YouTube is getting worse and that's because it has to it's not just you
imagining things YouTube is forcing people to turn off their ad blockers
recommending bad content removing user feedback allowing progressively worse
advertisers on their platform and trying to keep up with every new trend in video
I hate to be the one to tell you but it's not going to get better from here I
get that they're not removing the button apparently the button still going to be
there but it's not going to do anything uh YouTube has confirmed that it is
experiment with blocking some users with ad blockers enabled from watching videos
on the platform the update from YouTube is that the dislike button is staying
but the dislike counts will now be private this video is not the billionth
episode of YouTuber complains about YouTube instead I want to look at the
four business fundamentals driving decisions that is already making the
platform worse for creators and viewers my own controversial opinion on this is
that YouTube has become trapped actually paying creators too much which which is
a really dumb thing to say as a full-time YouTube Creator but by the end
of this video you might just agree with me YouTube has monopolized the online
video sharing Market the runners up Tik Tok Facebook bbilly and twitch don't
even come close in terms of total engagement of these companies only meta
Facebook competes with YouTube's core offering of user generated video on
demand but that is secondary to Facebook's core functionality of keeping
up toate with what the boomers are angry about all of the other platforms operate
in a niche like short from content on Tik Tok live video streaming on Twitch
and servicing the Chinese market for Billy Billy these sites don't compete
with YouTube but YouTube does compete with them months after Tik Tok started
gaining market dominance YouTube reacted by launching YouTube shorts and the site
also competes directly with twitch for live stream content having monopolized
the market for video streaming moving into these other niches was good but it
created the first reason why YouTube has to get worse it's doing everything badly
instead of one thing well despite its dominance there are certain video Cate
ories that YouTube has failed dramatically to break into the biggest
missed opportunity is premium paid content YouTube operates by making a
tiny amount of money off a massive amount of people and that means the
content on their site is necessarily lowbudget the largest creators on the
platform May wow viewers with how much they spend on their videos but even Mr
Beast is only creating something that is akin to a mid-budget reality TV show he
also produces less content than a similar show that would air on
traditional media Outlets because his videos are shorter and relas less
frequently paid subscription streaming services or cable TV stations bring in a
lot more money on a per viewer basis than YouTube because everybody that uses
their platform pays for it a webbased service like Netflix also has an expense
advantage over YouTube on their content side Netflix has to pay more to produce
or license its content where YouTube gets it for free from people uploading
to their platform but in return Netflix has a more curated library of high value
content in a Bloomberg feature from 2013 the company revealed that it compressed
its entire library of movies and TV shows into a 2.75 petabyte Master
catalog that's 2,800 times a terabyte which is how much storage most high-end
personal devices have since that report there's been no reliable updates to the
actual size of the Netflix library but the number of movies and shows offered
has actually shrunk since then compression has gotten better and
Netflix has not rolled out any new features like higher resolution that
would demand more storage YouTube has that much data uploaded to its servers
every single day Netflix and other streaming services pay for their content
through licensing deals YouTube pays for its content by handling billions of
videos that will never get a single view so they can keep the tiny fraction of
videos that do bring in Revenue making a little bit of revenue from a lot of
people is not as scalable as making a lot of revenue from a few people despite
its Undisputed market dominance YouTube makes roughly one quarter of the revenue
of Netflix which operates in a market with roughly a dozen strong competitors
there are no new people left to sign up to YouTube Every body that wants to
watch videos on the internet will already use it unless they live in a
country where their access is restricted when billions of gigabytes worth of data
are being uploaded on servers every day the only thing the company has left to
do is switch from getting more users to getting more out of the users they have
the first way they did that was by offering more options now on YouTube you
can watch short form live streams and pay-per-view movies in addition to
regular user made videos on demand that people typically came to YouTube to
watch there's only so much space on the site home screen and recommendation
sidebars so all of these options are leaving less room for the stuff that
people usually came to YouTube for with more competition than ever and less real
estate on the site to fight over even respectable creators have had to resort
to clickbait thumbnails and videos that they know will do well the site is also
fighting itself for parts of your screen that actually makes it money for those
of you brave enough to use YouTube without an ad blocker the site has been
trying to push larger banner ads into the limited screen space it still has
left only splitting people's attention even more for those of you who do use an
ad blocker don't feel too smug just yet because it's time to learn how money
Works to find out why YouTube has to get worse this week's lesson is sponsored by
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to discover better coffee YouTube does have a premium subscription service that
cost $13.99 a month which is more expensive than the cheapest Netflix plan
which is $6.99 a month with ads but cheaper than their standard plan which
is $1,549 a month which would be the most fair comparison because one of the
biggest perks of YouTube premium is the elimination of ads YouTube premium is
actually a great service and despite a common misconception it still helps
creators because Google splits premium Revenue with creators the same way they
split ad Revenue but it remains very unpopular with less than 1% of users
paying for a premium subscription to use the site because people are less likely
to pay for something they are used to getting for free and that's why the
second Reason YouTube has to get worse is all about the content most of the
content you watch will be made by the top 1% of creators according to the
analytics firm PC less than 12% of videos uploaded to the site get more
than 1,000 views and only 77% of videos uploaded get over 100,000 views the
report also discovered that those videos which accounted for less than 1% of
total uploads received 75% of all viewership creators making these videos
consistently are doing it as at least a full-time job and some make it a full-on
business with employees helping them to make videos the people you watch most
are financially dependent on your viewership so when the platform they
built their a audience with Chang its business strategy from getting more
users to getting more money out of existing users the creators had to
follow suit advertisers can now more carefully select exactly who they want
to Target with YouTube with their ads but since YouTube through a Google
account doesn't actually collect much information about their users directly
they have to figure it out based on what they are watching certain safe
Advertiser friendly niches now attract a lot more money than they have ever
before as YouTube becomes a more mainstream advertising platform but a
lot of creators and other content niches are getting no no Revenue at all oh man
you don't have to feel sorry for me but my other channel how history Works does
really well getting about 50,000 views or more per video but since most of
history is pretty dark and advertisers don't want their brand associated with
dark content there is no way that anybody would be able to live on the
revenue from that channel Charlie Munger the vice chairman of Berkshire hathway
said that in business if you show me the incentive I will show you the outcome
YouTubers have been incentivized to make safer longer more Advertiser friendly
content so they have reacted by doing just that the channels that do make this
kind of content have been greatly rewarded with more lucrative Revenue
shares and more valuable sponsorship deals this has enabled top creators to
not only make content by hiring bigger teams but also make content with a
larger budget whether a bigger budget means better content I will talk about
soon on the other hand channels that don't make this kind of content won't
make as much money and won't be able to create content as a full-time job and
they certainly won't be able to hire people to help make more videos so this
naturally led to less of the kind of cont content that YouTube first became
famous for instead of making the risque and unrefined videos the creators that
drive most of the engagement on the site have been rewarded by making copies of
the cheapest programming you would see on television reality shows talk shows
and news some of this content is very good and it's impressive how far some
creators can stretch their budget but they still don't have the same resources
as a program with dedicated funding a lot of content has become the worst of
both platforms they have the safe formulaic nature of programed Television
but without the budget ask yourself honestly if YouTube wasn't right there
for free on your computer or in your pocket how much of the content that you
consume would you actually sit down on the couch at the end of the day and
watch if you are brave enough share your answers in the comments and don't worry
my feelings won't be hurt if you wouldn't tune in to me weekdays at 6 in
addition to pushing content that is easier to run commercial breaks on
YouTube is making it harder to avoid those commercial breaks all together ad
blockers are the most cost-effective way to browse the internet ad free but most
Legacy Media companies like news Publishers have started cracking down on
this practice by introducing ad blocker blockers YouTube which is owned by one
of the biggest tech companies in the world could easily introduce the same
restrictions to increase their revenue per user but they haven't yet for two
reasons less people than you would expect are actually using ad blockers
according to multiple surveys run by Business Insider intelligence HubSpot
and CNET only about 40% of Internet users are running an ad block extension
on their browser for YouTube it was easier to Simply push more ads to the
people that were not using ad blockers the first reason is that it reduced
audience push back and made it less likely that another competitor would
emerge to host the audience that wasn't willing to watch ads from a commercial
perspective those viewers may have had a negative value but maintaining a
monopoly on content meant maintaining a monopoly on an audience as well the
second reason was because of the YouTube ads algorithm you have all heard of the
YouTube algorithm which decides which thumbnails you were displayed but you
might not know that what ads get shown to you goes through a similar process
YouTube doesn't make money on ads until one of three things happens the first
thing is that you watch an ad for more than 30 seconds the second is that you
watch the entire ad if it is less than 30 seconds long or the third is if you
actually click on the ad if you skip the ad as soon as you can YouTube does not
charge the advertiser and no money is paid the YouTube ad algorithm has a very
simple objective maximize Revenue that means it has to show you the ad that is
paying the highest rate that is most likely to get you to watch the whole
thing all the way through so if you are wondering why ads have become so
obnoxiously attention grabbing recently now you know viewers that use ad
blockers were a small part of the audience that would make a lot of noise
and also be the least likely to engage with ad content in any meaningful way so
there wasn't much of an advantage to Banning their use but now that YouTube
is basically unchallenged it's starting to change that policy by slowly blocking
ad blockers in test markets before it rules it out worldwide this is all a
part of what the science fiction author and journalist Cory Doctorow coined as the
inchidification of online Platforms in an Infamous article he wrote for Wired
at the beginning of this year according to Doctorow new platforms offer useful
products and services at a loss as a way to gain new users once users are logged
in the platform then offers access to the user base to suppliers at a loss and
once the suppliers are locked in the platform shifts surpluses to
shareholders in shifi platforms which act as intermediaries like YouTube does
between content creators and viewers can functionally act as both a monopoly on
services and a monopsony on customers as high switching cost prevent either from
leaving even when Alternatives technically exist Inu ification has
happened to every new technology platform that offered a service that
seem too good to be true and Senior Management at YouTube has a fiduciary
duty to shareholders to make it happen here too a controversial solution that
is going to win me no friends amongst my fellow content creators is just to pay
creators less currently creators that are a part of the YouTube Partner
program get 55% of net revenues from ads displayed on their long form videos and
45% of the revenue from the short shorts adpol pro rated on their share of views
YouTubers are more stuck on this platform than viewers and if people
think of it as a place to share videos that they are proud of instead of a
place where they can get rich it'll greatly improve the content quality on
the platform it's that slow and steady approach that saved another one of
America's most powerful companies in the world from not only one but five Market
crashes only where YouTube has only been around for 18 years this company has
survived for 154 so go and watch my new video over on
how history Works to find out how Goldman got it Sachs and remember if you
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