The YouTube Paradox And The Off-YouTube Solution

Posted: June 17, 2013 in GT, Youtube

When it comes to video distribution on the Internet,
there are few solutions better than YouTube. The
company is the No. 1 place to search for and find the
video content that viewers want to watch, and for
creators it provides a size and scale of audience it
can offer videos to. That said, a growing number of YouTube creators and
multichannel networks are beginning to grumble about
the revenue share that the site has with its partners
and their inability to monetize their huge audience of
viewers on the site. And, increasingly, they’re looking
for off-YouTube solutions to better distribute and monetize their videos. The problem is that distributing video yourself is
costly, whereas distribution on YouTube is free.
That’s one reason that so many creators got started
on the platform in the first place. With the shrinking
cost of cameras and editing equipment, as well as the
ability to upload and distribute their content for free, YouTube had an incredibly low barrier of entry for its
creators. As a result, the platform attracted a huge number of
talented creators who have, in turn, attracted millions
of fans. For those who weren’t part of the traditional
TV or movie ecosystem, that created an
unprecedented opportunity to get paid to do what they
love — make videos and talk to fans. For many first- time YouTube partners, the additional income was
likely a nice bonus for a hobby that they never
expected to get paid for. But things have changed over the years. Those same
creators now have big audiences and have become
their own big brands. The problem is that they aren’t
getting compensated very well for all that. At least not
as well as they’d like. As the YouTube ecosystem has grown up, it’s gotten
a lot more professional. With more professional video
equipment, more professional editing equipment,
more highly skilled creators. Huge networks have
popped up — like Machinima, Maker, and Fullscreen
— to help creators improve their content and reach. Some provide tools to boost views and reach new
audiences, some help with production, some help
improve monetization. But it’s become increasingly clear that these
businesses will have to find other ways of making
money — YouTube can’t be their only solution. That’s
in part because YouTube takes nearly half of all ad
revenues from partners. Not just that, but the typical
YouTube ads have relatively low CPMs — all of which means that revenues aren’t as high as they
would like and margins end up being constrained. The problem is that there’s no other solution for easily
reaching the size and scale of audience that YouTube
offers. For all the talk of some networks creating a
YouTube alternative, it will be difficult for them to
move the audience over. Not just that, but they won’t
benefit from all the network effects and video search advantages that they get from being on YouTube. With that in mind, a growing number of YouTube
partners are looking for other monetization options.
Some are building apps for mobile phones, tablets,
and connected TV devices. The idea is that they’ll be
able to better these apps through ads, when
compared to the revenue share that comes from YouTube’s website and mobile applications. They can
also own the user experience and have a more
engaged connection to their biggest fans. That is, they’re not looking for a replacement for
YouTube, but a way to augment their YouTube
audience and monetization through other channels.
Partners like VEVO, for instance, have been putting a
lot of effort behind owned and operated apps for
various devices. And more will likely follow. It might be pricey to build out their own apps, but at
the end of the day, these networks will benefit from
additional distribution outlets. It’s not to become
independent of YouTube, but to become less
dependent on it.

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