YouTube Red – how it works and why it may be disastrous


On the 22nd of October a new service was announced for YouTube, called YouTubeRed. For $10 per month, the service provided many benefits such as downloading videos for offline viewing and a robust music selection. But the chief draw for many people would be the lack of ads.

Back in 2007 YouTubelaunched its Partner Program; a way for those who create content on the site to make money. This was the starting point of a generation of “YouTubers”, entertainers who made their living creating videos and sharing them on the internet.

One of the most famous YouTubers- a Swedish man who many call “PewDiePie” – has 40 million subscribers and was a guest on The Late Show with Stephen Colbert.  The content creator, whose real name is Felix Kjellberg, recently became the first YouTuber to crack 10 billion views on his channel. Substantial popularity breeds substantial wealth, it seems. Although YouTube prevents its employees (Which YouTubers are classified as) from discussing their income, some estimate his net worth to be around $40 million (R544 million).

Stephen-Colbert-PewDiePie

(Left) Felix Kjellberg / PewDiePie teaches Late Night host Stephen Colbert (Right) Swedish curse words.

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Unfortuantely, while YouTube Red may be a service that some YouTube viewers are looking forward to, those who create some of the content on the site have raised some concerns.

Many of them are wondering how the service will work and how they will be compensated for their videos. One of the hurdles also seems to be a lack of communication between YouTube itself and these content creators.

John Bain AKA Totalbiscuit has 2 million subscribers.

Jesse Cox, a creator with more than 800 000 subscribers has a conversation with Stephen Williams (known as Boogie2988, he has almost three million subscribers.

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The individual some colourful language in that last tweet is Daniel Hardcastle, or “NerdCubed”. Hardcastle’s channel has more than 2 million subscribers, and it was on that channel today that a video was posted in preparation of YouTube Red’s launch.

The video – titled “All about YouTube Red” – explains everything that is known to creators concerning their livelihoods and the problems the new service may present. 

“It’s a complex and interesting issue, and I will point out that some of the things I will say will be incorrect because we just don’t know all the details. [YouTube] is [legendarily] awful at giving any information to the people that make YouTube videos,” Said Hardcastle, “Unless your name is Zoella or PewDiePie, and they can wave you in front of a main stream audience, they just don’t [care].”

“Zoella” (Zoe Sugg) is another large YouTuber with almost 10 million subscribers.

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The problem Hardcastle and the rest of the YouTube community has with the new service is the fact viewers who us it won’t have to watch adverts – and those adverts are what the depend on to make a living. YouTubers are paid according to Clicks Per Million (CPM) – a term for how many adverts a YouTube viewer will see while watching a video, and what that view is worth as a dollar value.

YouTube Red skirts this system by exchanging the CPMs with the $10 monthly charge.

“At the moment CPMs are dropping. They fluctuate throughout the year but overall they are dropping, which is why a lot more people are turning to sponsorships and book deals and another things to get out of it,” said Hardcastle.

“Now YouTube Red is coming along and even their website is wrong! [What it says] is a lie! YouTube Red isn’t an additional revenue stream, it’s a replacement. If people you were watching adverts now use Youtube Red, they are no longer watching ads. They’re taking a functioning system and replacing it with an untested system which they have no idea about how well it will do.”

Youtube-Red

The somewhat misleading message.

Hardcastle says that he and other creators have been told that this is how YouTube Red will work : all videos watched in a month will have their view times tallied and added to a shared pool. This pool, which sites at around 6 billion hours per month, according to Hardcastle, is then used to calculate how much each creator gets from the YouTube Red subscription fees, calculated as per what percentage of that 6 billion hours they are responsible for.

The problems in this system are myriad. Those pointed out by Hardcastle include the fact that lower-quality videos will have an advantage (due to the fact that they are easier to make), as well as a disproportionate amount of the money going to those established creators, leaving little for newcomers.

While the bigger names on YouTube are enjoying success at the moment, the platform as a whole will suffer if the newer creators are not cultivated. When the “old guard” stops creating content, there need to be replacements, which will be shunned by the business model of Red.

The next issue is the time it takes YouTube to pay their creators. Hardcastle states that it takes 45 days after the end of a month for YouTube to run the huge numbers and boil them down to a payslip. In Red’s early stages this is extremely problematic, especially because the service comes with a free 30-day trial which was made available to US consumers.

“I assume no one gets paid for that free month. For all of November (one of the busiest months) we won’t get YouTube Red [money] coming in,” Said Hardcastle, “I won’t know how well Red goes until the middle off February, for a system that launches tomorrow!”

Youtube-Red-South-Africa

South Africa is not part of the first rollout. This is the message on www.youtube.com/red.

Although creators can opt in to the new service and receive money from it, not doing so could result in a death sentence for a creator’s channel.

Choosing not to use Red will result in all of a creator’s videos being made private. A private video on YouTube is not viewable, and cannot generate any income for its creator.

YouTube’s creator-focused blog has since released some new information about the service and its effects. While still not answering some of the big questions, the free trials are addressed:

4. Let’s talk about free trials. Creators are the lifeblood of YouTube. So with Google Play Music subscribers instantly joining YouTube Red, we will pay a portion of the revenue we receive from these subscribers to our creators on day 1. Even with 30 day free trials, our creator community will make as much or more as they would have without YouTube Red.

With the lack of information, over-abundance of misinformation and an untested system about to affect many people’s livelihoods, creators and their fans will need to strap in and wait until February for YouTube Red to be fully realised.

“This is a business I run here. It might not be the most professional, but five other people depend on money from [my YouTube channel], and that keeps me up [at] night,” Said Hardcastle, “YouTube has gone and said: ‘Hey you know that thing that is kind of unstable but is here [and works]? We’re replacing it with something experimental and if you don’t participate your channel will be removed!’ It’s not a pleasant time. Maybe, maybe maybe it will be successful, but [I can’t recommend Youtube Red yet]. If you want to support your favourite creators, divide up that $10 and give it to them directly through Patreon or buy buying their merchandise, or just keep watching their ads.”

 

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