Assessing YouTube’s Monetization EcoSystem:

/ Apr 16, 2013

VIS_YTMoney

Where Offline Strategies for Monetization Fall Short

By Adam Winnick

I’m an investor in several companies that work closely with YouTube partners and have seen first-hand how difficult it is to monetize audiences, especially without alienating them. The YouTube platform is caught in the awkward adolescence that’s an inevitable part of growing into a self-sustaining social network that can support its talent and fans. In a column last month, Peter Kafka of AllThingsD articulated the economic challenges of supporting premium content with ad dollars: small revenue splits, inventory gluts, and no optimized sales-force for video.

Many YouTube partners, both networks and the channels with which they work, have developed strategies to make more money off-YouTube and for the most part, off-line. For channels in particular, most of these strategies won’t work except for a lucky few, and here’s why:

Going Mainstream

Participating in traditional media distribution channels will certainly pay well in the short-term and may even lead to a few break-out stars and shows. But these opportunities can be risky, as they pull personalities from their native and creatively-liberal platform and put them into a system that threatens their authenticity.  YouTube content – unlike anything on primetime TV – is about a two-way conversation between talent and their fans. Traditional media distribution channels disintermediate talent from their fans. Even worse, they draw precious resources away from these important conversations on YouTube.

Creating and Selling Products

Some channels have moved beyond personalized merch stores to selling their own products. YouTube has whitelisted a few commerce platforms that let creators sell their own products through merchant annotations. This can work well in a few verticals like fashion, food, or fitness but it is no panacea. Making videos audiences love is very different than the responsibilities of managing a business that may require dropshipping (for more on this check out the YouTube content creators playbook and the playbook on how to run an online business by Shopify, one of the companies YouTube has whitelisted). Running a full time business will surely detract from the primary goal of entertaining and informing audience. Hiring a business partner invites its own set of challenges without fully relieving a channel from their responsibilities.

Seeking Brand Endorsements

Channels often make videos for brands, acting as a spokesperson. Some are taking this relationship to the next level by partnering with these companies off of YouTube. Unless a channel works with well-established brands or has done extensive due diligence (often not the case), this strategy is extremely risky.  Channels become vehicles for driving traffic and nothing more. By tying themselves closely to a single brand, without creative control they jeopardize their unique voice and potentially compromise their hard won influence and authenticity.

The reality is that monetizing media online without alienating audiences still has a long way to go. Few have been able to hit this sweet spot, which is a shame given the potential of this platform to cast a wide net and catch niche audiences.

Though no winning strategy has yet emerged, there are three takeaways that are simple enough in concept, but critical for content creators to consider:

Make YouTube audiences happy; earn enough cash to keep creating quality content; do so with ease and authenticity.

Sound easier said than done?

Today it is, but the smart networks and channels are starting to figure it out.

_____

Adam has been investing in and creating companies that create win-win solutions for customers and their partners for nearly a decade. Adam is the CEO/Founder of Subblime, which works closely with content creators on YouTube to help them monetize their audience without alienating them. Adam is also an investor in EQAL, Spreecast, and Little Black Bag. Adam has an MBA from Stanford and a BA in Econ from Tufts University.  

 

Tags: , , , , , ,


  • Adam, great article. The spot on thing here is to focus on ensuring that consumers (users) are happy. It’s all about the eyeballs.

  • Pingback: dfurtgurtguwer()

  • Platon White

    My friend
    referred me to MGcash for content locking. I was impressed with their publisher
    admin and reporting. Very easy to use, and it’s making me money. Don’t miss
    your opportunity to boost your income at mgcash(.)com.

lyor-cohen-youtube-music

Pioneering Hip Hop Exec Lyor Cohen Joins YouTube as Global Head...

 
alpha-legendary-digital

Legendary Digital Reveals Alpha Subscription Service Launch...

 
time-inc-jash

Time Inc. Teams with Digital Comedy Producers Jash for Branded Content

 
Amazon Logo

Amazon Greenlights Three Comedy Pilots as Series

 
Industry Tickets Selling Fast!
Click above to lock in your registration for VidCon 2015!
 
cartoon-network-app

How the Cartoon Network Combined the Best of VOD and Linear TV...

 
jukin-media-ethos

Jukin Media Goes Viral for Brands with Ethos Division Launch

 
Streamy Awards

Streamy Awards Trade In VH1 for YouTube, Again

 
zefr-alignment-report

Matching Ads to Videos Not So Simple, According to Zefr’s...

 
shomi

Plug Pulled on Canadian SVOD Service Shomi

 
Twitter

What’s Trending on the Twitter Sale

 
Machinima Logo

Machinima Teams with SiriusXM for Daily Esports Radio Show

 
Hearst

AwesomenessTV, Vice, Complex to Power New HearstLive...

 
dirty-30-hannah-hart-mamrie-hart-grace-helbig

VIDEO: ‘Dirty 30’ Confessions with Stars Hart,...

 
facebook-thumbs-down

Facebook Says It’s Sorry It Vastly Overestimated Video...

 
craig-piligian-pilgrim-media-group

Pilgrim Media Group CEO Craig Piligian (‘The...

 
youtube-heroes-for-change

Heroes or Rats?: YouTube Unveils New Program for Creators Who...

 
Vessel says it's doing well in its first month

Why Verizon is Pursuing Vessel, the...

 
jared-feldman-and-sam-hui-ph-d-at-the-2014-canvs-launch

How Canvs Media is Harvesting Emotional Insights on YouTube,...

 
marlon-wayans

Marlon Wayans Getting ‘Naked’ for Netflix with Regina Hall

 
huffpost-ryot-aol

HuffPost RYOT Launching Virtual Reality Comedy Series and News...

 
youtube-vote-irl

YouTube Launches #voteIRL Campaign Targeting Digital-First Generation

 
tyler-oakley-camp17

How Top YouTubers (incl. Tyler Oakley & Meghan Rienks)...

 
charlie-sheen-anger-management

Charlie Sheen to Star in Crackle Feature ‘Mad Families’

 
filmbuff_videoink_300x250

Gunpowder & Sky Buys Distributor FilmBuff As Vision for...

 
toy-freaks-youtube

Toy Freaks Top Viewed YouTube Channel in August According to...

 
jeffrey-tambor-transparent-amazon

Emmy Wrap-Up 2016: Jeffrey Tambor (‘Transparent’)...

 
Twitter

Twitter Scores 2.1 Million Viewers for Thursday Night Footall Kickoff

 
youtube-sad-face-error

Vloggers Not Unique Snowflakes: 90 Million Flag YouTube Videos...

 
Mode Media

‘Billion Dollar Startup’ Mode Media Shuts Down

 
raised-firsts-branded-tv

Who Is Winning The Marketing Revolution And Why?

 
shes-gotta-have-it

Netflix Orders ‘She’s Gotta Have It’ Series...

 
swedish-dicks-peter-stormare-keanue-reeves-viaplay

What Is ‘Swedish Dicks’ and Who Is Selling It?

 
seamlessly-she-monica-potter-aol-partner-studio-gmc-acadia

How GMC is Using the AOL Series ‘Seamlessly She’...

 
Netflix_new

Liberty Global to Put Netflix on Set-Top Boxes in 30 Countries

 
vincent-cacace-vertebrae

Getting to the Spine of VR’s Monetization Challenges with...

 
meredith_brandfront_videoink_300x250

Meredith Hosted Its Own “Front” Stacked with 20 New Series

 
complex-networks-hearst-verizon

Verizon and Hearst Move RatedRed.com and Seriously.TV Under...

 
Twitter

Twitter Launches Live Streaming Apps for Amazon Fire, Apple TV...

 
YouTube Community

YouTube Fights Back Against Social Media Rivals with Community Feature

 
Casual Hulu

Vimeo Opening Television Store with Lionsgate Content, Launching...