Will’s Unpopular Opinion – The YouTube Bubble – 9-2-16

Are we living in a YouTube bubble? Recent events may suggest we are, and it may be about to pop.

A few weeks back, I wrote an article suggesting that the longevity of internet shows and podcasts may be in question, and now it looks like it may be time to cash in on those triple-A tranches (assuming you saw this coming). YouTube recently sent out emails to many of it’s top tiered online talents, stating that it would no longer be paying it’s contributors for often lewd and off-color commentary and/or content. Which makes reporting the news……difficult. I also use the word “top tiered” because it feels as though these YouTube stars are systematically being targeted as a way to usher in a new paradigm shift. A more modernized approach when it comes to doling out content may be in the wake of a massive stir-up amongst the digital masses. Some of these internet stars are making deals to cozy up to larger name brands. We saw this with ‘Screen Junkies’, as major personalities such as the Jeremy Jahns, and Chris Stuckman signed content exclusivity contracts. It’s happening with other websites and online personalities as well. Everyone is rounding up and preparing for the upcoming onslaught that will be the beginning of the end for the opinionated reactionary generation. Which in turn, may end up steering the medium in a a new direction by refocusing on how we consume our online media.

Earlier this week, internet star, Philip Defranco, received one of these emails stating that his channel’s monetization would be shut down immediately. The reason? His content wasn’t deemed appropriate for the ad-sales attached. Defranco defines this as a type of “censorship”, which although I believe is true, becomes worrisome for him and many others who make a living online through their no bullshit assessments of pop-culture issues. Claiming “censorship” implies that it’s a deliberate move by Google (YouTube’s parent company) to curate their content. Although, this is stated clearly in the “terms and conditions”, for YouTube to suddenly and almost arbitrarily enforce such a rule seems purposeful; insinuating that the surreptitious fashion of undercutting it’s heavy hitters, eludes to a possibly more backhanded play by Google in the long run.

So how did this happen? And why? I have a theory.

It was reported recently that close to a million cable subscribers cancelled their TV packages in this past quarter alone. Obviously this has many higher-ups scrambling to find a fix. They are losing out to voices all over the web. Audiences have become accustomed to getting their videos for free. I’m not just referring to your basic Netflix watcher with their parents password, but anyone who watches YouTube videos with an ad-blocker in place is essentially getting that content free of charge. ComCast, Optimum, Cox, they all know this, and are working diligently to offset their currently diminishing bottomline. Currently 40% of IGN’s viewership uses ad-blockers. This is troubling to larger web based companies, because a tech-savvy audience is less likely to adhere to the commercials and banner ads set before them; suggesting that the possible “fix” may be to wipe out ads altogether. But how do you do that?

Last year HBO entered into the online subscription based service, and recently Hulu announced that they would no longer be allowing free memberships with commercial filled content, but rather, all subscription models would now be pay based only. Hulu also announced an online live streaming channel for 2017 with ongoing back to back programming. Kinda like… a TV station… If that wasn’t evidence enough for an obvious shift in online structuring, consider that ‘YouTube Red’ (YouTube’s paid subscription service) has risen to 3% of the online viewing market since it launched a year ago in October of 2015. This may seem small, but is actually sizable when you consider that ‘Sony Vue’ on ‘Playstation’ garners 1.4%, and ‘Sling TV’ has a healthy 1.5% of the market; which suggest that a new business model may be around the corner.

Now, all the phases are set. First you set up alternate viewing options with an a la-carte subscription focused monthly pay model for individual websites. Then you gather up the famous, successful YouTube stars and offer them deals to work under a more corporate, structured umbrella. After, you drop monetization for straggling left behind YouTube stars (that offer a potential threat via counter programming), attempting to kill off the competition. Finally, as the leftover YouTube stars and channels fall, people desperate for content are left to subscribe to channels for a now jacked-up premium price. (Oh I forgot that part; expect all of these services to raise their subscription fees by %20-30 by 2020.) And then: checkmate. Not only has the bubble burst, but it’s been deliberately popped, and pray being in it, didn’t support your livelihood.

But what if your income is dependent on your YouTube revenue stream? Partner up, and fast. Millions of subscribers don’t mean nearly as much as back-end corporate funding and sponsorship. Sites like ‘SModCast’ won’t be hit, but rather could flourish as a result of such an undertaking. It’s the little guys doing the “Facetime movie-reviews” and “trailer reactions” that will lose their footing first. What’s also noteworthy, is the then prescient outcome for many of these tube-talkers. Sure, many of them do this for fun, with little worry is to whether or not they’re getting paid through viewer engagement, but for others who have been doing this for years and have no other skill sets, it is going to be disastrous. Not ‘Housing Bubble’ bad, but something tells me BestBuys and Apple stores won’t be hard-up for help in the coming 5 years.

You may ask why Google would do such a thing? They make millions of dollars worth of ads off of YouTubers right? Well, if the rumor is true, and finding advertising for shows that are either controversial or consistently spit hate (Tomi Lahren, I’m looking at you.) is becoming a chore, then millions of dollars worth of ad-sales may seem unimpressive compared to the possible billions in the subscription market. Continuing as is, may be a bigger headache than it’s worth without overhauling the process. Also, what makes money online is engagement. Things like: reposting, commenting, favoriting, watching past the 50% point, even just pushing a button on the page. Engagement is how brands stay alive. It’s not just because someone got 3 million views that pays the bills. This then suggests that the power is still at the will of the people. Subscriptions don’t rely on the virility of YouTuber’s to justify their existence. And even though Google pushing the red button and nuking half of it’s content providers may seem foolhardy, it may be a safer alternative than letting YouTube get further out of hand, and being forced to play catch-up down the road.

And on that note, it could effectively mark the end of the digital revolution that started in the early 2000’s (with digital camcorders and editing softwares popping up monthly.) A shift towards less feature happy tech devices may surface, as documenting your day-out could become obsolete if you have nowhere to share it. I’m not saying that people would no longer be interested in creating content, but they may become bored with watching it. We just had 10 years of “cat videos” and “epic fail compilations.” There’s become an over abundance of “classic movie-reviews” and “video-game play-throughs”. People may move on and look to other newer sources for their cheap time wasting recreation. And that’s something that is just part of the natural progress in any medium. It doesn’t even require the guiding hand of a powerful online entity; trimming the fat with a mass online culling. Over saturation could just be the extra push the Google-lords need to help make that transition to solely paid subscription based channels.

So, is it too late? It depends where you stand when the dust settles. Anyone and everyone who’s apart of the internet industry knows how fast it shifts. YouTube doesn’t exactly offer a 401k, so expectations must be set ahead of time, and a strategy on how to survive into the next stage of internet stardom shouldn’t be postponed. To this date, the list of YouTube stars or personalities that have successfully transitioned upwards and outwards of the thumbnails that line the internet’s wannabe “Hollywood Squares”, is close to nil. A few have tried. ‘Smosh’ did a movie that bombed. Justin Bieber is…..well….Justin Bieber, but for the most part, the days of dreadful “homemade music-videos” and “over explanatory tutorials”, may be behind us; unless people seriously want a Netflix option to watch “product unboxings”..

-Will Valle