“In the world of the internet, content is king.” Ever since Bill Gates famously said these words, there has been a gold rush toward the internet. The “Wild West” of Internet 1.0 has left way for Internet 2.0 where platforms lead the way and create a playground for creators, or ‘partners’ as Google puts it, to create blogs, news sites, listicles, videos, games, and apps, where advertisements can be injected in an effort to create revenue for the platforms and creators and the only way out for the user is a paywall. Monetization has become synonymous with advertising. As anyone who understands the tinge of excitement excreted from the ‘Skip Ad’ button on Youtube understands, I can’t help but wonder if YouTube’s latest demonetization policy is actually a step in the right direction.
There seems to be no shortage of scandals on the internet these days. Disney cuts ties with PewDiePie because he ill-advisedly made a video making fun of Jews; Gawker unknowingly signed their death warrant by publishing a sex tape of Hulk Hogan; Facebook and Twitter face media backlash when they are accused of unwittingly allowing Russia to hijack the 2016 presidential election; and Logan Paul apparently belittled suicide prevention awareness by making a video that callously belittled suicide (see: stupid guy known for doing stupid things does something stupid.)
But is any of this stuff really so bad when it is done for the all-mighty view? Can we not forgive some controversial transgressions when all we’re really trying to do is sell more advertising?
According to Adweek, by 2020, over 80% of internet consumption will be in the form of video. YouTube boasts that it’s users watch an estimated 3.25 billion hours of video each month. Facebook has driven hard into video, along with the likes of Instagram and Twitter. Countless hours of research goes in to figuring out how to get users to stay on the platform and consume more content. Meanwhile, content creators are trying to figure out how to keep their view count up. Read this excellent article about Olga Kay to see just how much work it takes. Sometimes desperate times call for desperate measures.
YouTube partners complain that YouTube takes too high a percentage of advertising revenue or that it’s unfair to demonetize their somewhat controversial videos (meaning remove ads) or that YouTube is bullying the little guy by removing ads from channels that have fewer than 1,000 subscribers. While this may be true to a certain degree, I can’t help but wonder if relying upon advertising for a sustainable income is even wise to begin with.
Let’s look at the numbers. Google doesn’t release how much money they make from YouTube but it is suspected to be somewhere between $4-$6 billion. In 2017, Google posted $110 billion in revenue mostly from their partner sites (Adsense, AdWords). While approximately $76 billion of this is reinvested back in to R&D and SG&A, the rest is put to work in the purchasing of marketable securities (hedging), from which they speculate accounts for only about an extra $300 million. Basically, Google does not make much money from YouTube and any money they do make they are reinvesting to grow YouTube. Assuming $6 billion a year to be correct, this means that YouTube makes about $685K per hour, or $0.15 per user per hour. This would also account for the 1.5 million YouTube Red accounts, which at $10-$12 per month, would still only account for approximately $198 million of that $6 billion.
It is hard to decipher exactly how much money YouTube partners make from their preroll ads, but it is definitely not much. The most accurate predictions I have been able to find suggest that it is somewhere around $0.75-$1.00 per 1,000 views depending on the level of engagement of the user. (YouTube ads only make a creator money if the viewer watches an ad for at least 30 seconds.) Which essentially means that Rebecca Black, with one of the most popular videos of all time at 117 million views is lucky if she’s even cleared the $100,000 mark.
Furthermore, unlike Facebook, who is beginning to focus on community engagement in an effort to attract local advertisers, the only people advertising on YouTube are still national brands. So unfortunately, Coke, Coors, and Amazon have a lot of sway when it comes to getting YouTube to bend over backwards for them (sorry Casey Neistat, it’s nothing personal, it’s just business).
As it turns out, YouTube’s demonetization policy is nothing new. In fact, it’s been in effect since YouTube rolled out their Partner’s Program ten years ago. The only difference is that now YouTube notifies it’s partners when a video has been demonetized; meaning, now they’re simply aware of it. And watching ‘power creators’ get kerfuffled over the removal of ads on videos with titles that (even seemingly) promote drugs, sex, guns, or violence, all I can say is, “Welcome to the world of advertising.” Brands are ostensibly paying you to promote their products, and if they don’t like the message you’re sending, well, it’s their choice whether they want to continue that relationship or not. Quit blaming YouTube, it’s not their fault.
And as far as the small accounts go, accounts with fewer than 1,000 subscribers are doubtfully making much money off of the Partner’s Program anyway. It’s frustrating, but unfortunately that’s the cruel world of business, sometimes you have to admit that your product just isn’t that good. Never fear though, after all that’s what Patreon’s for. In the meantime, it might be best to maintain YouTube as a supplement to a real business rather than a business in and of itself.