support creators? YouTube, In BriefYouTube is such a staple of modern internet that it is hard to believe the service is only ten years old. The site was launched in 2005 by three PayPal employees Chad Hurley,?Steve Chen, and?Jawed Karim who wanted to create a service where users could share videos online in a similar fashion to photo sharing websites like Shutterstock or Flickr. At the time nothing quite like that existed, but the great desire for the service was there and 2005 was actually something of a battleground for the first true online video contender. The fledgling startup YouTube came up alongside a slew of other startups including Vimeo, , OurMedia, Clip Shack, and Google Video (Kirsner, 2005). Though Vimeo is still a recognizable name it is clear that YouTube won out. The inclusion of Google Video is particularly interesting because even though that venture ostensibly failed Google later acquired YouTube a mere 21 months after its launch for 1.65 billion USD. Innovation columnist Scott Kirsner, cited above, who wrote on the various 2005 video startups, penned a follow-up piece this past February assessing why YouTube won the fight for online video. He attributes the victory to a couple of key business elements, a few of which are crucial to my discussion of YouTube here. Kirsner notes how YouTube, having identified video as a missing piece from the developing web 2.0, flourished because of various factors which lowered the barriers to user participation. No one had to download an application to use the service, file sizes were allowed to be large, multiple file formats were converted to flash, and there was no initial copyright policing (Kirsner, 2015). Beautiful in its simplicity YouTube took off. The website was purposefully simple and one of the first true web 2.0 services with a business model relying completely on users to generate content. The video-sharing site’s inception fits perfectly into the world view of Astra Taylor’s identified new-media utopians. It is easy to see how such a technology could usher in the idea that web 2.0 is an “amateur paradise… where people are able to participate in cultural production for the pleasure of it, without asking permission first” (Taylor 2014, 45). (As a techno-utopian myself, this is a hard notion to shake and I am not thoroughly convinced of its falsehood). YouTube made video sharing easy, phones and computers were getting better cameras, and here was a new platform of expression. Nobody could have anticipated the celebrity. Making Money on YouTubeEarly YouTube was a long-tail playground; anyone could have their fifteen minutes of fame and one-hit-wonder viral sensations came and went at a rapid pace. However, it was not long before some YouTube users became “YouTubers.” I will not go into the complex rise and fall of YouTube stardom but as I begin to steer this discussion towards the various ways YouTube has cultivated relationships with creators the distinction is important. I could upload a video today with all the hallmarks of a great YouTube hit and get nowhere – the market is so saturated; YouTube’s top earner on the other hand, Felix Kjellberg, aka “PewDiePie,” made 7.4 million USD in 2014 (Thompson, 2015). Clearly a site created for sharing and hobbyists is staying that way for some and becoming a career for others. Until recently, the separation between me and big name YouTubers was always simply one of popularity rather than structure – despite gaps in viewership the clicks needed to upload a video were the same. However, Taylor notes how many of Youtube’s biggest stars are now supported by classic media conglomerates - Time Warner for instance owns Maker Studios, the company which represents much of YouTube’s homegrown talent (Taylor 2014, 33). So much for the long-tail. But I am getting ahead of myself. Before I take a theoretical approach to ask what YouTube developments mean for new creators I first want to outline the various ways YouTubers can make this website their career platform. AdvertisingAdvertising is the classic way to make money on YouTube. Google support informs that ad earnings on YouTube are “generated based on a share of advertising revenue generated when people view your video;” more views lead to more revenue (Google, 2015). Prominent career YouTuber and organizer of Vidcon (the premiere online video convention), Hank Green, has a fascinating article which breaks down ad revenue from the creator perspective. According to Green, the average YouTube ad rate is $2 per thousand views ($2 CPM). At that rate Green, whose videos reached their billionth view last year, has accumulated roughly $2 million in revenue over the past 8 years (with YouTube taking a ~45% cut) (Green 2015). Two million dollars sounds pretty nice, but when factoring in rising production costs as YouTube videos become more and more professional that is still a loss, especially when compared to rates of advertising for television or cinema. The pitfalls of an advertising model lie in the fact that it is based on how much advertisers pay rather than how much creators make or how much viewers enjoy the content. That is why someone as YouTube famous as Hank Green can still be at a net loss. Still, the ad method has built the careers of many YouTubers. Massive stars have arisen by making large quantities of cheap-to-produce, high quality content. The aforementioned PewDiePie is one such creator. His “Let’s play” videos score billions of views per month – a huge amount ad revenue. For a supposed free creator market like YouTube however, ads pose an interesting situation. At some point the videos – the actual work of creators that viewers want to see—are just ad-delivery services. Advertising companies pay Youtube to put their ads on popular videos and YouTube pays creators to keep making those videos. It is an imperfect model, adapted from TV, which does not place enough value on the online creator. Plus, people hate ads. The creators recognize this and so does YouTube, that is why alternatives are emerging. Patronage with PatreonPatreon, and its spiritual sibling Subbable (which it now owns) are creator driven services birthed by this advertising crisis. Patreon is a service of the crowd-funding trend. Unlike Kickstarter or Indegogo which allow creators to ask for funding for a single large project, Patreon is geared towards creators who make a series of content on a regular basis. Fans chose to become direct patrons of their favorite creators by agreeing to pay a tip (an amount of their choosing) every time the creator releases a piece of content. Fans can set a monthly cap so as to never go over budget if their favorite creator has a particularly creation-heavy month. Like Kickstarter, creators who use Patreon can set rewards for their patrons based on pledge amount; a fan’s patronage can therefore earn them bonus content while ensuring that the creators’ general content remains free. Using the numbers provided by Hank Green, it is easy to see how this type of revenue stream is far more directly beneficial to content creators than advertising. If he makes a video that gains 1000 views he would make two dollars off of ad revenue for that video. If just 2% of those viewers pledged Hank $1 on Patreon that video would generate $20. Such a service relies on the principal that fans want to support the creators that they love. Trusting that fans would want to pay seems a little foreign in our society of free but it is not that much of a leap. As Green reminds this model is not new, “a viewer paying an average of $1 per piece of content” is not crazy; “it’s iTunes” (Green 2015). How do you get fans to contribute not only their time, but also their money to you? One of the interesting facets of YouTube celebrity is the interactivity of the fans and the increased awareness fans have about the need to monetarily support their favorite creators. How did Green and other Patreon creators do it? “The solution we found is so strange and so antithetical to capitalism that I’m not quite comfortable suggesting that it’s a long-term, wide-ranging solution” Green confesses, “But here it is:?We just asked” (Green, 2015). Enter YouTube RedThis is how the stage was set this October when YouTube Red was announced; but what exactly is the new service? On Google’s YouTube Red homepage they note that the project was build out of viewers’ desire for “more choice when watching their favorite content, more ways to support their favorite creators and, above all, the option to watch their favorite videos uninterrupted” (YouTube Red Blogspot, 2015). Put simply it is a subscription based service (akin to Netflix, Hulu, or Spotify) for YouTube content. For $9.99/mo subscribers get a number of benefits: ad-free YouTube, offline viewing, background listening, access to Youtube gaming and music apps, and dual access to Google Play. As a user it sounds great, but is it great for creators? Unfortunately less than a month out we simply cannot know. YouTube has been remarkably tight lipped about just how much of that $9.99 will go to the creators themselves. My immediate thought goes to the similar service and pricing offered by Spotify. Having recently attended a panel on the future of streaming at the Future of Music Policy Summit at Georgetown this is of particular interest to me. How will subscribers’ money be divided? Will it be like Spotify where a subscribers’ $10 is divided not based on who they personally watch to but rather based on general overall viewership statistics? Will YouTube Red continue to pay users based on the viewership algorithm that governs ad revenue? Or perhaps YouTube is developing a new system where subscriber funds relate directly with the specific content they consume.There is no question that this streaming service is in-part an effort to support and cultivate “native” Youtube talent. Not only do subscribers get to reap all the benefits and extras listed above, they will also get access to a selection of “original series and movies from some of YouTube’s biggest creators” in the coming year (Original Series & Movies, 2015). Red FlagsIt is too early to tell what the ultimate impact of YouTube Red will be. What information is currently out there sounds awesome for users (especially on the music font), and definitely more beneficial for existing creators than the ad model. Still in investigating the new service I cannot help but be plagued by a number of questions. There is a brewing controversy over the voluntariness of creator sign-on, for instance. YouTube has confirmed that any “Partner” – those making ad revenue off videos—that does not agree to sign their revenue share agreement for Red “will have their videos hidden from public view on both the ad-supported and as-free tiers” (Constine, 2015). Google says this is a matter of consistency “so people thinking about subscribing to Red don’t have to worry about their favorite content not being available in the ad-free service” (Constine, 2015). This seems like a worrisome sign or die strategy.Moreover, when more information is available, the first thing I want to know is whether signing on to YouTube Red gives YouTube different ownership rights to creators’ content. Services like Patreon allow creators to eliminate the middle man in terms of revenue. This move toward streaming already makes YouTube more like a production network; will YouTube continue to allow outside payment for content under their Red banner? Perhaps most interesting is what this service will do to the culture of YouTube. It is great that YouTube is willing to invest in its homegrown talent but it is undeniable that this points towards YouTube taking a blockbuster approach and using this new service to leverage mega-stardom. This move towards working on exclusive big-budget content with specific creators forces me to consider that this might be the death of the new YouTube sensation. Yes this new streaming service is like Netflix or Hulu – original programing is the hot word of the day – but unlike those sites YouTube started as a social media website. Delineating mega-stars removes all pretenses that YouTube content is equal. It creates a very real divide between creator and viewer that did not previously exist. For a site that gained its success based on low barriers to access, this seems like a pretty high barrier to introduce. Can someone organically “start-out” on YouTube anymore or has YouTube decided on its celebrities. This is exactly what Taylor warned about in The People’s Platform – what started as utopian long-tail freedom ultimately works its way back into the larger cultural machine. In ConclusionThese worries are not to say that YouTube Red should be discounted. On the contrary, I believe such a service is long overdue and will be extremely valuable for users. The sheer amount of access afforded by this ten dollar monthly subscription is unparalleled. In fact, I do not doubt that Spotify is a little worried right now – Google Play and a new YouTube Music App together under one subscription plan means a whole lot of ad-free music. Will I subscribe? If I wanted that music access, then definitely; but for the type of content I typically consume, probably not. YouTube Red is likely better for creators than the advertising model but direct support is still better yet. I am very frugal when it comes to money and with the technology available for me to support my favorite creators directly through services like Patreon that is where I will chose to spend. BibliographyConstine, Josh. “YouTube Will Completely Remove Videos Of Creators Who Don’t Sign Its Red Subscription Deal.” TechCrunch. Accessed November 19, 2015. , Hank. “The $1,000 CPM: Advertising Is a Kinda Shitty Model. It’s Very Exciting That We’re Moving beyond It., Not All People, and Not a Ton of Money, but Some People.” Medium, April 6, 2015. , Laura. “The Crowdfunding Upstart That’s Turning Freelancers Into Superstars.” WIRED, May 13, 2014. Scott “Why Did YouTube Win? An Interview with Co-Founder Chad Hurley from 2005.” Accessed November 18, 2015. , Scott. “Now Playing: Your Home Video.” The New York Times, October 27, 2005. , Astra. The People’s Platform: Taking Back Power and Culture in the Digital Age. New York: Metropolitan Books, 2014.Thomson, Michael. “PewDiePie Doesn’t Make Anywhere Close To What He Should Be Making.” Forbes. Accessed November 17, 2015. .“Original Series and Movies Blogpost - YTRed-Press.” Accessed November 17, 2015. . What Is Patreon. Accessed November 18, 2015. .“YouTube Red Blogpost - YTRed-Press.” Accessed November 16, 2015. . ................
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