10 Implications of YouTube's Revenue Sharing Model (Part One)

This is a part one in a series on reflections and analysis on YouTube's potential entry into revenue sharing with content creators.

YouTube this weekend announced it would eventually move to a revenue sharing model with content creators…not unlike Revver, which splits ad-revenue 50/50 with consumers who post video. This is a big deal, and could have massive implications on the creation and consumption of consumer-generated media (CGM). Up until now, YouTube has anchored its model more to "attention gratification" than financial compensation, which to many sounds like a raw deal against a backdrop of YouTube selling to Google for $1.5 billion.  Here's the relevant soundbyte from Chad Hurley (via Jeff Jarvis..thank you) on the matter:

In terms of paying users revenue against the content that they’re uploading, we’re definitely going to move in that direction. We didn’t want to build a system that was motivated by monetary reward. We wanted to really build a true community around video. When you start out with giving money to people from day one, the people you do attract will just switch to the next provider who’s paying more. We’re at a scale now that we feel we can do that and still have a true community around video.

Scott Karp of Publishing 2.0, who's written a fair amount on this topic, offers this shippet of interpretation on Hurley's comment: “We made all those poor slobs work for free, and now that we’ve sold them out for $1.65 billion, we’re finally ready to share a few crumbs.”  Yes, perhaps, but the more interesting question, I think, is how all this plays out over time.  Like it or not, YouTube is more than just an isolated video playground; it's now a de facto standard tied to the fastest growing ad seller in the marketplace (Google). And with that question in mind, I offer here ten potential scenarios, predictions, and implications of YouTube shifting to revenue-sharing. 

1. News Spread Faster, and Gets Edgier:  As with blogs, YouTube traffic flows operate on an aggressive “first to post, first to reap” principle. Think about Jeff Jarvis, Robert Scoble, Steve Rubel, and even TVnewser.  These blogs are consistently first-to-market on new news, and over time this helped each one build an influential tartgeted audience.  Translated to video, expect those who post first to reap disproportionate financial reward, and this may end up putting the "first to post" concept on steroids.  And then there's the "never before seen" phenomenon. With cash prizes on the line, expect consumers to cast an even wider and more aggressive net of camera phones and other surveillance devices to capture the weird, twisted, funky, and incriminating.  Just think about that priceless scene in the UCLA "Taser" video -- whereby a bunch of students had their camera and video phones as high as they could reach recording the incident -- and multiply that by ten.

2. Growth of a New eBay-Style Cottage Industry:  eBay has spawned a massive cottage industry of buyers and sellers who make their living exclusively on site transactions. Expect to see a similar model emerge on YouTube when revenue-sharing falls into place.  The welcome news is that great content creators, including many struggling artists, will receive compensation they have earned and deserve.  The big watchout here is that, as with eBay, we may see a huge amount of "gaming" the system. Will may even see a new art of commerce-centered “smart-mobbing” YouTube videos to help the find a tipping point of appeal. Will YouTube need to dial up "credibility" credentializing similar to eBays aggressive use of "trust" metrics?

3. Garbage Collectors and Video Spammers Find A Meal-Ticket:  But let's face it, lots of garbage (treasure to others) finds its way on both television and YouTube...which speaks to latent demand.  Art or spam?  Scoop or stupidity?  Spam in particular works at getting a wee small percentage of us to click silly things, and ultimately someone gets rewarded. Recently, spam has seen a major resurgence, and it’s easy to imagine a new explosion of video spam enabled by a compensation model. (Again, some order of labeling may help...but whose labels?)   Also expect to see elevated “rapid response” video-responses by members eager to dial up “face time” and awareness on the site. After all, when most of us skim through but a couple video responses before moving on to the next gig. Expect to see lots of the same people showing up to offer inane and insincere video responses. (Yes, I know this already happens, but financial incentives could take it to an extreme level.)

4. More Dedicated Surveillance of Brands:  Brands potentially face huge challenges in a compensated CGM environment.  Recall, some of the most celebrated and popular (hence financially lucrative down the line) YouTube videos of the past year have involved brands being "exposed" or "outed" for poor service, call support, employee behavior and more.  Hey, if that's the secret sauce, no call center agent is now safe from calls being recorded by consumer Steven Spielberg's..."for quality purposes" and maybe that is just an inevitable consequence of the new rules of "transparency."  But when every content contributor is now a de facto paid reporter, every brand vulnerability or achilles heel will be under an even intense microscope.  All the more reason for brands to obsess less with "paid" media and more over brand credibility and customer service.

5. Complications With "Co-Creation" or "Create Your Own Ad" Models: Think Super Bowl! Now compound that challenge with the big wave of "co-creation" under way, most visibly in next week's Super Bowl whereby three of the ads will be the product of user contributions. Looking ahead to the new YouTube model, if a Super Bowl contest-winner's ad find second life on YouTube, who gets the compensation?  The original content creator?  The brand?  The agency? All of the above?  Trust me, this will get really complicated, and even if brands us "fine print" to exempt themselves from compensating consumers, original creators will find a way to raise a stink...or create a viral protest.   

6. Higher Bar for Brands Rewarding Consumer Contributions, Ideas, or Feedback:  With YouTube setting the tempo, brands may be forced to now develop their own compensation models in instances where they solicit or accept consumer feedback that involves fresh or new thinking. Again, with YouTube nudging the habit change, consumers may come to expect "value for value" reciprocity in other places.  Remember, just about every major fast-food marketer has huge disclaimers on their web forms noting that ideas or suggestions can't be accepted, or that all rights are forfeited through the submission process. We even see this for major brands that are waxing poetic at the CMO level about the power and glory of "conversations."   

7. Indirect Product Placement & Brand Counter-Attack:  While brands will do everything to encourage positive word-of-mouth, the notion of consumers being compensated for work that negatively portrays brands or brand experiences may (regretably) trigger music-industry type enforcement activity by brands against peceived unauthorized use.  If the creator is being compensated, and he or she used clips or mashups, how does that play out? And what about what I like to call “indirect product placement,” whereby the backdrop of the video is dotted by brands (driving a Ford) or brand experiences (running around Disneyland).  Over-reaching lawyers may well make a stink, and an extreme outcome may be that the only risk free way of driving revenue off videos is to only wear generics and avoid all use of branded logos in the background!  (Yes, let's hope and pray that day never comes!)

8. Greater Need for Disclosure: As sites like YouTube become more “professionalized” by talented creatives or others looking to monetize their creativity, the line will get even blurrier to consumers in the context of what’s “genuine” and “authentic” versus others. Is the video "professional" or "amateur" or "organic"...or can we even make such distinctions?  Moreover, is the total number of "views" the product of organic discovery or paid media.  As I've noted before (see my ClickZ column, YouTube or ConfuseTube?), YouTube is a bit fuzzy about disclosing whether featured videos are in fact advertising and promotional vehicles for paid sponsors.  Moving to a compensation model may dial the viewer confusion factor?  Trust marks and labeling might be part of the solution.

9. Re-engineering the School "Back Sale" -- Charity and Fundraising: On the more benign and innocous side, expect to a see a not-so-insignificant percentage of YouTubers elect to donate their shared revenue to charity or some other good cause. For many, this will be the true mark of “I’m not doing it for the money” authenticity. YouTube will likely perfect a payment mechanism that gives the shared revenue recipient a range of choices on how to spend the money. In some cases, YouTube might even “match” the donation to drive goodwill with both its users and advertisers.  Alos expect to see a new genre of fundraising emerge based on a compensated video model. Schools, trying to raise money for the band or the school musical, will post content to YouTube and encourage everyone under the sun to watch the content.  Hey, why not…if every view helps get the band to the Rose Parade, this can only be big! 

10. Rich Rewards for Many, Soul Searching for Many Others:  I'm far from the "big leagues" of high-traffic content creation, but I do consider myself similar to millions of other YouTube users.  More specifically, I'm not creating content for the money, and I've even shied away from sites like Revver because I don't want my motivations for "self-expression" and "sharing" to be questioned.  "Trust me," if sometimes go out of my way to tell others, "I'm not putting these videos up for the money."  Yes, I suppose I rationalize directing revenue from the wee small traffic to the videos of my precious twins to a college fund, but darn that sounds weird…and even a bit cheap and tacky. Or does it?

What I do know for sure is that for the coming months the blogosphere will light up with high-minded debates over whether new revenue driven model still preserves the integrity of the community, conversation, and participation. I honestly have no clue how it will all net out, but I'm looking forward to this discussion.

 

Comments

[Kevin Dugan]

Wow. This is very helpful insight and analysis. Thanks Pete!

[independentmusician]

Someone posted a link to this article at my blog.

(independentmusicnews.com/blog)

Thanks! I am very interested in this YouTube issue and am glad to be alerted to all articles/opinions regarding it.

[vishyww]

For those aspiring people wanting to get site traffic and make money with videos on Youtube and Metacafe etc, read this detailed step by step instruction ... http://www.successonline.in/driving-traffic-from-youtube-and-your-videos/