How YouTube became unstoppable
Good morning! This Wednesday, if you want to compete with YouTube, you’ll have to do a few things well. And making an awesome video player isn’t one of them. I’m David Pierce, and my YouTube recommendations all have to do with Formula 1, coffee and “It’s Always Sunny In Philadelphia.” It’s perfect.
The monetization machine
The word "creators" shows up 52 times in Susan Wojcicki's annual letter detailing YouTube's priorities for 2022. (The only word that shows up more often is "YouTube.") Over and over, Wojcicki made clear that the thing she cares about most — the true secret to keeping YouTube growing and rich and earth-shatteringly successful — is keeping creators happy on YouTube.
How do you keep creators happy? One word: money.
- Wojcicki noted that there are now 10 ways for creators to make money directly on YouTube, and that products like Super Chat and Channel Memberships are bringing in more money than ever.
- She also said there was a 40% increase in channels making more than $10,000 a year. That's a big deal: The creator landscape has always been incredibly lucrative at the very top with very little left for everyone else, but YouTube may be getting so big that there's more to go around.
- And your favorite YouTuber might be selling you an NFT soon, too, Wojcicki wrote. "We're always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies … to strengthen and enhance the experiences creators and fans have on YouTube."
- YouTube's also going big on live and social shopping; creators can hawk products and make them clickable and shoppable, and of course YouTube gets a cut.
- Shorts, YouTube's don't-call-it-a-TikTok-clone, is also growing fast, and YouTube's paying creators directly out of the Shorts Fund.
YouTube has certainly done wrong by its creators over the years — confusing recommendation algorithms, overeager copyright enforcement, occasionally random enforcement of the rules — but it continues to be a virtually unstoppable machine in the creator economy. It might be easier to get famous on TikTok, and Instagram Stories might be a vastly superior product to Shorts, but they're still way behind YouTube as a platform on which to do business. And YouTube's lead seems to only be growing.
- Hank Green caused an uproar last week by going on YouTube and calling TikTok "a giant hole in the creator economy," and said that he makes about half as much money per view on TikTok as he used to.
- The numbers are pretty staggering: Mr. Beast, the biggest earner on YouTube, made about as much money last year as the top 10 TikTokers combined.
Monetization excellence gives YouTube enormous power. It can enter practically any space it wants and immediately become a power player, because it's writing bigger checks to creators. Wojcicki said in her letter that YouTube plans to invest in podcasting, for instance, which makes sense given that YouTube is already a popular podcast destination despite not being a great listen-only experience. But given how hard it can be to grow and monetize a podcast, would you be surprised if YouTube became a power player in the space just by letting podcasters sell memberships and merch and get a cut of pre-roll ads?
In that sense, there's no serious YouTube competitor out there. Vimeo is on to other things, Rumble is … around, and TikTok and Instagram compete with each other much more directly than they do with YouTube. None come close to offering the financial upside YouTube does.
But if you wanted to take down YouTube, the move isn't to try and build a better video player. The move is to build a better money funnel.
- Twitch is one of the few companies that has withstood a YouTube assault, in large part because it was early to add things like paid subscriptions and gifts to keep creators around.
- Substack thinks it has a chance, too: It announced yesterday that it's adding a native video player to the platform. The player isn't very good, but the pitch is that creators own the content, and it's connected to their subscriber list. That pitch is much more likely to work than "we did YouTube better than YouTube!"
YouTube looks untouchable right now, as the world continues to shift to video of all kinds. But these are early days in the creator economy, and practically every company is looking for a way in. If you want to topple the Big Red Play Button, you’re going to need an even better way to get creators paid. And then you will, too.
On the calendar
Tech regulation is coming. How does Big Tech respond?
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The ‘mob bosses’ of Silicon Valley
Bolt’s Ryan Breslow has a bone to pick with Stripe and Y Combinator. In a long Twitter thread, Breslow wrote that the companies will do “more than compete with you” if you get in their way. But isn’t that just a typical day in Silicon Valley?
The tech industry is brutal, and lots of the people replying to Breslow pointed that out. One called his tweets a marketing stunt, and another suggested that Bolt buckle down on competing with a good product instead of complaining. Just goes to show that in the cutthroat world of Silicon Valley, nobody is safe from getting piled on. Not even the underdog.
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Correction: The top story was updated Jan. 26, 2022, to clarify Dallas Lawrence's role at Roku.