The YouTube Rant

Forewarning:  This post is long, and it's mostly a rant about YouTube.

When you think of a video website the first one you'd think of is usually YouTube, unless you have a more specific interest which you know is better catered to by a third party site.  YouTube started out as a site that had community in mind, much like many other sites that incorporated social elements.  As with Facebook however, I think ultimately the growth of the site as a whole has had a negative effect on the ability to build communities, because they, by definition tend to be self contained or clearly defined, whereas, YouTube and other websites like it have been steadily moving ever closer to being generic.

A number of people on YouTube have made very successful careers which they built up through the site, but those people are few in number compared to the site's user base.  While I have spoken in the past about the 90-9-1 rule in relation to online communities, that doesn't even apply here because the number of people who have been successful through YouTube is a lot less than 1% of the user-base.

Looking at the Top 100 YouTube channels by subscriber count if we look at these 100 channels and strip out the VEVO channels, record companies, TV shows, and Special channels that aggregate content via tags, then we are left with 37 channels that have more than 10 million subscribers.

YouTube doesn't say specifically how many users it has but it says it has over one billion so if we use 1bn as the marker, these 37 channels that have over 10 million subscribers represent 0.0000037% of the site's users.  If they have 10 million subscribers, those 10 million subscribers represent 1% of the site's user-base.

When it comes to those 37 channels, there are a number which have stagnated in terms of growth.  I encourage you to explore SocialBlade, their statistics are extensive and provide fascinating insights into some of these channels.  There are a handful of channels in those 37 which are continuing to grow, one or two at a rate of more or less 1 million new subscribers per year.  While all of this sounds promising, you have to remember they are not paid based on subscriber count, they are paid based on a number of factors including view counts, and advertising impressions.  The best method of estimation is to equate approximately 1,000 views as $1 earned.  This used to be $2 but Google decided to slash the CPM rate offered to YouTube partners.

Bearing this in mind you can pick your favourite YouTube channel, they don't have to be in that list, and go to their channel and view their uploaded videos page.  Scroll through and look at their recent uploads versus past uploads.  There are a number of channels which have been steadily declining in terms of their income.  There's one person in particular who inspired this post for me who shall remain nameless for legal reasons.  Looking at their YouTube channel however, their videos prior to 2016 made approximately 5 million to 10 million views on average - this amounted to $10,000 to $20,000 per video at the old rate, and $5,000 to $10,000 per video at the new rate.  They were uploading 120 videos per year approximately.  At the time, they made approximately $1.8m per year.

Over the course of 2016 those figures declined steadily.  In the last six months of 2016 they have only had 3 videos break 1 million views, and 11 break 500k views at time of writing.  They have been uploading 1 video a week so around 52 by year end, with all but 3 breaking 1 million views, and 11 breaking 500k, being generous and rounding up to 500k and 1 million, they have made at most, and rounding the whole figure up to one significant figure, they have made approximately $50,000 for the year - that represents approximately 3% of their previous income.  That's an incredibly steep fall in income.

You might be thinking their career is over.  You'd be wrong.  This particular person is like many of those who reached this level of success on YouTube - they hedged their bets.  Not relying solely on their YouTube revenue they created a wide variety of alternative income streams.  They followed the trends of many big name YouTube stars who released books, and merchandise that they made money from and will continue to make money from.  They lined up other engagements outside YouTube and created sustainable income streams that continue unabated by the decline in YouTube revenue.  As a result it has become apparent from their YouTube channel that most if not all of their videos now exist to maintain a presence on the site, not as an effort to actually use the site.

So the question is, which came first, was it the decline in views and subsequently the fall in income, or was it the lack of motivation?  That's very hard to determine due to the fact that most youtube videos have view counts that rise over time, even when no longer relevant or recent, view counts still tend to rise precipitously as they become subject to their own popularity due to the way youtube related videos and suggestion algorithms work.

What I find interesting is that beyond the "top" channel, subscriber growth doesn't move quickly for the vast majority of YouTube channels.  So the question is whether more channels can actually achieve this over time or whether the "big name" youtube channels will one by one succumb to the same motivational decline and stagnate putting an end to growth. 

This is the point where we must leave the realm of websites and the internet and take a step into wall street and the realm of financial markets.  As you look around there are a few terms you should learn before you continue.  Predicted earnings is the expected earnings a company will make going forward.  Share price is the current selling price for shares in that company, this rises and falls in reaction to the perceived value of a company.  A boom or bull market is a market where things are going well, and it is advisable to buy shares, and a bust or a bear market is a market where it is advisable to sell off your shares, either because of perceived volatility, increased risk, or a fall in predicted earnings, among other things.

YouTube, and other companies like it are companies that exist within these markets.  We tend to forget this because we preoccupy ourselves with their products rather than the company behind the products.  YouTube is owned by Google, which is part of Alphabet Inc.  It has income and expenditure, money that comes in and goes out.  For the company to be profitable it needs to be sustainable, income must rise to compensate for any increase in expenditure. 

Most businesses that trade on the stock market must contend with market cycles.  These are cycles of boom and bust which represent periods of growth and decline respectively.  YouTube and many other websites have been growing but they are reaching a limit to that growth.  YouTube like Facebook is a member of the billion+ users club, which is still quite rare for websites to achieve.  The problem with having such high user counts is that you reach a saturation point, where you can't reasonably expect to grow anymore than you have.  In the case of Facebook they are quite literally running out of people, they have invested in technologies to try and widen internet access in developing countries, this is all in the name of growth, this is not out of any genuine concern for the humanitarian cause.

As far as YouTube is concerned, there is no shortage of people trying to make it big on the site, but there are many barriers to them succeeding.  The main one that I can see, and the reason for this post to begin with, is the fact that the community element of the site was systematically broken down and removed over time.  In the name of reaching a generic interface and trying to increase the exposure of users to new content, YouTube broke the main driver of content consumption.  Increasing content consumption by increasing exposure of users to new content outside of their community when their interest should have been left to the content creators who have a better understanding of compatibility.  In the pursuit of trying to pop the bubbles of community that viewers were often trapped in, YouTube instead built walls that prevented users from building communities.  The handful of channels that are growing rapidly from the top 100 I mentioned above all share something in common.  They have communities centred around them.  The creators themselves engage with their viewers in many ways and they have demonstrated in practice how the site should actually work.

The walls that need to be tore down and replaced are those built by the revisions made to the comment system, the forced integration of Google+ was one of the most idiotic decisions Google ever made which poisoned the site for many.  YouTube needs to move away from generic approaches and move back to encouraging interaction between the creators and their viewers, not the site as a whole.  YouTube needs to stop creating barriers to consuming the content the viewers actually visit the site to consume.  The notification system for subscriptions needs to be revised as many viewers don't even receive notifications of uploaded videos.  Above all else YouTube needs to stop presenting content from random unrelated channels that don't belong to the communities people are part of just because titles match, or videos happen to share a common tag.