The Value Gap in Online Video: Being a YouTube Millionaire is a lot harder than you think

As online creators struggle with declining ad rates and fractions of pennies payments for streams, platforms and artist-entrepreneurs respond with new options.

During the closing keynote of the 6th annual Buffer Festival held on September 27 in Toronto, online creator turned entrepreneur Jack Conte threw up a slide that told the story that is the reality for many online creators. This particular slide was the earnings and engagement page from his Google AdSense account, which breaks down how many views his videos receive and how much revenue he receives. The news was not good. In exchange for 1,062,559 views and 1,919,583 minutes watched, his total earnings were estimated at $166.10.

These numbers probably seem out of synch with the tales you’ve heard about the self-made YouTube wealthy: the teens and twenty-somethings who have turned cameras set up in their bedrooms into global celebrity and uncommonly high paycheques. Those people do exist, of course, but they essentially make up the ‘one percent’ of the platform, with earnings many, many times those of the average YouTuber. In order to be part of the elite class of YouTubers making millions per year, millions of subscribers are required, often more than 10 million in fact, along with an output of 3 to 5 new videos each week, and a staff to assist with a volume of production which is not unlike that of a TV show.

Such a production approach can be a viable business for a small percentage of online creators, but, for the majority of people posting their work online, the setup is far more of a cottage industry. And because most creators don’t have millions of subscribers or the resources to hire production staff, Jack Conte founded Patreon, an online platform that facilitates membership-based financial support between fans and artists. The premise was simple. Like someone’s work? Make a monthly pledge.

In the five years since Patreon was launched, it has gone from zero patrons and artists on the platform to approximately 1 million patrons and 50,000 creators. This year, it’s on track to pay out $300 million to creators, thereby doubling the payouts made in 2017. A few dozen of these creators are reported to be generating six-figure revenues thanks to the platform. While not in that highest tier of Patreon-supported creators, Canadian podcaster Jesse Brown has built his Canadaland brand from a single podcast on media criticism in Canada into a network of shows, and he did so via Patreon, where close to 4,000 patrons pledge just over $20,000 per month to Canadaland, which supplements its Patreon revenues with advertising sponsors.

The term ‘value gap’ is usually used to describe the fractions of pennies that musicians have been recently receiving for streams on Spotify or YouTube, but it’s also relevant to online creators in general, who more and more are confronted with the challenges of an online marketplace that is oversupplied with creators—whether they’re writers, filmmakers, podcasters, comedians, beauty, fitness, and lifestyle bloggers, or musicians—and an advertising pie that can only get sliced so many ways.

As evidenced in Jack Conte’s slide showing a payment of just over $100 for more than 1 million views, the time and resources creators put into their work and the payments they often receive from the online platform are mismatched. To make things even worse, payments have been declining for some time, most profoundly during last year’s ‘Adpocalypse’—a boycott by advertisers who were unhappy about their ads appearing alongside videos they deemed inappropriate or otherwise not ‘brand safe’. The result was the removal of hundreds of millions of dollars from the advertising pipeline that provides payment to creators.

Though the worst of the Adpocalypse appears to be behind us, the days of creators making a living on YouTube supported solely by advertising dollars are largely a thing of the past. Multiple revenue streams are therefore a must, and YouTube has developed a suite of non-advertising-based monetization tools to help move creators beyond click-based revenue alone. In case you’re wondering how committed YouTube is to enabling business models outside of ad revenue sharing, the company now has an executive whose title is ‘Head of Alternative Monetization’. That executive is Rohit Dhawan, who gave the opening keynote at Buffer Festival’s Insight Series, a day devoted to the business aspects of the constantly evolving online content industry.

Dhawan plainly stated the following during the kick-off at the industry event: “My job is to maximize creators’ earnings.” And so far, so good. It has been reported that the number of YouTubers earning at least $10,000 per year is up by 35% year over year and that the number of creators in the six-figure range has increased by 40%, although the actual number of creators in each tier has not been made public.

The path to more dollars in creators’ pockets is, thanks to the integration of merchandizing and ticketing directly into the platform, the introduction of subscription-based channel memberships along with exclusive offerings, and features such as Super Chat, a live and interactive chat that lets fans interact directly with their favourite YouTubers by purchasing chat tools such as emojis, placements, and colours to highlight their messages in the live chat stream.

Dhawan reported that 64% of creators who use the Super Chat feature double the revenue they generate through YouTube revenue. He also pointed to success stories such as Lucas the Spider, whose creator sold $1 million in merchandise in 18 days using the new integrated eCommerce feature.

Also integrated into YouTube’s offerings to brands and creators are functions usually carried out by third-party agencies. To streamline relationships between YouTubers and brands, YouTube acquired Toronto-based influencer marketing platform Famebit in 2016, bringing together tens of thousands of creators with over 10,000 brands. What separates Famebit from other influencer marketing agencies is its methodology for matching advertisers with content creators. Rather than auditioning creators based upon online work they’ve already posted on YouTube or other online platforms, the agency issues a request for ideas to a few hundred creators, out of which about 10 to 20 are selected by the brand for a campaign that often lives across various social media channels.

While YouTube’s ‘one stop shopping’ approach to these new features has turned into a valuable new resource for many, there have also been criticisms of a centralized system that has video distribution, influencer marketing and monetization via advertising, merchandise and ticketing all taking place under one roof. One skeptic of the new programs issued a mini-tweet storm on the hashtag for Buffer Festival’s Insight Series, criticizing YouTube for introducing new features that ‘create a deeper dependency’ between the platform and creators, while also shifting commissions from an array of third-party agencies back to the Google-owned site.

Whether you’re for or against the centralized services offered by YouTube they are now but one of several options available to creators looking to branch out beyond ad-based revenues. In addition to the crowdfunding of the likes of Kickstarter and Indiego or the subscription/membership model of Patreon, other platforms ranging from Facebook to Instagram, Twitter, and Snapchat are in the midst of adding longer form video to their offerings and will no doubt be experimenting with a variety of business models as their platforms are only as engaging as the content that lives on them.

Note: This post originally appeared on Trends
Related Post: YouTubing: Not What It Used To Be 

Joining the Pod Squad

After many, many years away from the interviewing game (I won't say how many, as it's that many), I'm doing a podcast series -- 6 half-hour episodes for now -- called Now & Next.

Episode 1 just went live this week, and it's called Inside YouTube: Beyond Dogs on Skateboards and Viral Video. It takes a closer look at the industry structures that are developing around the internet's leading platform for user-generated videos, with Mark Swierszcz, head of YouTube Space Toronto, as our guide.



YouTube began in 2005 as random clips uploaded by anyone, and over the years became a prime destination for both creators and viewers around the world. Today 1 billion hours of video are watched daily in over 90 countries. The platform has minted thousands of its own stars and has also demonstrated just how far we’ve come from the world of traditional approaches to creative development and broadcast schedules.

I was astonished -- no really, really I was -- to see the podcast perform so well on the charts in its first week of release. It topped the tech category for Canada on day one and ended the week at a respectable #13. Thanks everyone for your support of this new digital undertaking. The next episode goes live on October 30th and I hope you'll give it an ear or two.

The plan is to publish a new episode every 2 weeks through to the end of December, with upcoming episodes covering the role of data in the entertainment industry, the great podcasting surge of 2018, cryptocurrency and the creation of digital originals, and the mainstreaming of VR (virtual reality) and AR (augmented reality).

Now & Next is available on iTunes and the major podcast apps. 

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Hashtag We're Number 1
(Or at least we were temporarily)

The Rise of Documentary in a Post Truth World

In today’s world, where disorder seems to be the new order, it shouldn’t come as much of a surprise that the documentary format is experiencing a newfound success. As Mark Twain cannily observed, “truth is stranger than fiction… because fiction is obliged to stick to possibilities; Truth isn’t.”

And truth, it turns out, can make for good business. With budgets usually in the low single millions vs. the hundreds of millions spent on box office toppers in genres such as drama, adventure, animation and comedy, distributors, sales agents, and financiers are now looking at the documentary format from a new perspective.

Docs at the box office

Box-office analyst Jeff Bock explained the doc phenomenon this way in a recent issue of Variety: “Netflix and streaming services have pushed documentaries into the forefront.” Bock continued: “Could the surge inspire studios to get in on the trend? It’s possible… Documentaries are generally inexpensive to produce, and commercial companies likely have a bigger budget to spend on marketing than indies do […] Don’t be surprised to see a Lionsgate or Paramount documentary released on a wide scale as counterprogramming [next summer]. If a studio that is struggling can make $10 million on a $1 million film, what does it have to lose?”

Bock’s analysis follows two notable years of box-office hits, on top of the popularity of factual titles available through SVOD services such as Netflix and Amazon Prime Video. In the midst of summer break blockbusters such as Deadpool 2 and Avengers: Infinity War, 2018 has also been hailed ‘the summer of documentaries’ with audiences across North America filling seats for the real-life tales of TV’s Mister Rogers, U.S. Supreme Court Justice Ruth Bader Ginsburg, and a group of separated-at-birth triplets.

2018’s top documentary performers

• Won’t You Be My Neighbor, on the cultural impact of Fred Rogers aka TV’s Mister Rogers ($22.6 million generated at domestic box office)

• RBG, the story of U.S. Supreme Court Justice Ruth Bader Ginsburg ($14 million generated at domestic box office)

• Three Identical Strangers, the story of identical triplets separated at birth and raised by different families then accidentally reunited ($12 million generated at domestic box office)

Across Canada this summer, audiences also showed up in large numbers for the Canadian production The Accountant of Auschwitz, which tells the story of former SS officer Oskar Gröning’s trial, held 70 years after the end of WWII. The stirring documentary, released theatrically across Canada during the summer and fall of 2018, enjoyed unusually high box office numbers. During one week in June, The Accountant of Auschwitz even recorded the highest per theatre revenue of any film in Canada, beating out summer blockbuster Oceans 8. Producer Ric Esther Bienstock is quick to point out, however, that the documentary’s box office victory over Oceans 8 “[…] is a bit of an optical illusion. While it’s factually true, it’s because we were in one theatre that week, and we grossed more on a per theatre basis than Oceans 8, which was presented in 300 theatres. Still, the success of our theatrical release has really been a very pleasant surprise. We’re also set for a broadcast premiere on the Documentary Channel this fall, with a Hollywood Suite second window. And, of course, the rest of the world is still open for exploitation.”

The "robust world of non-fiction"

At this year’s TIFF Industry Conference documentary day, a group of executives focused on acquiring and representing non-fiction content assembled for a panel to deconstruct the goings on in the world of documentary. Kevin Iwashina, senior associate at Endeavor Content (formerly WME Global), noted that the documentary category used to mean just one thing, and that was a 90-minute feature. Now he sees what he termed “the robust world of non-fiction”, with the potential to mean many different things and take on a variety of form factors and be presentable on a variety of screens.

Also new is the variety of paths to positive economics, whether it’s theatrical box office, streaming/SVOD, advertising-supported AVOD, transactional TVO or some combination of those monetization options. “What’s changed,” pointed out Rena Ronson, head of the Independent Film Group and partner at United Talent Agency (UTA) “is that we now have feature docs doing better than feature films in the marketplace. And that’s new.” Jessica Lacy, partner and head of the international and independent film department at ICM Partners, says she has witnessed a new attitude toward documentaries from the investment community. “Financiers from the world of traditional feature films are becoming interested in financing the documentary format. […] We live in a complicated world and people want to be a part of that.”

New form factors and new opportunities

UTA’s Ronson and ICM’s Lacy noted that the IP (intellectual property) that resides within these real-life stories is another element that makes documentary financing attractive to investors. Examples cited include The Seven Five, the story of one of New York City’s most corrupt cops, which now has a book deal and is in development as a TV series, and the romantic comedy meets documentary Meet The Patels, which is being developed into a feature film.

The model of investing once and having the potential for returns across multiple platforms is one that is getting the attention of equity investors. They’re now looking to documentaries for exploitable IP, and also to podcasts, where titles such as Dirty John, S-Town, and Homecoming, are making the leap from audio to television. “It’s a great place to grow your IP”, noted Ronson.

After many years of being thought of in the categories of news and information, documentary is now an entertainment category, pointed out Iwashina. With that comes a new respect for the documentarian. “I’ve never seen so much focus on the director,” he said. “It used to be more of a content/story focus, and now documentarians are being acknowledged as artists.”

Note: This post originally appeared on Trends