
YouTube Stars Feel an Advertising Pinch - prostoalex
https://www.nytimes.com/2017/05/07/business/media/youtube-stars-feel-advertising-pinch.html?emc=edit_ca_20170508&nl=california-today&nlid=4617603&te=1&_r=0
======
LeonM
YouTube creators are highly undervalued.

Many of them are highly influential amongst their viewers and have more views
than your average mid-tier TV show. Youtube also offers much better insight in
the audience than TV channels ever can achieve.

And yet, the content creators need to rely on Patreon and selling merchandise
to pay for their expenses.

I'm not saying all of them are struggling, in some niches (for example
cosmetics) YouTube creators are known to make a pretty hefty buck in
sponsorship deals, but the majority is highly undervalued.

Alejandro Salomon recently talked about this in his podcast [1], since this
phenomenon is especially true in the automotive sector.

[1] [https://youtu.be/fcIgvYzSFm4?t=1936](https://youtu.be/fcIgvYzSFm4?t=1936)

edit: typo

~~~
michaelbuckbee
If you want to see a really crisp example of this it's with food shows.

Look at this disparity:

"In 2015, more than 400,000 people on average are watching Food Network at
some point during the day." [1]

Then check out Nerdy Nummies (a YT channel I found out b/c my 6yo loves it).
[2] which is regularly breaking 1M views per episode, has 8+Million
subscribers and lifetime has generated 1,949,110,170 views for YouTube [3]

And all of those numbers in a demographic that doesn't even realize the Food
Network exists, with a pittance of the resources, no outside marketing and
compensated a fraction as well.

1 - [http://brandongaille.com/40-captivating-food-network-
demogra...](http://brandongaille.com/40-captivating-food-network-
demographics/)

2 -
[https://www.youtube.com/user/RosannaPansino](https://www.youtube.com/user/RosannaPansino)

3 -
[https://www.youtube.com/user/RosannaPansino/about](https://www.youtube.com/user/RosannaPansino/about)

~~~
Pulcinella
How "valuable" is a viewer of YouTube channel like that versus a viewer of the
food network. For example, I've heard that many viewers of various toy
unboxing videos are young children. I can't imagine most advertisers want to
pay money only to have their ad viewed by somebody with basically no
disposable income.

Edit: My comment was not about advertising to children directly. I was using
that as an example. I'm not sure if a view on YouTube has the same value as a
view in more traditional media (e.g. Television).

~~~
colefichter
You don't think advertisers want to market to children? I hope this was
sarcasm and I'm just missing the joke.

Have you walked down the cereal aisle in a grocery store?

~~~
Pulcinella
Have you seen YouTube advertisements? Half the time the ad has nothing to do
with the video. I've seen ads for cement mix in front of video game videos.

If I want to advertise my stand mixer, I don't want to have to pay when my ad
is seen by a 5 year old just because a video about gummy bears was tagged
"culinary."

I understand advertisers want to "get 'em while they're young" and want
children to pester their parents to buy things, but 2 million views from
children is not the same thing as 2 million views from the 18-35 bracket.

~~~
taysic
I think Youtube advertisements are very targeted toward you, and not
necessarily relevant to the video. Google uses the information it has on you
and plays the products that have paid the most for your demographic from what
I understand.

------
thr0waway1239
These creators are very smart and very good at what they do. But they lack the
most basic understanding of why it is such a bad idea to create an entire
business around something you cannot control.

Yes, there is that risk with _anything_ you do (including your own website and
your own email list), but surely by now they have heard enough people complain
online that it is very unwise to build a tall building on a shaky foundation.

Aside: why don't they use competitors such as Vimeo and post the videos on
Vimeo [1] first, and then post those same videos on YouTube after two weeks?
If their audience is really that engaged, shouldn't they be following them to
Vimeo also? It would be a two in one deal - the creators create competition
between two online video services (which is usually good for them), and if
more creators move away from YouTube the consumer also benefits from greater
choice and is more likely to go check out Vimeo, leading to a possible
virtuous cycle. A third and unexpected side benefit - less data collection
about your online practices by an internet behemoth.

[1] From what I can see, Vimeo also has options to monetize your videos.
[https://vimeo.com/blog/post/learn-how-vimeo-on-demand-
helps-...](https://vimeo.com/blog/post/learn-how-vimeo-on-demand-helps-
creators-earn-more)

~~~
fiatpandas
Easy to say you shouldn't put all your eggs in one basket, and who would
disagree with you? But I think it is not saying very much. E.g. someone loses
their job: "see, I told you it would have been better to work 2-3 jobs. You
relied too much on your only job."

At some point you spread yourself too thin and it's better to concentrate on
an ecosystem with a critical mass that actually cares about your content.

Do I feel bad about someone who built up a ghost hunting video empire on
YouTube see their castle crumble as advertisering industry pivots on
standards? Abstractly, no. But just compare the trending content on YouTube to
Vimeo and try to imagine the likelyhood of the majority of your users
inconveniencing themselves by introducing a rift in their YouTube subscription
consumption flow. It's a stretch.

~~~
ehnto
There are certainly other baskets, but none have been as nice and profitable,
with as large a user base, as YouTube. So to say they should be using other
platforms is great in theory, in reality they would just lose their followers.
There are other platforms just as technically competent as YouTube. But I
don't believe there is a replacement for the community and the brand YouTube
has just yet.

It also stands to reason that if there were competition, and say half the
users used one platform and half the other, that you would get half the
viewers on each, the possibility for massive growth on either is smaller as
more channels compete over fewer users. Even if you were on both, it would be
harder. This is one of those situations where as a creator and a user, it
would be nice if one monolithic platform just worked out well for everyone.

~~~
thr0waway1239
Remember when the major studios pulled out of their Netflix streaming
contracts at the first possible opportunity? After all, they could have just
stayed on Netflix, and it _might_ have been this nice monolithic platform
which could have worked well for everyone. At that time, their decision seemed
not just stupid, but Netflix certainly tried to milk it by portraying the
studios as being very evil. A few years down the line, you now have more
choice, Netflix has improved without raising prices, and in general online
video streaming has become a significant threat to another entrenched beast -
cable TV.

People may not diversify their streams of income for a lot of reasons, but if
you are a YouTube star, you already have some advantages which are extremely
valuable:

1\. You have already shown that you can wait for the months/years it takes to
get to the point of becoming a star. That is time you could have instead
invested (at least a portion of) in other platforms. 2\. You are obviously
tech savvy - or atleast savvy enough to get someone who is tech savvy to do
the work for you 3\. You are already in possession of a very valuable
commodity - the attention of people who actually like you. Why don't you get
people into your email list from your channel? Why don't you give them special
incentives to take them out of YouTube (over which you have no control) into
your website (where you have so much more control)?

>> Even if you were on both, it would be harder.

Derisking any business is hard. If anything, YouTube stars, who usually do not
have additional constraints such as employee payroll, unsold inventory, a
board to answer to, stock prices to take care of etc. should be able to add
this derisking if they actually want a business.

Otherwise it is just a hobby. Then why complain?

~~~
sangnoir
> A few years down the line, you now have more choice, Netflix has improved
> without raising prices,

Netflix _has_ raised prices[1]. They raised it from $8.99 to $9.99 (+11%) -
they even scrapped the previously grandfathered $7.99 subscription from early
adopters.

1\. [http://money.cnn.com/2016/04/19/technology/netflix-
prices/](http://money.cnn.com/2016/04/19/technology/netflix-prices/)

------
Mikushi
> Last week, the company announced a slate of new ad-supported shows on
> YouTube, including projects with Ellen DeGeneres and Kevin Hart.

Gotta support "well behaved" brands and cut the small man out of the picture.
Insipid low brow content that'll please advertiser is all these will be.

Sadly it seems certain parts of the internet are turning into cable...

Let's not even get started on the appalling support YouTube offers content
creators when things go wrong. If you are not Coca Cola I guess you basically
don't exists.

Shame bandwidth is such an expensive part of the video market, because Youtube
deserves to have some stiff competition thrown at it.

Things like Patreon help offer alternatives but it could help with being
better integrated into the platform.

~~~
themagician
You aren't entitled to money just because you post stuff on YouTube. Brands
want to advertise on "insipid low brow content" specifically because it has
mass appeal and caters to advertising. Nothing stops you, as a content
creator, from finding your own advertisers.

There is a very strange mentality among YouTube creators that they are somehow
"entitled" to have advertisers run ads on their channel and pay them.

Like you said, bandwidth is expensive. YouTube is already giving you something
for free.

I really don't get it.

~~~
falcolas
When a creator's videos go from making $700 per video to $150 per video,
without being caused by any action on the creator's part, and without any kind
of transparency from YouTube's part... I think they are absolutely justified
to be concerned.

And that's what this article shows - concern. Concern about laying people off.
Concern about having to find another job. Nobody's is acting like they're
entitled to money, just concerned about the sudden changes they have no
control or visibility into.

~~~
sfifs
The content likely was not attractive for an advertisers to put an ad on in
the first place and so revenues dropped the minute ad controls for advertisers
were added. Google didn't really have a choice but to do this given the
billions that were pulled. Will be interesting to see impact on AMJ quarter
results.

~~~
Obi_Juan_Kenobi
There are specific issues, mostly regarding clarity with regard to
demonetization. It's all automated, and there are lots of errors.

H3H3, for example, made the video "Christian moms against dabbing" as a test
for ad-friendly content, but was demonetized because of the word "Christian"
in the title. It was not a controversial video, actually quite light-hearted,
but the algo still triggered.

The frustration you hear/read is that many creators do understand the
advertiser issues, but find nevertheless find it difficult to work with
YouTube's automated systems.

~~~
sfifs
You need to understand the economic incentives in operation.

Advertisers and Google have a risk avoidance incentive. It doesn't matter if
they pass up good ad friendly content. They definitely don't want to take a
chance to put their brand in front of ad unfriendly content.

Now unlike television where ad inventory is limited, on the internet, it's a
buyers market. Even if the advertiser passes on something potentially good, he
can always find some other content to place on. Indeed what he is buying is
actually access to the people watching content, not the content and since the
same people on YouTube will probably watch other videos as well, why not de-
risk by automatically screening out everything potentially controversial?

------
socrates1998
YouTube is really weird, the whole reason I go there is to watch people who
don't have TV shows. If YouTube turns into Jimmy Fallon clips, then why even
have the website?

YouTube is being tempted by corporate money to turn it into another TV
channel. But as soon as the only good content you can get is made by NBC or
CBS, then why would people go to YouTube?

It's amazing that they seem to promote these TV shows when their own creators
get pushed to the side. I mean, talk about bad business.

They should have the Jimmy Fallons on youtube, but why wouldn't you push your
own creators? That's what makes youtube unique.

The small Youtube creators are the ones that should be protector and promoted
by Youtube and it seems like it is the opposite. They are ones hurt the most
by these changes to youtube's systems. It's like youtube just wants them to
leave.

Look at how they treated their #1 overall channel. He freaking left for
Twitch. Are you kidding me?

~~~
bigtunacan
"Look at how they treated their #1 overall channel. He freaking left for
Twitch. Are you kidding me?"

I'm a bit ignorant of both the YouTube and Twitch scenes. Who are you
referring to?

~~~
Obi_Juan_Kenobi
Presumably Pewdiepie (the largest channel by subscribers), but he's very much
still posting to YouTube. Not sure what that's about.

Twitch, incidentally, banned IcePoseidon because he was doing IRL streams and
attracting too much attention (getting threatened with guns) who moved to
YouTube's streaming format.

Twitch and YouTube are looking more and more like a little proxy war for
Google and Amazon.

------
minimaxir
The article underplays the success of Patreon in solving this problem; almost
every video creator I follow has set up one. It's a win-win for both content
creators and consumers.

I'm actually surprised more programmers/engineers have not set up a Patreon.
(in disclosure, I have one set up, but have zero expectation of it replacing a
full-time salary.)

~~~
falcolas
It's unfortunate that viewers have to pay twice for content - once via
Patreon, the second while watching ads.

~~~
tapoxi
My cousin is a YouTuber, and for him (and a few others) they follow a "Premium
Content" model.

Their YouTube channel has free, ad supported content to develop an audience,
and Patreon subscribers get that content ad-free, as well as extra content.

It's a decent model, but as I find myself watching more YouTube than
Netflix/Hulu these days, I really wish this concept was supported by YouTube
itself. They have YouTube Red, but that doesn't directly support my favorite
YouTubers.

~~~
jasonlotito
YouTube Red does directly support the YouTubers you watch.

~~~
rtkwe
Only somewhat. As far as anyone can tell, because afaik Google hasn't come out
and said precisely, all the money goes into a large pot and then the whole pot
is split by the portion of minutes watched with Red that for each channel. ie
in a simple case with two channels and 2 Red viewers if person A watches 20
minutes of channel A and person B watches 10 minutes of channel B in a month:
A gets 2/3 of the pot and B gets 1/3.

At least that's what seems to be happening as far as I can see from the
various articles written about it.

~~~
falcolas
Given how a video has to be monitized by the creator (i.e. set up with ads) to
get Red dollars as well, I'm curious if the changes to ad placement will have
a knock-on effect for Red dollars as well...

I'd hope not, but stranger things have happened.

~~~
rtkwe
I'm not clear on what you're saying.

------
nannePOPI
Big advertisers don't want to give money to indipendent content creators,
because they are a lot of people and much more difficult to control since they
own themselves and are not owned by corporations.

Think about the reaction pewdiepie had after being dropped by disney. If he
was a tv star it would have meant the end of his career. Instead it was just a
big "meh" and moving on.

Tv networks are easy to control. Networks are often owned indirectly/in part
by the very same people who ask for the ad space.

It is not about the value of the ad, it's about not giving too much power to
normal people and risk too much decentralization. Having so much voices it's
bad, globalist billionaires and corporations risk losing an amount of control
over population they don't want to lose, also because they often crave total
domination, both in politics and in the markets.

I know this could be difficult to understand, because many of us are sane
people and don't crave that kind of power. It's difficult to put ourselves in
the shoes of the people with the very big money, but they really do think in
term of having absolute power and control (in fact they did get there).

They think "okay, those people have an audience, they make people I can easily
control lose the audience, I need a solution", and they do it immediately.
Instead it's difficult to us to imagine being so big and rich, and yet feeling
treatened by some kids on youtube. It looks crazy to us, but that's really how
they think. Yet that's how corps and billionaires often thinks, because they
have a complete different mindset from normal people.

Of course I could be completely wrong, it's just an opinion, no math involved
so can't really prove it. Use your gut.

------
jszymborski
There is going to be a huge push for invite-only creator-centric platforms
like LinusTechTips' Float Plane. YouTube should have developed something like
this instead of YouTube Red ages ago.

~~~
SadWebDeveloper
Everyone hopes they do well but that project its going to crash and burn big
time or stay as another patreon, because what makes YouTube great is the huge
device compatibility it already has with several platforms, i can't be the
only one watching YouTube on my TV rather than my smartphone, tablet or PC.

~~~
mangodrunk
I exclusively watch it on my TV. I find it funny when they will talk about
information at the bottom, or click the links on the video which assumes a
less passive device than the TV. I've been subscribed to You Tube Red for
quite some time now as well.

------
djhworld
> His firm recently conducted a survey of 100 YouTube creators and said that
> channels focused on comedy and gaming experienced the sharpest drops in
> revenue last month compared with February. At the same time, creators in
> food, beauty and fashion, and family and parenting had increases. YouTube
> shares ad revenue with creators, who keep more than half.

I'm wondering it this is just a coincidence, or whether Youtube are trying to
shift advertisers to these "family friendly" channels, and away from anything
that might cause controversy.

------
Analemma_
Ad rates on the internet go in only one direction: down. They're OK to
bootstrap your "brand" but you'd better start looking for alternate revenue
sources immediately, whether that's merch, Patreon, whatever.

~~~
digitalneal
The classic "Musicians make money touring, not selling records."

This is why the automotive Youtube "celebs" are launching GTCon a convention
for car enthusiasts to get fans to meet them IRL and buy merch!

------
sotojuan
A channel I watch recently mentioned the reason it has been posting more often
(at expense of quality) is that YT algorithm heavily punishes infrequent
uploads.

You have to post frequently and build a community to be successful now.

~~~
ramy_d
As a consumer this is what irks me the most. YouTube is forcing indie creators
to make content at a scale and rate they just can't live up to leaving larger
productions (from tv) to migrate into this "new market" and the end-game is
that if youtube is just TV, then this discussion is a resounding "no thanks"

------
wshaef
No matter what kind of business you’re in, it’s wise to diversify your sources
of revenue. YT’s ad-focused monetization model disservices a variety of
creators for a variety of reasons, many of which are mentioned in this NYTimes
article.

Fan patronage in the likes of what Vidme (disclaimer: I’m a co-founder) and
Patreon are offering help creators diversify their revenue streams and make
content for their fans, rather than to please advertisers.

Google and Facebook aren’t well incentivized to offer this kind of model on
platform because they can make considerably more money allocating resources
towards optimizing ad revenue. Hunter Walk, an ex YT employee turned investor,
writes about this in this blog post: [https://hunterwalk.com/2017/03/26/why-
were-paying-for-conten...](https://hunterwalk.com/2017/03/26/why-were-paying-
for-content-these-days/)

------
nimos
A lot of the videos being demonetized don't seem any worse than what's on
daytime TV. It will be interesting to see if Twitch can capitalize on this and
start offering more options for non-live content. There already seems to be
some youtubers moving to streaming on there to try and diversify.

Youtube in general seems very poorly run lately. The app on my phone right now
won't play videos unless I update or wait 30 seconds. Who okayed that? You
might as well just tell me to fuck off. I'd happily use something worse out of
spite at this point. "Don't be evil, but really annoying is ok"

------
darksim905
Where are people getting that youtubers are undevalued? There are some really
dumb channels out there where people are making $10k a month, easy from a few
million views, with maybe one person helping them. There are many, many salty
people out there that they are losing money because they don't know how to
adjust to YouTube's algorithm changes. Sure, there may be some changes to
advertising & some people may claim to 'leave' the platform, but the reality
is, they make money. People just don't realize how much, even if many people
out there have adblockers enabled.

~~~
pc86
To be clear this isn't an algorithm change, it's giving advertisers a choice
on where their ads show up.

------
ben_jones
Why hasn't "Twitch but for {food, cars, cosmetics, etc.}" cannibalized youtube
yet? Twitch was basically a row boat that cut off Google's battleship by
firing a nerf gun across its bow. And they won. And they got acquired for
billions. Their product is great, I've learned a fair bit of design and
function just by looking at it.

I suppose gaming has a large user base that is quick to download and try new
tech. It also has a way of slow "dopamine dripping" its audience into spending
countless hours of viewership. Does this not exist in other genres?

~~~
sp332
YouTube specifically didn't like dealing with copyright complaints from video
game makers. People posting game streams got sick of their videos being taken
down from YouTube, and moved to Twitch. I don't see food or cosmetics having
similar pain points on the platform that would make room for a competitor.

------
hxta98596
I wonder if the opacity and significantly less money coming from YouTube (YT)
here is a bit of _" Headline bad - Bottom line pad"_

i.e. When a business encounters a major problem like this, fix the problem
ASAP but also use these opportunities to _try_ to add new profits (another
example of how this works: when Uber faced criticism about driver background
checks they used the negative publicity to add a $1.50 "safe ride fee" to
_every ride_ )

Q: _Could enough YT stars with 7 and 8 figure subscriber counts band together
and move to a different platform or get staked by a well-funded new startup to
create a YT competitor site?_...In theory sure anyone can try to compete with
a google product...but how realistic is this here? And if it's not realistic
then YT can cut the % it has been paying content creators and get away with
it.

I have no clue if ad revenue $ will return to previous levels for YT content
creators. I hope so. But I wouldn't be surprised if YT used this opportunity
to change how it has been doing things _and_ grab a bigger piece of the ad
money profit pie at stake. Either way this is a fascinating story: on one hand
YT has _almost_ a monopoly when it comes to this kind of monetized online
video content. On the other hand, YT is dependent on a pyramid of quite
powerful content creators to maintain the very monopoly they are subject to.

------
thejohnhenry
It's crazy to me how nobody, even the (usually remarkably candid) Youtube
stars themselves, acknowledge that this story is mostly about ad fraud. I
would expect people to be hush-hush about this in a normal industry, but
Youtube creators are usually really good about incisive analysis and being
open with their audience. Do they themselves not know?

~~~
EnFinlay
What fraud are you referring to? The type where ads are reported as clicked,
but advertisers don't see the user come to their site, or the type where
influencers don't tag when they've been paid to promote a product?

~~~
thejohnhenry
The first kind. Is the second kind also a big problem? I'm unaware of it.

~~~
Buge
[https://www.youtube.com/watch?v=_8fU2QG-
lV0](https://www.youtube.com/watch?v=_8fU2QG-lV0)

------
hasbot
A paranormal-focused channel with 470,000 subscribers used to earn $6000 per
month!? Wow! I had no idea there was that much money to be made.

~~~
mahyarm
It's easier to get a job in software engineering than to build something like
that.

------
profalseidol
Time for Brave and BAT

------
profalseidol
Time for SingularDTV

------
angry-hacker
Let's not forget YouTube relies on these people too. Yes, YouTube has near
monopoly in the area right now, but there can always be changes. These
influencers can bring a new site overnight 500k new users if they want to.

And the whole advertisers don't like that content is stupid and complicated. I
can't remember the name but some popular guy made series about serial killers,
no NSFW pictures but probably something you wouldn't your kids watch. Most of
his videos were banned completely. Yet we have a shitload of rap music that
sings literally about killing people making money with big brands. Go figure.
This song gives me nice Amazon.com ads:
[https://www.youtube.com/watch?v=vJwKKKd2ZYE](https://www.youtube.com/watch?v=vJwKKKd2ZYE)

~~~
Obi_Juan_Kenobi
I'm really hoping for YouTube (Google) vs. Twitch (Amazon) competition.
YouTube is clearly moving into Twitch's market, and there are signs that
Twitch is looking to expand into non-streaming content.

------
soared
Classic HN comment. Only education-focused content is of value. There is no
value in entertainment, especially when it is for children and plebs. When
they get off work, why don't they view the science videos instead of lowly
clickbait?

There are reasons those videos exist, get off your god damn high horse
komali2.

~~~
tw04
There's also a reason why we've got a president who blatantly lies and yet
half the country can't be bothered to do a simple fact check.

So no, don't get off your high horse. Encourage everyone you know to spend
more time educating themselves for entertainment and less time wasting away
watching pointless drivel - whether it's on YouTube or broadcast tv.

~~~
sillyquiet
You are encouraging proselytization, which is just as intrusive and annoying
in non-religious contexts.

~~~
tw04
If you find people encouraging you to better yourself through scientific
education "intrusive and annoying", you need to take a long hard look in the
mirror. Quite frankly I'm not even sure why you'd participate on this site
other than to troll.

~~~
sillyquiet
yep, definitely intrusive and annoying - I don't need other people telling me
how, in their opinion, I need to better myself. What an incredibly dumb
comment.

