Tag Archives: youtube

Want to make a living on YouTube? Forget advertising

You may think that if a YouTuber has over a million subscribers they’re rolling in money, but in most cases you’d be wrong. CPMs on YouTube ads have always been low and the recent “adpocalypse” has made things worse. But that doesn’t mean you can’t make a living on YouTube. You just have to get creative about your monetization. I explain how in this video

The rise of the YouTube video essay

Evan Puschak, host of The Nerdwriter

Evan Puschak, host of The Nerdwriter

To understand how J. Matthew Turner ended up creating a viral YouTube essay arguing that Daniel LaRusso, the young hero of the 1984 film The Karate Kid, was actually the villain of the movie, you first need to know the story behind the video he posted to YouTube a month before that one. For years, Turner, a video editor from New York, harbored a conviction that the movie Mortal Kombat was so similar in plot and themes to the Bruce Lee cult classic Enter the Dragon that they were virtually the same movie. “It was in the background of my head for a long, long time,” he told me recently. “And for whatever reason, I happened to think of it again last year and I suddenly saw how it should be done.” He had always envisioned a 15-minute video in which he would methodically build a case for his thesis, but he knew it would be difficult to keep viewers entertained for that long. “But now I realized that I should just show all the shots side by side and then try to explain the plot of both movies as one movie at the same time.” Continue reading

Silicon Valley once steered clear of original content. What changed?

apple tv

By the time news outlets began reporting that Apple is actively negotiating with Hollywood executives to produce exclusive programming for its fledgling television platform, none of us seemed surprised that a major tech company would invest so much money in original content.

If anything, Apple is late to the party. In 2011, Netflix, which until then had been just a tech platform that allowed one to stream already-released movies and old seasons of television shows, plopped hundreds of millions of dollars into the creation of premium shows, greenlighting them before even seeing a pilot. Amazon wasn’t far behind, launching a bevy of shows to mixed reviews. In 2012, YouTube shelled out $100 million to both lure established media companies onto its platform and allow its already-existing stars to up their games. These days, not a week goes by without a major tech company announcing a major content play, whether it’s Yahoo’s resurrection of the show Community or Facebook’s offering of huge advances to YouTube stars in order to entice them onto its native video platform. Twitter recently attempted to purchase the millennial news site Mic, and prominent venture capitalists have bought huge stakes in companies like BuzzFeed, Vice, and Vox, valuing these news outlets in the billions of dollars.

Viewing all this activity, it’s hard to believe that, a mere decade ago, the tech sector considered original content anathema to everything it stood for, a vestigial hangover from the days when the barrier to entry for content production and distribution was relatively high and therefore lucrative.

Circa 2007 – 2008, the practice of creating original content seemed to be a dying profession. The music industry had been completely eviscerated in the wake of Napster and other file-sharing programs. Newspapers were well into their decline, already kneecapped by Craigslist and facing a print advertising exodus. Magazines weren’t far behind them. The book industry, while not exactly suffering, wasn’t thriving either, with most sales coalescing into a handful of conglomerates who were already bracing themselves to have their asses handed to them by Amazon. The television industry seemed relatively sturdy but most assumed its day of reckoning would eventually come.

This is when we saw the rise of platforms that were fueled primarily by user generated content. First Myspace, and then later Facebook, YouTube, and Twitter. Media companies that were suffering looked at Keyboard Cat and assumed that this was the future of content, and Silicon Valley didn’t seem to disagree. Original content was expensive and difficult to scale effectively; why hire 60 journalists to create content when you could spend that money on 30 engineers who would then build a platform on which millions of users would generate content for free?

So what changed? Why are we seeing the sudden emphasis on premium programming in a world where everyone with a GoPro seems willing to upload their videos for no payment?

Well, it turns out that original content actually is scalable, particularly when it’s hosted on the right tech platform. Netflix just announced in July that it had reached 65 million subscribers, a number that would have been difficult to attain when it was merely licensing reruns, especially as other low-cost streaming services have entered the market. And sure, it’s possible that your amateur video of cat could hit the viral stratosphere, but most don’t, whereas YouTube stars can guarantee millions of views for each video posted. The majority of BuzzFeed listicles reach at least a million views, which means that your average BuzzFeed staffer can reach an audience that’s similar in size to The Daily Show’s.

And though viewers have flocked to user-generated content, advertisers still prefer premium programming, especially if it attracts hard-to-reach demographics. The critically-acclaimed USA Network show Mr. Robot only attracts about 3 million viewers per episode, a mediocre turnout when compared to the network’s other hit shows, but it’s having to beat away advertisers with a stick. “It’s a hot property right now,” network president Chris McCumber told New York Magazine. “We have more demand than we can handle for Mr. Robot, and it’s bringing in new advertisers.” And with brands increasingly shifting budgets toward native advertising and away from display, it suddenly behooves tech platforms to have in-house content expertise.

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Finally, tech companies have discovered that exclusive content is a great way to lock users into a platform. A decade ago, there were only a handful of social networks that had the millions of users needed to effectively scale user generated content. Now let’s consider the number of platforms today that have at least 50 million active users: Facebook, Twitter, Google+, LinkedIn, Pinterest, Instagram, Snapchat, Tumblr, WhatsApp, Foursquare, YouTube, Flipboard. I’m likely just scratching the surface.

We now have dozens of networks competing for our attention, and our loyalty to any one platform is tenuous at best. Exclusive content, even if it makes up a relatively small percentage of the content posted to the platform, gives us that much more incentive to choose one platform over the other. Medium, the blogging platform launched by Twitter co-founder Ev Williams, employed this strategy well when it hired top-tier freelance journalists to write on its network before opening it up to the masses (I and call this the “mullet strategy”). Of course, nobody has capitalized on this approach better than Netflix, which is now spending north of $700 million on content you can’t watch without a Netflix subscription.

The question now is how traditional media companies, many of which have been producing original content for decades, will respond. Already we’re starting to seeing seismic shifts in the media landscape, whether it’s HBO launching a standalone app or magazines like Forbes transforming themselves into platforms. News companies are also inking content distribution deals on platforms like Facebook and Flipboard with promises of revenue sharing.

Perhaps the late David Carr was right when he said, in 2012, that “big news is still the killer app,” by which he meant original content. Given how much we keep hearing about the current “golden age of television” and the rise of millennial-focused news companies that are reaching billion dollar valuations, I can’t help but agree. A new dawn is upon us, and if you’re a content producer like myself, then take a few moments to rejoice.

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Why are tech companies scrambling to create original content?

Hand Drawing Content Flow Chart

For the longest time it seemed major tech platforms like Facebook, Twitter, and Google wanted nothing to do with professional publishing, and by that I mean hiring professional content creators, i.e. journalists, to create polished media content. Why? Because Silicon Valley hates anything that doesn’t scale. Original content creation is labor intensive, expensive, and can’t be automated with code. The content created has a limited shelf-life, thereby decreasing the longterm ROI for the labor devoted to it.

You can see this philosophy reflected in how media companies have framed themselves to Silicon Valley investors, and by that I mean they’re attempting to pretend they aren’t media companies at all. BuzzFeed, when announcing a $50 million investment from Andreessen Horowitz, described itself as a company with “technology at its core,” and one of the investors compared it to Tesla and Uber. We’ve also seen the rise of the “platisher,” which is a media company that tries to create a platform for user-generated content (for instance, Forbes’ massive contributor network) so it can scale well beyond the limits of its paid editorial staff.

Why, then, have we recently seen tech behemoths, most of which already boast hundreds of millions of users, trying to enter the original content game? In some cases this has meant merely opening up their platforms so media companies can host longform content directly to them, as is the case with Facebook and Snapchat. Both have entered into partnerships with major news orgs to host content directly within their app ecosystem in exchange for a share in revenue for any ads sold against that content.

But other tech companies are wading expressly into original content creation, either by hiring journalists and artists to produce exclusive work for these companies’ platforms or by outright buying up entire media companies. The most obvious example is Medium, the blogging platform headed by Twitter co-founder Ev Williams. Though anyone can create a blog on Medium (and many do, including me), the company also employs editors and freelance journalists to produce magazine-like publications (my favorite is Backchannel, edited by Steven Levy).

A few months ago, Reddit launched a professionally-produced podcast, then followed it up with a curated email, and is now employing a team of videographers to produce original video. Business Insider recently reported that Twitter has made attempts to purchase Mic, the policy-oriented news site that’s geared toward millennials. Facebook and YouTube, both at war for top video talent, have dished out millions of dollars to entice creators into producing video exclusively for their platforms. Amazon CEO Jeff Bezos decided it was worth $250 million of his own money to buy up the Washington Post and now Verizon is purchasing AOL, which has transformed itself from a platform to a media-oriented content company, for $4.4 billion.

So why are tech companies suddenly interested in labor-intensive, unscalable content creation? My guess is that it has something to do with a combination of the 80/20 rule and the 1 percent rule. Both embrace the idea that the most influential users on any platform make up a tiny percentage of the overall user population. It’s no secret that the media represents disproportionate influence on major social media sites like Twitter, both in terms of branded news org accounts and the personal accounts of their reporters.

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As I’ve written before in regard to Medium, tech platforms will sometimes use what is called a “mullet strategy” (business in the front, party in the back) by commissioning high quality content to attract readers with the hope that some of those readers will stick around to launch and run their own user accounts on the platform.  As I wrote in November, “You’re essentially paying those early influencers to populate your network with content with the hope that the masses will come clamoring to join the club.”

This is why YouTube is shelling out money to keep its stars under its own roof. One could argue that losing a few YouTube personalities wouldn’t matter for a platform that has over 1 billion users who upload 300 hours of video to its platform each minute, but YouTube realizes these stars are the foundation on which the entire network stands. If they were to suddenly leave for Tumblr or Facebook’s video platform, then many of their fans will also begin uploading video content to these platforms, thereby planting the seeds that could grow into a massive user base. Influencers matter, and these tech platforms realize that sometimes you need to pay to keep the influencers from decamping.

So perhaps the notion that original content creation can’t scale is outdated. Instead, it is a means to an end, a way to keep the business flowing in the front so that the unwashed masses of amateur users can be lured into joining the party in the back. Old media isn’t dead after all; it’s just now used as bait.

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Image via Ketchum

Should YouTube launch more robust social networking features?

youtube

As anyone who has logged on to Facebook in the last few months can attest, its native video player has become ubiquitous. So ubiquitous that people are beginning to take it seriously as a competitor against YouTube. And it should be taken seriously. As detailed by a new study from SocialBakers, more people are now sharing native Facebook videos than YouTube videos on Facebook.

facebook video

Given that Facebook is one of the largest traffic referrers on the internet, it’s effectively choking off a key point of distribution from YouTube. This is no accident on Facebook’s part. As John Herman argues cynically-but-accurately at The Awl, Facebook “views links to outside pages as a problem to be solved, and that it sees Facebook-hosted video as an example of the solution.”

So how did Facebook, in a matter of just a few months, become a serious challenger to YouTube’s dominance — a dominance that it maintained for more than half a decade? A key to understanding this sudden upset can be found in a Medium post from Jason Calacanis that doesn’t even mention Facebook video. Instead, he argues that Twitter’s future video product, which hasn’t even launched yet, will quickly be adopted by its users and will finally prove Twitter’s dominance as the real-time pulse of the internet. There were two paragraph in particular that brilliantly exposed YouTube’s key weakness:

Most celebrities, influencers, journalists, business leaders, and world leaders do not have YouTube channels. If they happen to have a YouTube channel they probably never log into it personally, and they probably update infrequently. In other words, the most powerful folks in the world are not active on YouTube.

The most important people in the world — the influencers referenced above — are personally hyperactive on Twitter. When given the ability to upload videos natively from their phone — and have them play in the Twitter stream — they will experience the tsunami of attention that YouTube stars have been addicted to for the last five years.

He’s right. Most celebrities either don’t have an account on YouTube, or if they do they’re not the ones who run and operate it. But nearly every celebrity has and runs his or her own Twitter account. It’s not just celebrities either. A very sizable portion of a YouTube video’s viewers watch the video because it’s either linked to from an outside source or embedded somewhere. They’re not logging into YouTube to subscribe and watch videos in their feed. Why? Well, there’s little utility to YouTube if you’re not a video creator. Basically your options are to subscribe to video channels, upload your own videos, or comment on videos. It’s very limited in functionality.

Twitter and Facebook, on the other hand, have the crucial benefit of being the natural newsfeeds for hundreds of millions of people. Their video tools then simply become natural extensions of those newsfeeds, a means for capturing more of their users and keeping them on-platform. Why would Justin Bieber, with his 59 million Twitter followers, try to send them away to another website when he can keep them on Twitter and sharing his video through that platform? It eliminates the inefficiencies.

So that all being said, how should YouTube respond? It seems evident that the only way to battle these other social networks is to become more of a social network itself. Yes, it already has some social networking qualities, but like I mentioned earlier they’re of little use to you if you’re not a video creator. What if YouTube were to modify its ecosystem so that, in addition to videos, you could also begin publishing text and photos to the platform? Suddenly, it gains utility beyond just video, and becomes a destination for users to take the time to actually log in to the platform rather than watching a few videos and leaving.

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Of course I’m being a little flippant about what would actually be a gargantuan task. If there’s one thing we know about YouTube’s hardcore users, it’s that they’re by now incredibly wary of any major changes that are made to the platform. They revolted en masse when YouTube tried to force them to connect their YouTube accounts to their Google+ accounts, and Google finally gave up on forced integration between the two.

You could also argue that Google Hangouts On Air is an innovative tool that weaves video into Google’s Google+ platform, but that only caters to a specific kind of video: webcam video chats between two or more people.

Google as a company is not one to rest on its laurels and allow other companies to disrupt it, so I have no doubt that it’s already developing new features to battle Facebook, but it must do so while preparing for a full-on onslaught not only from Facebook, but Twitter and Tumblr as well, both of which are launching enhanced video capabilities and have millions of young users they hope will start uploading video natively. It seems clear that the future of online video no longer centers on who has the best video platform, but who controls the feed where users congregate. And YouTube is woefully behind on that front.

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The teenage YouTuber building a massive fanbase across college campuses

yafa

When Yafate Beyene informed his parents that he was going to forgo college and, almost immediately after graduating high school, move out to California, they didn’t believe him. “When I first told them back in Minnesota that that’s what I wanted to do, they kind of brushed it off saying, ‘Ah, he’d change his mind eventually,’” he told me in a recent phone interview. “But once they started seeing the feedback I was getting on the show, once my cousins in Africa were calling my parents and saying they liked the show, that’s when they knew the potential. That’s when they started supporting it.”

Beyene, better known as Yafa to his fans, produces, shoots, edits, writes, and stars in The Yafa Show, a man-on-the-street interview series for the YouTube age. At 19, he’s collected over 10,000 subscribers and nearly a million views. Sure, he’s still small fries compared to YouTube celebrities in the Million Billion Club — YouTube channels that have amassed at least a million subscribers and a billion views — but he has tripled his subscribership in the last year and gained nearly 500 new YouTube subscribers just in the two weeks that passed between when I interviewed him and when I began writing this article. And if you show one of his videos to a student currently attending college, there’s a good chance they’ll recognize him.

Yafa started playing around on YouTube as early as 13, though back then what he posted had little structure or consistency. It wasn’t much later, however, when he began to contemplate what he wanted to do with the rest of his life. “I decided I wanted to travel and I wanted to meet new people,” he recalled. It was around the age of 16 or 17 when he abandoned that first YouTube account and launched the Yafa Show, at first shooting it at local malls around his small hometown of Lakeville. But it turns out mall security doesn’t like you walking around bothering customers with a video camera, so he kept getting kicked out. “I wanted a more secure location where I could just come every week and have an actual talk show kind of format,” he said. “So on Fridays I’d get out of school and get in my car, in my 2000 Pontiac Sunfire, and I’d drive about 45 minutes to downtown Minneapolis.” He’d often arrive around 11 p.m., just as young 20 somethings would begin herding from bar to bar. Yafa would set up his tripod, pick up his microphone, and begin asking people walking by if they were willing to be interviewed.

The concept of the Yafa Show is deceptively simple, in that its description belies the skill and dexterity that goes into making it. On his phone he keeps a list of questions that he believes many people find themselves wondering but are too afraid to ask. Do women really fake orgasms, and why? How much daily masturbation is too much? Why do couples cheat? Once he’s chosen a question, he then proceeds to ask it to every single person who agrees to appear in front of his camera. Often, there will be group dynamics at play as he asks a couple friends together and they each riff off each other. Other times he’ll interview them alone, which can sometimes produce cringe-worthy moments as he asks that person a sometimes deeply personal question. Sometimes a person, upon hearing the question, will walk away without answering it. But perhaps his most consistent observation about the people he interviews is how much information they’re willing to give up. “I’ve gotten people to say some things that while I’m editing the footage later I’m like, ‘I can’t believe I got them to say that.’”

Yafa’s editing process is perhaps the most important component to his show. When it’s at its best, it’s not simply a chronological replaying of answers, but rather he groups the answers into thematic sequences that tell a longer story arc about how human beings approach a cultural issue. In the video on how much masturbation is too much, for instance, we learn there’s a solid contingent of free-flowing, everything goes individuals who think there’s never too much. Then we’re introduced to the prudes who consider more than once or twice a day for self-indulgence as rather pathetic. And then general consensus seems to settle on chaffing and blisters signalling that you’ve reached your daily limit. The follow-up questions become increasingly personal as Yafa switches from how much masturbation is too much to direct inquiries into how often his interview subjects masturbate themselves.

“He is a journalist and a cultural critic,” said Dane Golden, the vice president of marketing for Octoly, which consults with brands on how to properly utilize YouTube. Yafa reached out to Golden a few years ago and he’s since become a mentor and a kind of unofficial producer for the Yafa Show. “He’s going out into the world and finding people and asking them what they think and he’s doing serious reporting, even if it’s on not so serious topics.”

And it may be Yafa’s status as a person of color that allows him to wade into often taboo subjects like cultural and racial stereotypes — asking his interview subjects to provide answers that they may not want recorded for posterity a decade from now. An 18-year-old freshman at the University of Minnesota or UCLA who’s answering questions like “What’s the definition of a bad bitch?” or “Signs she’s on her period?” likely won’t find his or her answers so humorous once they’ve entered the job market, so perhaps Yafa’s best talent is getting these people to shed their inhibitions and caution and blurt out whatever thoughts reside within the id. “I think it’s important to make the interviewee feel as comfortable as possible — a true conversation rather than just hitting them with question after question,” Yafa said. “It feels like we’re just a whole bunch of bros talking about the girl they want, and I think that’s the way you can get the best answer from people.”

yafa 2

It wasn’t long before the University of Minnesota campus began to seem too small and confined for the ambition of the show, so on his spring break of senior year in high school, Yafa piled his stuff into his car and set off across the country, heading toward West Virginia and the Big 10 colleges in the area. “I was 17 and I couldn’t really stay in a hotel, so I slept in my car for those seven days. At 3 a.m., after I was done interviewing, I’d sleep there and then wake up at like 6 a.m. freezing. Then I’d drive to a new city, plan out the interview for the day and shoot at night. I just did that for seven days straight. I’d shower at gas stations. It was very low budget.”

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A surprising thing happened as he went from campus to campus: Some people recognized him, and sometimes he’d have a line of people waiting to be interviewed. It was a sign that he was slowly but surely building an audience of fans. His most explosive growth, however, came after one of his videos was featured on WorldStarHipHop, the controversial website that has aggregated everything from funny videos to footage of young people, often minorities, engaging in violent fist fights (the website’s founder, Q, has been accused of promulgating negative stereotypes). WorldStarHipHop is so popular and powerful that major entertainers regularly choose to debut exclusive music videos there. “The day that happened, my phone got a notification every two minutes for the rest of the day and the following day. I had to put my phone on vibrate it was getting beeped so much. I was getting messages from people on Facebook, people texting me and saying, ‘Everybody at the University of Minnesota is talking about your video!”

When Yafa graduated, he flew to Spain for a week for a brief vacation, but once he came back he spent a day in Minnesota before packing up his stuff and heading to LA. He wasn’t even 18 years old yet and therefore couldn’t sign a lease, so for the next few months he sublet in an apartment with six other roommates and got a job at a Starbucks a 45-minute bike ride away (you can see a Starbucks in the background many of his most recent videos). Almost immediately after turning 18 he got a job at a sports bar and has been there ever since, working at the bar at night and then shooting the Yafa Show on his days off.

At first, he was plagued with self doubt about whether he’d made the right decision and if the show would ever really take off. “I remember I was at a Starbucks going over some ideas, and I had a guy approach me who said, ‘Yo Yafa, I’m a big fan, I didn’t know you moved to LA. I watched your show back when you were in Minnesota. Big fan.’ And that gave me all the motivation I needed to go back out there and start shooting.” Within months, he became a fixture on the UCLA campus, and by living in LA he’s begun to make some crucial relationships that might lead to future collaborations with entertainers and famous YouTubers.

But during our entire conversation there was one topic he never broached: money, or, more specifically, how he planned to make it. So I asked him about his business model. Was it to simply rack up views and participate as a YouTube partner, taking a cut of pre-roll ads on his video? “I’m a YouTube partner,” he said. “I think when the content is sometimes risque, it’s harder to get advertisers on the show.” And some YouTubers have complained over the years that the pre-roll ads don’t pay very high rates, requiring you to amass millions and millions of views per month in order to make decent money — a bar Yafa hasn’t reached yet.

Instead, he’d like to pursue an avenue already being mined by other major YouTube personalities — direct sponsorship. “Maybe a clothing line to go along with it,” he said. “Or maybe a travel sponsor.” In this scenario, a hotel chain or airline pays for him to travel from city to city to shoot his show. He’s also contemplated selling merchandise, like t-shirts with his face and show logo on them. “I’m focused [on revenue], but I’m not purely focused on it. Right now I feel like working on the content is the most important thing and once the show gets big enough the sponsors will come to you.”

I asked Yafa’s friend and mentor, Dane Golden, about the longterm business viability of the show. Golden has worked on the brand side of YouTube sponsorships, after all. He didn’t seem worried about Yafa’s prospects, and said it would be disastrous for his brand if he started using cheap gimmicks to juice up his YouTube views for advertisers. “He’s gradually finding an audience and it isn’t happening right away,” Golden said. “He is doing all he needs to do. He could do some collaborations [with other YouTube personalities], and collabs are how smaller YouTubers get bigger, but he doesn’t want to do it with just anybody, he wants to only do it with people who really identify with his audience and his type of show. So that takes time to find that audience.”

Until he does find that audience, Yafa will continue to get up, work his sports bar job, and then shoot on his days off, staying up all night editing the video while subsisting on coffee and chicken nuggets. Because that’s what he set out to do when he threw away a traditional career trajectory to pursue this dream. Most kids his age haven’t even figured out what they’re going to major in in college. Yafa, though he couldn’t pinpoint the exact number of subscribers he needs to have crossed the threshold between amateur YouTuber and professional, at least knows where he’s going. “It’s the point where if you tell a random person on the street that you have this number of subscribers, whether it’s 50,000 or 100,000, they say, ‘Wow!’ That’s how I’ll know I made it.”

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When will we see the first $1.5 billion valuation of a YouTube network?

stylehaul

Want to know how smart a bet Google made when it purchased YouTube for $1.5 billion in 2006? Independent companies that were built almost entirely on YouTube’s platform are being sold for nearly that same amount.

In March, Disney acquired Make Studios, a network of over 50,000 YouTube channels with close to 400 million subscribers, in a deal that could value the company up to $950 million. Then in September, an investment group took a stake in Fullscreen, a network with 3 billion monthly video views, that valued the company between $200 million and $300 million. And finally StyleHaul, a network that specializes in beauty and fashion shows, was acquired for a $150 million valuation. As Digiday’s Eric Blattberg  put it, “It’s a good time to run a big YouTube network.”

Here’s another way to put these valuations in context. Fullscreen, a company launched in 2011 and distributed on a platform less than a decade old, is valued higher than what the Washington Post went for when it was sold to Jeff Bezos.

How did we go from prognosticators worrying that YouTube would always be a loss for Google to massive valuations and revenue for both YouTube and companies that use it for distribution? Well, you could probably point to December, 2010, when the company launched pre-roll advertisements. Before that, it was only running Adwords-like text ads. With that move, brands that were already spending millions to develop television commercials could simply re-purpose those same commercials on YouTube at mass scale.

Vevo and its backers also deserve a lot of credit for their prescient early YouTube strategy. For decades, music labels had been giving away their music videos to MTV and VH1 for free (for marketing purposes) and the executives at Universal and Sony were determined to do a better job at monetizing the web. So they created an online networks that distributed their signed artists’ music videos mainly on YouTube. That’s why if you watch a music video on YouTube today, it likely has a Vevo logo on it.

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The move paid off. As of 2012, Vevo was bringing in an estimated $280 million in annual revenue and receiving 3.1 billion views a month. It began looking for more backers at a valuation between $700 and $800 million. And in 2013, Google took an official stake (likely over worries that Vevo would otherwise move its network over to Facebook), that valued the company at $700 million. No doubt having so many music stars actively marketing themselves on YouTube paved the way for mainstream legitimacy, allowing other major media companies to invest in the platform.

With YouTube itself projected to generate $7.5 billion by 2015 and as much as $30 billion in just a few years, Google’s $1.5 billion bet on YouTube in 2006 may go down in history as one of the company’s smartest. I couldn’t help but compare it to the $30 billion Comcast paid for NBC Universal. How long until a YouTube network sells for that much?

Are you beginning to understand why news companies are suddenly investing so much in video?

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YouTube needs to start worrying about Facebook video

key and peele

On a recent episode of Comedy Central’s Key & Peele, the duo produced a skit on the dangers of concussions in football. Shot in a hyper-dramatized, cinematic style, it shows Keegan-Michael Key playing a high school quarterback who’s been sacked by a defensive lineman, resulting in a concussion. Afterward, he tries to rally his teammates for the next play but digresses further and further into a state of complete gibberish and confusion as his brain turns to mush. It’s hilarious.

As Comedy Central has been wont to do lately after a show airs, it not only uploaded the skit to its custom video player, but also to YouTube and directly to its Facebook page (via Facebook’s video player). What happened next should worry the executives at YouTube.

To be clear, the YouTube version, with over 700,000 views, had the largest audience. But the Facebook version, with 200,000 views, is a not-so-distant second, and it represents the massive strides Facebook has made at growing its video offering into a formidable opponent to YouTube.

Just a few short years ago there were basically three kinds of video you encountered on the internet: YouTube, Vimeo, and various custom platforms used by entertainment and news sites. The custom players were often clunky and had limited viral spread. Though some had embed features, allowing one to embed the video on his own website, they weren’t very intuitive. Vimeo has always been a beautiful product and has a hardcore fanbase of documentary and short filmmakers, but it’s a rather niche platform that never seemed to pose much of a threat to YouTube. So for seven or so years, YouTube was the reigning king of online video, with no other company even approaching its viewership numbers.

Facebook’s video player has been available for a few years now, and I remember uploading videos to it back in 2012 or 2013. The tool was glitchy, sometimes taking multiple attempts to upload something. And encountering Facebook video in the newsfeed was a somewhat rare occurrence.

Due to a confluence of events in just the last few months, however, that scenario is much different, and now it’s nearly impossible to scroll through the Facebook newsfeed without seeing video. So what changed?

Well, Facebook obviously began to favor video in its newsfeed algorithm, emphasizing it over text, image, and link content. And once Facebook page owners realized this by viewing their analytics dashboard, they had an incentive to start uploading more video. Facebook also started to auto-play video, making it harder to ignore (and also possibly inflating viewership stats, which I’ll get to in a second). And then lastly we had the Ice Bucket Challenge, the month-long viral campaign to raise money for ALS. Not only did it crowd the newsfeed with videos, it also allowed millions of casual Facebook users to upload video to the social network for the first time.

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It also helps that Facebook has, at last count, about 1.2 billion users. And it turns out many of those users are consuming video. The company recently announced that it’s serving 1 billion video views a day. It’s hard to find an apples to apples comparison for YouTube, but back in 2012 YouTube announced it was seeing 4 billion views a day, and we can only assume that number has grown considerably since then. An executive from web analytics company ComScore recently claimed that Facebook video had surpassed YouTube views on desktop, but this should be met with a skeptical eye, since this includes auto-plays, and Facebook auto-plays every single video in the newsfeed regardless if you stop to watch it.

Still, there are enough eyeballs for Facebook that it can now make serious inroads in luring stars off YouTube. Recently it has reached out to some of YouTube’s most famous personalities, offering them higher ad rates and significant advances if they leave YouTube and come to Facebook. It knows that these stars can create a domino effect, leading to other midlist stars trying out the platform. At the very least, if it can get some of these stars to cross-post their videos to their Facebook pages rather than simply embedding links to YouTube (what Comedy Central is currently doing with Key & Peele), then this could become a gateway drug to convince them to start investing more in Facebook and less in YouTube. And as Hameed Yousuf recently pointed out, the way Facebook displays videos uploaded natively vs embedded YouTube links is vastly different; the latter has far less visibility in the newsfeed.

That all being said, Facebook video still has significant weaknesses. For instance, though it works well within Facebook’s ecosystem, it doesn’t get much play outside of Facebook. I can only remember one or two times when I came across a Facebook video embedded on a blog or news site. YouTube is still the default tool for easily embedding video.

But even more important is the fact that it’s incredibly hard to discover Facebook video. Facebook’s internal search functionality sucks, and the site isn’t crawled well by outside search engines. YouTube’s search is amazing, and it’s the second most popular search engine in the world next to Google. And speaking of the G word, it’s the elephant in the room. Because it owns YouTube, it can not only crawl its metadata more efficiently, but it can also give it preference in Google search results. Do a search for “Key & Peele, quarterback” in Google.  The Facebook video doesn’t even show up in the first page of results.

Facebook is now over a decade old. It kills me that it for some reason hasn’t figured out how to provide a valuable search tool, something Twitter developed long ago. It keeps hinting that it will, but it’s forever on the horizon. Look what happens when I try to use its semantic search to search public posts for mentions of Key & Peele:

facebook search

“This search isn’t available yet,” an indication that someday, we don’t know when, but maybe, hopefully, we think there just might be a public search feature. Until that moment arrives, Facebook will always be hindered when it comes to discovery — for its video and any other type of content — a problem that the rest of the open web solved long ago.

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