Friday, March 2, 2018

YouTubing: Not What It Used To Be

A quick follow up on the post from earlier this week on earnings in the creative economy in these days of a new breed of celebrities who ply their craft online and build their following from the ground up. We tend to hear a lot about social media influencers making thousands per tweet, stars of Instagram with major brand deals, and of course professional YouTubers pulling in the big dollar, often without leaving their room.

As is the case in most marketplaces, especially those with low barriers to entry such as digital entertainment, a few make a lot and most don't earn much. Increasingly the way to make it on YouTube, which is the focus of this post, is for creators to use their online fame as a jumping off point, for activities such as books, personal appearances, merchandise, sponsorships, and product endorsement.

Because the revenue coming in solely from advertising running against the videos,  even for those with millions of views per month, is simply not enough. The CPMs (the amount that advertisers pay to reach 1000 viewers) for online ads have been declining on YouTube for most creators, a combination of a huge amount of inventory on the supply side (i.e. the 400+ hours of video being posted every minute to the site), as well as companies' concerns about brand-safe content moving many advertisers to premium YouTube inventory that tends to be produced by well-known creators and is generally considered family-friendly.

For the average YouTuber the squeeze is being felt on both sides, then: Competition from all the new creators wanting to get in on the action, and a flight to safety by the brands and companies with the biggest digital advertising budgets, such as P&G.

A study conducted recently by Professor Mathias Bartl of Germany's Offenburg University illustrates just how challenging it has become to make a living on YouTube alone. Bartl's analysis showed that even if you're in the top 3% of creators on the platform, and that means the bottom end of the tier averages about 1.4 million views per month, your net income from advertising (after YouTube takes its 45% cut) would be just under $17,000. (And at the highest end, where the likes of Smosh, Lilly Singh, and a bunch of game commentators whose names you don't know if you're over the age of 22, yearly incomes can run from $10 - $20 million, with ad revenue often being just one component.)
Click to enlarge
Not only that, but as you can see in the chart above the percentage of videos getting the lion's share of the views on YouTube has gone from about 40% in the early days of the site to about 3% more recently. And finally, for some additional context, there are roughly 16,000 channels on YouTube that receive in the neighbourhood of 1.5 million views or more per month, and that's out of a pool of millions of channels. Being in the top 3% is seriously hard work. Where you really need to be in order to make a living on YouTube is in the realm of the 2000 or so channels with 1 million subscribers. That seems to be the new level of success required for 'big enough'.

Related Posts:

Online Creators and Cash: Some Numbers From The Creative Economy
The Industry of YouTube: A 2017 Snapshot

Sunday, February 25, 2018

Online Creators and Cash: Some numbers from the Creative Economy

It’s a time of unprecedented choice. For everything from types of yogurt to entertainment. And as far as the latter goes this wasn’t always the case. In fact, the inverse was. There were only so many channels on TV, so many theaters in a city, so many slots on a radio station playlist. In other words, limitations were the defining characteristic of the marketplace.

Now nobody is keeping your writing, your music, your videos, your podcasts, or your handcrafted designs out of the purview of a global audience. The problem used to be getting a green light so you could get your work on the air, in a store, or otherwise in front of people. That's now the easy part, with the hard part being getting anyone to know or care that your work is available on Etsy, Soundcloud, Vimeo, YouTube, Patreon, and the like.

So what does this climate of ease of upload and/or availability of content or goods mean for creators? It's now been a decade or more since most of the ‘super platforms’ for content and commerce came onto the scene. In the early days people spoke of a radical inclusivity and democratization of creative processes and markets made possible by digital connectivity and networks. More recently there has been work done on what's being termed the 'degradation' of cultural creators and their creations, suggesting that despite the availability of inexpensive tools and low cost or free platforms, the inequalities and hierarchies of the corporate world are being reproduced online.

It is against this background that a study described as "the first rigorous quantitative analysis of America's new creative economy" has been conducted, estimating the income earned by creators across activities such as blogging, photography, music, self-published books, and handmade objects, with a focus on independent vs. celebrities generating revenue online, e.g. people with last names like Jenner or Kardashian.

Where the income earned by creators comes from:
  • Revenue share of advertising
  • Subscriptions
  • Affiliate marketing (commissions for referrals)
  • Sales of products made by the creators (e.g. on Amazon, Etsy, eBay)

Also note the following regarding the study: Income from activities such as influencer marketing, in which the ‘star’ from YouTube, Instagram, etc. paid to promote other products and/or services, are not included and revenue numbers for sellers on eBay are for self-made/handmade items only.

The top line numbers are as follows:


I ran the numbers to come up with averages, as opposed to aggregate figures. Even though averages can be misleading, because just one outlying high earner can disproportionately skew the average higher. Think of being in a room full of people and calculating the average salary of people in that room. Then think of that room if a few CEOs, let alone Warren Buffett, is standing in it.  So yes, averages aren't ideal, because they don't tell us how many people are making, e.g. more than a living wage, but I’m working with what I have, and here are those averages, and note that they’re for full year 2016.

Click to enlarge

Based on this cursory analysis it looks like you shouldn't expect to make much money anywhere except possibly on Twitch these days. And for those who may not be aware Twitch is a live streaming platform, acquired by Amazon in late 2015 for close to $1 billion dollars, which is dominated by live game play and commentary, but also has some oddities like streams of a guy Ubering drunk college kids around

Not included in the study was Patreon, a donate-what-you-want subscription service for creators across a wide range of products and services. While there are a lot of people making a little money on Patreon, and a little is better than nothing, it turns out only about 2% of active creators on the platform are making what could be considered any sort of a living. On the other hand Patreon paid out more than $150 million to creators last year, dollars that otherwise would have been more difficult for individual makers to access.

So whether or not any of the reported numbers are good news or bad news isn't really the question. It is the new reality for creators, for whom new options exist outside of the old system of limited channels, genres, and form factors.

To access the full report, entitled "Unlocking the Gate: America's New Creative Economy", click here.

Related Post:

Monday, January 15, 2018

War of The Words: The Role of Social Media in Political Conflict

This blog does not generally concern itself with military matters but when things military cross over with things media, that’s when I take to the light artillery, i.e. the laptop keyboard. And so today you get some thoughts on a podcast I just finished listening to, on a new form of warfare. It’s the one made possible by and magnified by social media platforms.

And yes, defeating the enemy by winning them over ideologically was always one form of warfare, but now, argues David Patrikarakos, author of War in 140 Characters: How Social Media Is Reshaping Conflict in the Twenty First Century, the ability to shape narratives, and to spread them, is taking place in distinctly tactical ways, most of which were not possible prior to the era of digital networked media.

This is because there are billions of people on social media, each with the ability to deliver, edit, and/or distribute information. But the issue at hand is more than just one of of scale, i.e. moving from a limited set of broadcasters and newspapers to thousands or millions of communicative channels. It’s also the fact that what is ‘official’, ‘journalistic’, or ‘accurate’ moves through the same channels as the deceptive and misleading. Welcome to the marketplace of opinions.

Early in the podcast Patrikarakos makes a key point: That in war as we once knew it propaganda operations supported military operations on the ground. Now, he says, it’s the other way around. Military operations are supporting propaganda operations. He says he noticed this while covering the recent war between Russia and the Ukraine. Wherever he went, he heard propaganda repeated to him, often verbatim, and almost always with a heightened level of conviction.

Isis, says Patrikarakos, is also a phenomenon of social media. In fact he refers to it as "a social media terror organization." "If they had emerged even ten years ago, it would have taken them 20 years to reach one quarter of the people they were able to reach."

It’s been about 10 years since the promise of participatory media became a reality. Think back to the arrival of content-sharing platforms such as Flickr and MySpace and YouTube. What's interesting to think about now is how they all seemed like toys at the time. Pastimes where we could spend hours on end doing who knows exactly what. 

The addictiveness of the activities was undeniable, and now here we are 10 years later. Most of us assumed that more cameras, more voices, and more opinions would mean more truth, or at least more checks and balances on claims. But even those with a very limited knowledge of physics (e.g. me) know enough that for every force there is an equal and opposing force. And not everyone uses their powers for good.

To hear the full interview with author David Patrikarakos on the WhoWhatWhy podcast click here.

Tuesday, December 26, 2017

Best of the blog 2017

It was a media year full of apologies and, often times, of subjectivity over objectivity. Of post truth and alternative facts. It was also another year in which there was an oversupply of content, and business models in both the analog and digital worlds were called into question. We also saw things go from moments to movements. Some things came as a surprise, such as raccoons and squirrels showing up in places they were not expected. Others came as no surprise.  
(Ed. Note: That last one is a NYT link, so if you're saving your NYT clicks...)

Have we shifted to new norms for a new era? Time will have to decide that one.

In this tiny corner of the mediascape, i.e. this blog, I have run the numbers for the year, as is my annual custom, and here are the top 5 most popular posts of the year, in reverse order.

#5 From LOLcats to Rated Dogs

Coming in at number 5, and accounting 7% for all page views for the year it's the story of North Carolina college student Matt Nelson, and the media empire he started by, yes, rating dogs on the internet.


And you thought the internet ran on cats. That's so five years ago. Read the story of the We Rate Dogs phenomenon here.

#4 The Internet is Worth How Much???

Occupying fourth place, and representing 12% of the page views for 2017, is the post that asks and answers the question: What is the value of the internet to the U.S. economy? 

It also provides a look into what it is I do for a living, which is not always easy to explain.  Find out how on earth such a figure is arrived at by checking out the full post here.

# 3 The Internet: Where hundreds of millions of users does not equal a business model

At number 3, with 13% of all page views for the year in its corner, and continuing with the theme of internet economics is this post. It calls into question the widely held belief that the internet's enabling of the digitization of media products, coupled with low cost mass distribution, equals a goldmine. Particularly when you can sell digital advertising again 'eyeballs', to use industry parlance, use freemium business models in which some pay but most don't, or take engagement metrics to the bank, so to speak. Those measure such things as the amount of time people spend on your app, site, or service, the comments they leave, and whether or not they click 'like' or 'share'. While this has been the road to billions for Facebook they are the outlier. Read the full post on bewildering digital business models here.

#2 Taking on the Fake News Industrial Complex

With just a handful more page views than the #3 title holder is this post, which introduces you to Misinfocon, an event that went deep into the world of misinformation and disinformation pedlars, bringing together journalists, technologists, software developers, academics, advocates, investors, a counterintelligence expert working for the Department of Defense, and even a bona fide fake news site creator at MIT’s Media Lab earlier this year. Get the whole story here.


#1 The Digital Future & How It Happened

And the big winner, at #1, with 14% of all page views for the year it's this post, based on a conference keynote given back in January by Jeffrey Cole of USC Annenberg’s Center for the Digital Future. The gist of the talk was about how and why disruption, that oft used, if not, over-used term, happens, even though hindsight often makes things look so obvious.

Why didn't Blockbuster buy Netflix for a song when they had the chance? How and why did capital and infrastructure intensive businesses such as the hotel industry and the cab industry get blindsided by the likes of AirBnB and Uber? Read the full post for some insights into why things happen the way they do, particularly in the world of technology-based businesses.

And now I'll take a moment to thank you for reading and sharing the blog posts this year. It continues to be a labour of love, five long years into this exercise. Where things go with it in 2018 are yet to be seen but for now I thank you for joining me in this journey of publicly thinking through what I see as some of the most interesting puzzles of our time.

Thursday, December 14, 2017

Getting schooled by Degrassi

We're now into 4 decades of Degrassi, the teen-oriented show that began its life as a staple on Canada's public broadcaster then moved on to PBS in the US and later to cable and specialty channels around the world and most recently to Netflix. Along the way Degrassi has picked up Emmy and Peabody awards, future famous stars such as Drake, and famous fans such as filmmaker Kevin Smith, he of Jay and Silent Bob, Mallrats, and Clerks fame.

But you don't need to spend the $8000 Kevin Smith mentioned above to dig into the Degrassi vault. Now, thanks to a new YouTube channel called Encore+, you can pair 21st century binge watching habits with the 20th century problems of the kids from Degrassi as full episodes of the show are available for on demand viewing on the channel, along with other Canadian favourites such as Mr. Dressup and DaVinci's Inquest and sundry documentaries

The first iteration of the Degrassi franchise was The Kids of Degrassi Street, which ran until 1986, followed by Degrassi Junior High, from 1987 to 1989, then it became Degrassi High from 1989 to 1991, Degrassi: The Next Generation from 2001 to 2015, and most recently Degrassi: Next Class which made its way to Netflix in 2016.

In parallel to Degrassi’s development across its five franchises has been the show’s migration from public broadcasting to cable channels and now to OTT. Degrassi creator Linda Schuyler spoke recently in Toronto about the show's evolution across time and tech platforms, and my story on the talk can be found here.

Friday, December 1, 2017

Twin Crises: Traditional Media and Digital Media

It turns out that crisis in the world of media is an equal opportunity employer. Organizations and people on both the digital side of the business and its analog ancestors are feeling the pain, though for different reasons. A recent talk given by by Postmedia columnist Andrew Coyne served as the impetus for this post, and I’ll share my notes from that talk in a bit. 

My old school handwritten notes from Andrew Coyne's recent talk
at Innis College, University of Toronto

Coyne draws a crucial link between the crisis in the media and the current crisis in the public and political spheres, where the left and the right couldn’t be further apart and the prospects for anything even resembling consensus or compromise are grim indeed.

But first some context for our look at the duelling crises in the mediascape. On the one hand we’ve got the race to the bottom of advertising-based digital business models, in which even the most high profile, highly trafficked sites such as BuzzFeed, Vice, and Mashable, are feeling the pain as they miss revenue targets, despite, in most cases, continuing growth in users and clicks.

On the other hand we’ve got the ongoing erosion of traditional media’s revenue stream, particularly with newspapers, as seen in the chart below.

Source: The Economist

Whether it’s in print, analog, or digital, much of the talk now is around the viability of advertising-business models as the way forward for a dramatically reconfigured media landscape. Now it’s abundance, not the scarcity of column inches or the broadcast dial that is the rule. And on top of that, those once considered amateurs or non-experts are able to command audience and in turn dollars.

So what’s next for the besieged components of the media and entertainment industries? We’ve all become so accustomed to the ‘free’ content, which comes in a few basic forms: ad-supported, freemium-supported, pirated, and non-monetized i.e. labor of personal interest/love. If I’ve missed any, let me know.

Some say, that despite the runaway success of Netflix, and on a global scale, that ad-supported OTT television may well be the future. There’s also a compelling argument being made for a move away from ad-supported publishing online.

A key culprit in the digital world is what Marc Pritchard, global head of marketing  for P&G, one of the world’s biggest advertisers, calls the fraudulent media supply chain, littered with fake clicks, bots, and content that just isn’t brand safe. “We had substantial waste in a fraudulent media supply chain", Pritchard has pointed out. "As little as 25% of the money spent in digital media actually made it to consumers. But digital is now a $200bn industry. We have to stop giving digital media a pass and insist it grow up.” 

Of course these are just the broadest of brush strokes to provide some context for the complex scenarios that have led to a media industry fighting a battle on several fronts, but the gist is pretty clear: The last 10 years or so have been devastating to legacy media, the houses of the digital giants are anything but clean, and things are far from settled in terms of business models.

And with that, my notes, in point form, from the recent talk given by journalist Andrew Coyne at the University of Toronto, entitled: Crisis in the Media: Causes, Consequences, and Cures

A brief history of the internet and news:
  •        The cost of distribution became almost zero
  •        The speed and updateability of electronic media
  •        Anyone could publish, whether blogger or legit media organization
  •        The rise of global news brands, such as Washington Post, New York Times, Wall Street Journal

On the upheaval that followed:
  • “We have ourselves to blame”, said Coyne. “A lot of our ills are self-inflicted. We made lousy websites, then lousy iPad apps. Craigslist then Facebook and Google got the ad dollars because they built a better mousetrap.”

On the price charged for newspapers:
  • “We never charged readers more than about 25% of the actual cost. Ads paid for the rest. And this made us vulnerable.”
  • William Thorsell of The Globe & Mail said: “We’re not in the business of selling you newspapers, we’re in the business of buying your time.”

On Fake News: A Red Herring?
  • “Fake news is a fact of life in the age of social media. It’s the demand for it, not the supply, that’s the problem. It’s the people seeking and/or finding/receiving information that confirms their own point of view. And it was always that way. What’s different now is it’s being amplified, and then weaponized.
  • “The cures for fake news may be worse than the disease…e.g. government oversight.  The last people I want deciding what’s ‘true’ is the government.” 

On Trust:
  • “The crisis of trust isn’t just in the news, it’s a crisis in knowledge. It’s an epistemic crisis. There’s a boiling resentment of the liberal, educated elite. This led to the rise of populism seen in the U.S….the politics of know-nothing-ism.”
  • “The contempt for media morphed into contempt for knowledge and expertise.”
  • “The internet played an important role in the growing partisanship/lack of consensus between the postmodernism of the radical left and the cynicism of the right.”
  • “There was never such a thing as a well-informed public.  Only some ever chose to be.”

On whether or not news is a public good:
  • “I found the Shattered Mirror report unnecessarily menacing.  I think you can now charge people for what they watch, listen to, and read, vs. the bundled model that aimed for the mushy middle. And not everybody is going to be able to make it in the pay model world, but government subsidies are not the answer.”
  • “I’m against government/public funding of news because it’s not 3 or 4 outlets now, but 3 or 4 thousand. Should the government be deciding who is and isn’t a journalist?”

On the fact that some people are doing journalists’ jobs for free, out of passion for subject matter

  • “We should have to justify our paycheques. If you’re going to be the New York Times writer on a topic then you’d better be damn good.”

Thursday, November 30, 2017

The post-broadcast, post-border world

Globalization -- the flow of goods, ideas, and people across international boundaries --  is nothing new. It’s been around for centuries, enabling the movement of everything from tea in cargo ships to cultural and social phenomena.

What is new is the expansion of these globalizing practices to the world of media production and distribution. In the music world the combination of globalization and the internet means pop hits from South Korea and Puerto Rico can freely cross national borders and become the most watched videos in the history of YouTube. In television it means that instead of thinking in terms of the infrastructure required for cable TV and fixed broadband, producers ought to consider new options for content delivery such as OTT and mobile.

To use my home country of Canada as an example, the impact of globalization on media seen in the form of homegrown YouTube personalities with massive global followings, such as Michael McCrudden of Before They Were Famous, Mitchell Moffitt and Gregory Brown of ASAP Science, and comic actress and musician Lilly Singh whose Superwoman channel now has over 2 billion views.

Another great example is The Indian Detective, slated for release on Netflix in mid December 2017. It's a co-production shot in India, South Africa, and Canada starring Russell Peters as a Toronto cop of Indian heritage who finds himself in the middle of a murder investigation while visiting his father in Mumbai.

Together the new delivery mechanisms for content as well as the new form factors and viewing preferences form the foundation of an entertainment industry that's dramatically different from the one largely defined by broadcasters, cable companies, and fixed television schedules.

To provide some perspectives on the various industry changes afoot the CMF commissioned me to write a White Paper entitled Adjust Your Thinking: The New Realities of Competing in a Global Media Market.

It's both a standalone document and a companion piece to the series of 7 Fact Sheets released by the CMF over the course of Fall 2017 which analyzed key geographic regions in the global media and entertainment industries.

Adjust Your Thinking: The New Realities of Competing in a Global Media Market was released this week at the Whistler Film Festival, and can be found here.