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Summary

YouTube is reported to be considering ways to better reward the onscreen talents who attract millions of subscribers to its channels. It needs to do so in order to benefit from their growing audience appeal across multiple platforms.

YouTube needs to reward its onscreen talent, or risks them taking their audiences elsewhere

YouTube’s reported plan to reward its onscreen talent better is overdue. While it is wrong to see YouTube as an aspiring TV network, in this respect the comparison is relevant: Platforms, like networks, need to retain the talent that keeps viewers coming back. Especially when the competition for eyeballs is getting fiercer and the talent is getting more powerful.

Among teen demographics, in particular, the popularity of those vloggers who have built their profile via YouTube is striking. Adults may struggle to understand the appeal of stars like PewDiePie but their ability to build a digital audience is something traditional media simply cannot match. However, in terms of monetizing that audience, traditional media is starting to make its play: UK vlogger Zoella’s debut novel Girl Online – which has already broken a number of sales records in the UK – is one of a growing number of examples of how YouTubers are using traditional media rather than the video platform to monetize their audience.

So what role does YouTube play in this new media ecosystem? Is it destined to be merely the platform through which talent can build an audience, only to monetize it elsewhere? Reports suggest that Zoella earned several hundred thousand dollars last year from YouTube, though some of that was from product placement rather than her share of YouTube’s ad revenue. For a twentysomething star, that is a lot of pocket money. But it looks like being dwarfed by the revenue from her book. Will traditional media – TV, book publishing, or even radio – have the last laugh by making proper money out of the stars that YouTube created?

YouTube can argue that, in the maturing online video market, advertisers’ budgets are growing exponentially, and that its stars will soon feel the benefit of that shift. But, while it is still the dominant video publisher by far, YouTube has to justify taking a reported 45% of the ad revenue generated by its onscreen talent’s content. The risk for YouTube is that its home-grown stars – such as PewDiePie – will look to migrate their millions of fans onto their own platforms, rather than using YouTube. The risk for the talent, conversely, is that in moving away from YouTube, they lose their audience. And that risk means we don’t expect an exodus anytime soon.

But some in the video space are starting to gamble that the future is not just about YouTube: Now that most of the multichannel networks (MCNs) are part-owned by big media players, we expect them to morph into multiplatform networks (MPNs) – whose content is delivered via as many outlets as possible – as they seek to make themselves less reliant on YouTube.

YouTube’s strength should not be underestimated but nor should its invincibility. Its role must evolve, so that it can, like an old-style talent agency, manage and monetize its stars. If traditional media want to snap up popular vloggers to sprinkle magic dust onto their own products, YouTube needs to benefit from that. Giving extra love (and money) to its talent may seem like an old media strategy, but it’s also a sensible one for now.

Appendix

Further reading

The Outlook for OTT Digital Video, Report ID: ME0003-000506 (December 2014)

Author

Nick Thomas, Practice Leader, Digital Media

nick.thomas@ovum.com

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