YouTube has grown up a lot since the video hosting platform was first launched in 2005. Its high-quality streaming and intuitive interface helped it grow much faster than rivals such as DailyMotion and Vimeo. With Google’s purchase of the site in 2006, YouTube firmly established itself as the dominant force in online video. A whole world-spanning culture has sprung up around YouTube’s content, with content creators from North America to East Asia making big bucks through its advertising and revenue-sharing options.
In recent times, YouTube’s rapid ascent has been rocked by a few scandals involving content shared on the site. PewDiePie, one of the platform’s most popular vloggers, attracted outraged headlines thanks to an ill-considered stunt in which he hired unwitting participants through Fiverr to hold up offensive signs on screen. Even worse headlines plagued YouTube in the British tabloid press following terrorist atrocities in Manchester and London, with publications such as The Daily Mail and The Sun noting that advertisements for big-name brands appeared alongside videos promoting terrorism.
Advertising is the primary source of income for YouTube. Google and YouTube’s parent company, Alphabet, doesn’t disclose precisely how much revenue each of its subsidiaries makes, but it’s thought that YouTube generates around $10 billion a year, with most of that coming from advertising revenue. It’s therefore unsurprising that YouTube has been keen to minimize the damage these scandals have done to its brand. The most important step YouTube has taken is to allow advertisers to select the type of content their advertisements will be associated with. This has huge consequences for both advertisers and content creators.
The biggest impact has undoubtedly been felt by content creators in niches which brands would rather not be associated with. The range of content which falls into this category is huge, but basically any content which could be deemed offensive will find it more difficult to generate ad revenue going forward. This includes popular content curators who swear freely in their videos, such as the aforementioned YouTube superstar PewDiePie.
This could also have consequences for music videos for content which would have a ‘Parental Advisory’ sticker slapped on it if it was a physical release. Creators of this type of content may want to engage in self-censorship and release ‘clean’ versions of their videos to avoid being cut out of YouTube ad revenue.
The Pros & Cons for YouTube’s Future
YouTube has taken steps to restrict the types of content which brands are associated with to reduce the impact of negative headlines on its brand. The obvious benefit of this is that it will legitimize YouTube content with the kind of big-name brands who spend huge money on advertising campaigns. Those who are able to thrive in the more restrictive climate of YouTube content curation in the future may find their income increasing.
There is an inherent risk to this strategy, however. YouTube’s most active users and content curators are young and tech-savvy. YouTube has attracted a youthful audience and replaced watching television for many millennials. The problem YouTube may face is that this audience is the ficklest of demographics. Rupert Murdoch’s News Corp. found out how fickle this demographic can be when it purchased Myspace for $500 million in 2005. Almost as soon as the deal was finalized, a mass migration to other social media platforms began. Within a year, that $500 million investment had been rendered almost worthless. While Facebook is now the undisputed king of social media, it faces a similar dilemma. As Facebook has attracted an increasing number of older users, alternative social media platforms such as Twitter, Instagram and Snapchat have eaten into its popularity with younger users.
YouTube doesn’t seem in danger of suffering a similar loss of users to Myspace anytime soon. DailyMotion is far behind it in terms of popularity, with no real active community to speak of. Vimeo is its closest competition in terms of being a popular platform among content curators, but it is still far away from supplanting YouTube as the premier video-sharing platform. Vimeo actively discourages advertising within videos shared on its site, meaning it will probably never be a viable alternative to YouTube in terms of providing income for content creators.
The internet and social media are always evolving though, so even if YouTube isn’t in danger of losing users yet, a new platform could come along and eat into its user base at any time. If big-name content curators begin moving to other platforms in large numbers, YouTube’s new restrictive advertising policy could cause it big problems.
Product Placement: An Alternative Source of Ad Revenue
While YouTube’s new rules make it harder for creators of certain types of content to directly share in the site’s ad revenue, it has no impact on individual content creators’ ability to generate income through direct advertising and product placement. Many popular YouTubers already work directly with brands to promote products and services in their videos. The new ad policy may result in this becoming more prevalent.
Product placement has gradually become a huge source of income for mainstream film and television productions over the past few decades. Savvy brands already recognize the potential benefits of getting popular YouTubers to feature their wares. A direct endorsement to an engaged audience can benefit a brand a lot more than airing advertisements at the start of a YouTube video.
Could This Be a Golden Opportunity for Advertisers?
With popular content creators in certain niches being frozen out of YouTube’s ad revenue, an opportunity exists for brands to target very specific segments of YouTube’s user base. Content creators who are adversely affected by YouTube’s new policy are already gaining a lot of sympathy among their dedicated followers. Brands which are willing to step forward and engage directly with these YouTubers could earn themselves a lot of goodwill in highly targeted niches.
The advice to brands would be to search for the type of content that their target demographics are most likely to be watching. If they reach out to content creators in these niches directly, they will probably get a positive response. Brands can achieve a prominent and powerful endorsement for content creators for a fraction of the cost they would pay dealing directly with YouTube.
Conclusion: Risks and Opportunities
On balance, it seems unlikely that YouTube’s most active users and popular content creators will migrate to another platform in the immediate future, as no real viable alternatives currently exist. As with all changes in the ever-shifting social media landscape, the brands and content creators who act quickly to adapt to change are those most likely to benefit from it.