Lessons Learned from YouTube’s $300M Hole
edwardspoonhands.com
edwardspoonhands.com
This makes both very sad and very angry.
That being said, I didn't realize that YouTube was funding original channels! I'm reminded of the talk Dan Harmon (creator of the television series "Community") gave regarding the death of television/the Internet as a new platform for stories [1]. The majority of people already consume television shows on the internet, I'd love to see a larger shift towards an internet-only tv series model.
[1] http://www.youtube.com/watch?feature=player_embedded&v=e...
So you have to find alternative revenue streams, which isn't always easy.
I think the issue is just cost -- high-end TV is $250k-3mm/hr . Low-quality TV costs something like $30k/hr of finished product. High-end web is $1-4k/hr. Amateur is $100-400.
You can produce much more niche content if you need only $1k/hr to produce it. Niche reduces the cost per hour for the same quality, too -- I'd rather see dmor or sama or garry talking about startups for 15 minutes vs. Morgan Freeman. Non-talent costs really can be dramatically reduced in a non-union world, especially one where the principals are compensated through equity or other non-cash, for the same final quality. And, if something is niche, I'll watch it even if the editing, sound, video, etc. aren't quite up to the same level.
There was a lot of news and special interest but throwing Educational programming into the mix is not factually correct.
I have two list, one from 2011 and one recent. Both show an emphasis on Entertainment and Extracurricular programming.
Recent: http://www.youtube.com/yt/advertise/original-channels.html
From 2011: http://www.tubefilter.com/2011/10/28/youtube-original-channe...
Not too many pure educational programming plays. Certainly not the majority.
->Non-talent costs really can be dramatically reduced in a non-union world...
Producing content is like anything else you have to make, a lot of times you get what you pay. I've worked with a lot of new workers, the good ones rise to professional level pretty fast and they won't work for equity/portfolio for too long. I think Youtube has gone as far as it can go with cheap content, which is pretty good. Now they are experimenting.
I would consider a lot of the science/food/tech/automotive stuff as "educational entertainment" to the extent that the Hitler Channel and other cable tv programming is educational. But there is not a single thing there I'd personally watch.
(The only YouTube content I love, personally, is Hickok45, MrColionNoir, etc., and cat videos. I'd love curated high quality cat videos. I'll probably get some cats and a 4K RED or Canon just to have an excuse to produce this.)
And a lot of people underestimate this. A beautiful website without good content is worth nothing (well maybe it's worth inspiration for designers). A newspaper without content is worth gossip and sensation.
That's why some blogs are better than high profile newspapers and that's why some home made Youtube movies provide more information (and are thus better) than big money productions.
Hank has a great point, YouTube is all about quality content! They need to invest in people that know how YouTube works not Hollywood. It takes a fresh and open perspective to understand a YouTube audience. I'm 19 and I've been making videos since the age of 15 and you learn so much about interaction and branding but you never forget that you're just some guy talking to a camera...WHICH IS PRETTY RELATABLE! I'm sorry I think I went on a random rant.
MY POINT: YouTube always should be supporting their original content creators, not trying to help all these new companies become big and successful. There is a reason I watch TV and a reason I watch YouTube. I don't need both on one platform. Alright, done.
As generalisations go, I feel this one falls between sweeping and wildly optimistic.
99.9% of the stuff on youtube is utter bilge. I find a lot of useful resources; but thanks to the magic of social media I get to see the titles of a lot of LOOK AT THIS KITTEN and OMG CAR CRASH videos too.
I'm trying to find other stuff he's done but I can't find his Twitter, Youtube, Facebook, anything...
Tumblr does frustrate me...
http://youtube.com/crashcourse
http://en.wikipedia.org/wiki/Hank_Green
(In addition to that, he's also my employer, but that might not be relevant to you)
Tumblr frustrates me because I'm not 'in the stream' so to speak. The whole thing seems to be designed to just whisk you away to more Tumblrs. That could be great, but when you arrive at a page and have no clue who penned the words you're looking at or where you can go to find more of their work... it borders on infuriating.
Anyway, the reason I asked is I liked the post and found it tangentially relevant to a project I'm working on with a friend. Gave me a new way of thinking about a few things. So again, Thank You.
Some people put links to twitter/other social networks on their blogs but since probably >99% of the visitors to Hank's blog will get there from somewhere else in his network (Twitter, Youtube or any one of our number of community sites).
So yeah, don't feel to bad, Tumblr confuses even those of us who consider ourselves "social-media competent"
When people go to youtube the bar is set quite low, they don't expect the same as when they watch a show from a well established TV network that has a brand to protect and pristine "quality" to portray. That would be a good reason of whey this type of funding did not work out.
"Please, let the advertisers figure out for themselves how to tackle this very new medium instead of trying to shape the medium to meet their needs."
Forgetting the rest of the article, I think this point is really salient to the way lots of valuable web services are evolving right now.
Yeah but there's no Youtube, it was sold to Google, a 14-15 year old and publicly traded company. As for advertisers and ads, Google is an ad agency so they'll probably not going to take your advice.
Especially the way in which users are pressured into using their "real name" and the dramatic shift in discover/recommendations (from content-based to social-based) seems more than just a matter of integration. Both are things that are the opposite of what YouTube was about a until recently.
Google is all about advertising. Software is just a means to that end.
2010:
- Advertising Revenue: $28.2B
- Other Revenue: $1B
2011:
- Advertising Revenue: $36.5B
- Other Revenue: $1.3B
2012 (unaudited):
- Advertising Revenue: $43.6B
- Other Revenue: $2.3B
Travel allll the way back to 2001, the earliest figures Google has published. Guess what the revenue split looks like? Yep: still an advertising company.
2001:
- Advertising Revenue: $66.9M
- Other Revenue: $19.4M
If anything has changed it's that Google has steadily become more of an advertising company.
Like Newscorp, the stuff you think they do (search/services vs news/commentary) is not actually what they get paid to do. Both Google and Newscorp make their money by using getting people to look at ads.
Like the vast vast vast majority of all consumer facing internet businesses ever created since the dawn of the Web, Google was created to do something: Search, without any clear business plan about how to make money. Most Web businesses do not charge end user fees, they are founded to get users, and either make money from ads, or get acquired by those that do.
Facebook: Ads. Twitter: Ads. Yahoo: Ads. New York Times? Ads. You really think the journalists at the New York Times view themselves as working at an advertising company because that's the only way they can get paid? You think it's accurate to describe the New York Times as an Ad Agency?
Much rarer do we see people saying "Facebook is just an ad company" in forums, this charge is always lobbed at Google, which says to me that there's some intellectual dishonesty going on, people with an axe to grind.
Google spent nearly $7 billion on R&D in 2013. Most of this spending is targeted not at ads, but in trying to develop other lines of business with diversified revenue sources. Larry Page is not an idiot, he sees that relying on ads for 97% of your revenue is a risky proposition. It just turns out to be a hard problem to get people to pay for content now, even on mobile you can see prices being driven down to free + freemium. Unless Google wants to be an Enterprise company like Oracle (a market where people have a proven track record of throwing money at stuff), it's at the mercy of what people are willing to do, and as shown over and over again, people like get stuff for free if paid for by others (ads).
Even for HBO and some other channels, the majority of media people consume, even that on "for pay" cable TV is still funded by commercial ads. You take a TV show which has a $2 million per episode budget, and you need a atleast 2 million people per week to pay $1. Now, how likely is that when many shows can't even command an audience of 1 million free viewers.
NY Times is a newspaper and totally different from Google which has Adsense, Doubleclick and Adwords. Google essentially controls online advertising and 95+% of their revenue is from....ads! Now with Google going 100% pay-to-play on eCommerce and transactional keywords it's even more of an ad company (milking the search goodwill.) You can call them whatever you want of course
Wrong question! What % of the world's advertising does NYT control, online, offline or mobile? What advertising tools does NYT offer? What is the ratio of ads vs content on money topics on NYT?
Said who? How about looking at what the company focuses on? Before seeing content on Google I see a billion million gazillion ads, often looking similar to organic results. A while back ads were on the page to pay the bills but now they are the main content, by design. Shopping also is 100% ads. So what company is Google again? Oh, yeah, trying to send the users to the best site asap. My @ss.
Since Knowledge Graph was introduced, there are now millions of queries that don't even show any ads at all. For example, I search for "Hawaii" on Google (just did it in an incognito window), and I get a Knowledge Graph card and zero ads. I do it on Bing and I get travel ads for Alaskaair.
Your anecdotal evidence is worth nothing, we know the number of ad clicks because Google reports them each quarter. And they are rising by double digits quarter after quarter. So many more people are thinking that an ad is the best answer. Surprise, huh?
So users are finding more and more of their answers in ads? Good thing Google controls both ads and 'content.' And anecdotally the number of ads has increased immensely on transactional keywords, especially after Page. Content is buried by them. http://www.zoekmachine-marketing-blog.com/wp-content/uploads...
Your reasoning has been consistently flawed in most of the threads.
whatever you say. By the way, if you work at Google you should state so, quite a few Googlers have that habit. I suspect you are, given the stock answer you gave for the "best answer." If you work for Google, I don't blame you, It's hard to defend the same practices you and your bosses railed against just 2-3 years ago.
Without AdWords, we'd probably have gone back to AltaVista.
> Most Web businesses do not charge end user fees, they are founded to get users, and either make money from ads, or get acquired by those that do.
This is where it's confusing. AdWords behaves like old-fashioned newspaper advertising: Google both control the inventory of spots to advertise and accept the adverts.
AdSense is different: Google doesn't not provide inventory, but they fill it. In that respect they are more like a central ad buying agency than a newspaper.
> which says to me that there's some intellectual dishonesty going on, people with an axe to grind.
Or it might be that I'm just pointing out that what Google spends its money on doesn't change what people actually pay Google for.
If you classify companies according to what they are paid to do, then Google is a company that gets paid to take and display advertising, just as Ford is a company that's paid to manufacture and distribute cars or WalMart is paid to source and distribute durable and perishable retail goods.
Journalists don't like to think about where the money is coming from. And in fairness to journalists, that's been the grand bargain for more than a century: pay my wages, don't meddle too much and I'll give you good copy to sell your papers.
Well now the grand bargain is: pay my wages, don't meddle too much and I'll produce services that support, directly or indirectly, AdSense and AdWords.
There is no shame in this. None of this detracts one iota from the journalists at a media firm or the engineers at Google. But TANSTAAFL.
> Google spent nearly $7 billion on R&D in 2013.
And most of the wages paid at newspapers are not paid to the advertising or classifieds staff. They make enough money per head to support a much larger staff of journalists, designers, subeditors, setters, printers etc etc etc.
> Larry Page is not an idiot, he sees that relying on ads for 97% of your revenue is a risky proposition.
I agree. But simply elbowing your way into a different business model is hard. Really, really hard. Ask Newscorp. Ask Microsoft.
About the article, 300m is just pocket change for Google anyway, they blew 12 billion on Motorola just to get the patents, so 300 million is not going to make a difference for them even if it fails miserably.
That business shares some of its technology with two other efforts:
1. Google's efforts to monetize those ads. 2. Google's efforts to monetize other ads.
None of this invalidates a claim that Google typically fits the "users first, dollars second" stereotype.
Android fits that stereotype too; ditto Google Apps.