YouTube Red: The Rich Get Richer (with Video)

This is my second attempt at talking about this because as YouTube has been so bad at communicating the particulars of their new YouTube Red service, the information I had to work with has changed several times. Hopefully what we know now is final.

After many long delays and supposed rejiggerings, YouTube Red is almost here. Rumours of a paid, ad-free version of YouTube have been circulating for a long time and I think this was inevitable. It certainly makes sense, given that use of AdBlock is skyrocketing, robbing both YouTube and content creators of the pittance they get already because sitting through a 30 second ad for a half hour video is apparently too much of a burden. In case you don’t already know, I’m not a fan of AdBlock. The rapidly growing use of tools like it are causing advertising rates on YouTube to plummet since marketers can’t guarantee the exposure. This is causing those who rely on ad revenue for a living to see their salaries drop in a space that was already hyper competitive.

Lots of people say they’ll pay for the content they like if they just don’t have to watch ads. That’s bullshit for 95% of those people but the 5% who are honest about it can be enough to sustain things. Many popular YouTubers have already taken advantage of this by relying more and more on crowdfunding services like Patreon to offset what they’re losing in ad revenue. YouTube’s very aware of this and is trying to offer something that still keeps them cut in on the action, while also overcoming the bigger issue. It’s a smart business move but once again, it’s another in a long line of initiatives from the company that are designed around seeing the rich get richer while the little guys suffer.

From the consumer side, I don’t really know how much value YouTube Red offers for $10 a month beyond ad-free viewing while still supporting channels. You get the ability to download videos on your mobile device and have them keep playing in the background (you can do both of these easily with third-party apps) and you get access to exclusive shows being produced by YouTube with some of the most popular personalities, most of which look like reality garbage that only hardcore fans will care about. I’m sure they’ll expand their offerings as the service goes on but right now, it’s clearly a product for early adopters only. For no good reason, it’s not available in Canada so I can’t even test it for myself. If you do decide to try it out, I’d love to hear what your experience is like.

Where the real hullabaloo has come from is the creator end of things. YouTube didn’t tell anyone but the biggest and most popular people about the back end workings of Red whatsoever. I’m partnered with one of the biggest networks on YouTube and they were trying to tell partners to be calm and that they were working as fast as they could to find out details because they weren’t told anything in advance. YouTube has still not officially relayed any information to creators and most of what we do know now has come from bigger YouTubers like TotalBiscuit and Boogie2988 who have the means to get details and were kind enough to share them with the rest of us. At first, I was laughing at how a company as large as Google can still be so inept at communicating with their partners but the more I’ve thought on it, the more I’ve come to think that they knew exactly what they were doing and simply because frankly, like everything else YouTube does, Red is a bad deal for all but the big guys.

TotalBiscuit relayed some initial details via an audio blog. The idea behind how YouTube would share revenue from Red with creators was going to be based on watch time on a per user basis. The math worked something like this:

  • YouTube Red subscriber pays $10 a month so we start with that.
  • Google takes their cut off the top (likely 40%), leaving $6 a month.
  • That $6 a month sits in a pie that is divvied up by how much content the subscriber watches and how much of each piece of content they watch.
  • If they consume a ton of video, the overall pie gets smaller but the pieces of that pie are handed out based on minutes watched. So if they watched a large amount of your content, you get more money.

This model is actually pretty awesome for people like myself–and TotalBiscuit for that matter–who make longer videos. One of the things I kept getting told when I initially complained about my channel’s slow growth was that my videos were too long. I tried to make shorter ones that didn’t work out and I decided that I didn’t want to compromise my creative ideals because so many YouTube users have the attention span of a meth addicted hummingbird. That’s definitely hurt my growth but I decided it was worth it.

The current system doesn’t reward watch time as much as it does views. Longer watch time can get you higher in search rankings but since the ads are usually displayed right at the start of the video, once that’s happened, the money has been made and it doesn’t matter monetarily if someone watches your whole video or clicks off after a minute. Under YouTube Red, those who spend the time to make engaging, longer videos will actually be rewarded for their efforts by more revenue. This sounded like a boon for people like me and I was really excited by it.

Then we learned how it was actually going to work.

The following day, TotalBiscuit tweeted that the formula was actually going to have one significant difference from what he was originally told. Instead of the revenue pie being created per user, it was going to be one massive global pie. So all YouTube Red subscribers would be pooled together and then that money would be handed out using the same formula I described above but based on the total minutes watched by every Red subscriber globally, not individually. Why does this one change make YouTube Red go from something cool to something awful for small channels? Simple: It once again gives the most benefit to the biggest channels that are already popular.

In addition to getting preferential treatment in search rankings, suggested videos and many other ways, YouTube Red’s global revenue pie now ensures that the channels that get more views and produce longer videos will see the greatest benefit. If you have a YouTube Red subscriber who doesn’t subscribe to a ton of channels and tends to watch more smaller ones than big ones, their money goes a lot further. With everything lumped together in global aggregate, the bigger channels who get more views will naturally get a bigger piece of the pie because they get more minutes watched simply by having a larger audience. This removes the ability of YouTube Red subscribers who are dedicated to smaller channels to speak with their wallet because it combines their money with everyone else’s and turns individual contributions into a big mainstream blob. While smaller channels likely still will earn more from this than they would from ads alone (which isn’t saying much), the bigger channels will unquestionably get the brunt of the benefit.

This sucks. YouTube has more and more started to act like Hollywood where they only care about supporting the stuff that’s already popular and leaving the rest to fend over the scraps. This is a horrible way to grow their business in the long-term and reeks of short-sighted “public company thinking.” Those at the top of the YouTuber ladder are already wealthy and continuing to grow more so simply because their base is big enough that it’s continuing to multiply its own. They don’t need the help, the little guys do and we’re once again getting shafted. I have no desire to make a career out of YouTube but I would like my channel to earn back at least a little bit of the thousands I’ve invested in it and YouTube Red doesn’t look like a path to that. This move by YouTube doesn’t surprise me but it ultimately doesn’t hurt me much. The channels with a few tens of thousands of subscribers who are trying to grow into something that they maybe can turn into a career? Those people are getting completely screwed by this. They’re small enough that they can’t easily get a decent size Patreon going or be able to sell merchandise or get brand deals but they’re also big enough that they could grow into something major one day.

YouTube is a brutal career full of hard work, lots of business pressure and toxic communities. I personally don’t think it’s going to be too long before some of the few who have made fortunes from it decide to peace out and go enjoy their money. Someone has to replace those people if YouTube wants to survive and right now, they’re doing nothing to foster the next generation of TotalBiscuits, Markipliers and PewDiePies. Their rigged system is making it clear that if you decide to do YouTube, you better only plan on doing it for fun and that you basically have no chance to make a career of it because the ones that already made it are the only ones YouTube actually cares about. A slew of potential and valuable YouTube personalities are giving up or not starting at all because of this and these latest revelations about YouTube Red are just going to further that.

Creating a program or system where some smaller channels can get some better exposure would be trivial for YouTube to do but instead, they continue to come up with more ideas to milk as much as they can out of the same handful of people for as long as possible. Isn’t that what people have been complaining is wrong with AAA gaming and Summer Hollywood blockbusters for years now? This isn’t how you make things sustainable and it definitely isn’t how you grow the next generation of big stars.

Like many other YouTube changes like the Google+ comments integration and Content ID system, there’s a lot of outrage and confusion right now but those things ended up settling down and weren’t as awful as everyone thought. Maybe that will happen here too. We won’t really know how well YouTube Red will benefit small creators until the money starts to come in. I hope it works out better than expected but based on the math I’ve seen so far, I’m not confident.

At one brief period, I thought I might want to make a career of YouTube but I abandoned that idea a long time ago. This is going to remain a fun project for me and honestly, I think it’s better for that. However, there are tons of people out there who could be the next big, valuable thing for YouTube and many of them are giving up because of this rich get richer system. I hope YouTube wakes up soon because they’ve got a bubble on their hands.

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One Response to YouTube Red: The Rich Get Richer (with Video)

  1. Pingback: My Bold Predictions for 2016 | Geek Bravado

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