YouTube’s Evolving Challenge

YouTube (YT) is the largest search engine in the world, second only to Google itself. With over 1 billion hours of content watched each day and over 300 hours of new content uploaded each minute, YouTube sits in the middle of a three-sided marketplace which serves creators, viewers, and advertisers (1). At the core of YouTube’s success is its community. Creators have been able to not only share their unique stories, but rally a worldwide audience.

From a monetary perspective, YT provides creators with 55% of ad revenues, while keeping the remainder for itself. While thresholds have changed over the years (from views to stricter criteria of watch time and subscribers) for which channels can qualify for its revenue-sharing Partners Program, creators continue to receive support from YT with 40% making over six figures on the platform (2). More importantly, YT allows creators to express their artistic voice. No longer is high quality content restricted to the upper echelons of major studios. The advent of prosumer cameras, editing software, sound equipment has empowered millions of creators, from the hills of LA to the heart of Indonesia, to share their perspectives and their stories. YT has pursued a long-tail strategy, picking up a wide variety of content types. At the upper end, YouTubers like Lindsey Sterling, Ryan Higa, and H3H3 have followings that rank in the tens of millions with millions tuning in each week to watch their content (3). Further down the tail, niche content ranging from unboxing to haul to DIY targets smaller, but more engaged audiences. By keeping the platform free and easy to use for both creators and audiences alike, YT continued to grow, aided by Google’s backing after the acquisition in 2006. Like Reddit and Twitch, YT communities are self-reinforcing with strong same-side and cross-side network effects. Creators collaborate with other creators both inside and outside the same content vertical. Fans can not only engage with other fans about their favorite youtuber, but also become content creators themselves. The clearest example of the intensity of fandom is VidCon. VidCon, a convention for creators and viewers, attracts over 30,000 people, most of whom fall in the Gen Z demographic and who see youtube and vine celebrities on par with A-list actors of traditional Hollywood (4).

The power of the YT model lies in the relatability and resonance between the creator and his/her audience. Core to this is authenticity and the ability of creators to connect to their audience. The challenges in today’s creative landscape is how to better monetize the creator base without alienating audiences. YouTube has introduced new products like YouTube Red and YouTube TV that put premium content behind a paywall. Failed startup Vessel tried to window content, charging audiences to view content during the first few days of release. However, these new products threaten the very core that made YT successful in the first place: the community. High production budgets, more creative overhead, and increased bureaucracy separates creators from the audience. In the standard YT model, the audience can comment, message, and like the videos, gaining direct contact with the creator. The management and arbitration of what content is valuable by a small group in headquarters seems anathema to the decentralized, “crowd votes” model that made YT successful in the first place. In 2017, YT experienced “adpocalypse” in which advertisers boycotted YT after finding some of their ads ran as pre-roll to offensive content. The pullback resulted in plummeting revenues for creators, some of whom had no connection to the offensive content (5). The question of adjudication, what constitutes “offensive content,” and who was in the proper position to decide were widely debated. Specifically, YT guidelines for “Not Advertiser Friendly” content includes categories like “sensitive social issues” and “tragedy and conflict” (5). With a good intention to bar those who incite extreme action from using the platform, the general language in the guidelines penalized any youtuber who even touched on controversial issues. With increasingly complex social issues, sensitivities, and rhetoric, the challenge for YT lies not in technical capability of backend streaming support, but maintenance and monetization of the dynamic creative drive that made YT so successful in the first place.




  1. 39 Fascinating and Incredible YouTube Statistics [Internet].; 2017 [updated Dec 12; cited March 24 2018]. Available from:
  2. Additional Changes to the YouTube Partner Program (YPP) to Better Protect Creators [Internet].; 2018 [updated Jan 16,; ]. Available from:
  3. Most Subscribed
    [Internet]. []. Available from:
  4. The VidCon Revolution Isn’t Coming. It’s Here. [Internet].; 2015 [updated July 31,; cited March 24 2018]. Available from:
  5. Can YouTube Survive the Adpocalypse? [Internet].:; 2017 [updated Dec 28,; cited March 24 2018]. Available from:



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Student comments on YouTube’s Evolving Challenge

  1. Great read, S.Po! Re. the Adpocalypse, I wonder how YT plans to tackle and police sensitive content. One option is to hire more staff and provide them with clear guidelines, but that is an expensive route and it makes them de facto the ‘moral police’. Censorship is a tricky concept that Google/YT tries to avoid. AI, which would lower their costs, seems to be not yet good enough to understand the context of certain videos (e.g. humor, sarcasm, etc.). Another cheap way is to keep on crowdsourcing viewers’ opinions by having them report and denounce inappropriate content. But as we’ve seen with Logan Paul’s and other youtubers’ videos, this approach tends to be too slow and reactive to concerns by advertisers. I’m very curious to see how they solve it in the future!

    1. Yeah, censorship / content curation is tough. Exactly as you point out with Logan Paul, it’s not an easy task, especially with the sheer volume YT gets. I think you’re right in that a combination of AI and crowd source (maybe looking at viewer behavior, not just waiting for a flag) could work. Will be interesting to see what they implement and to see how successful it is.

  2. Nice choice. Youtube is facing the severest competition ever in short-duration video market. Snapchat and instagram stories are building big hypes around user generated videos. Meanwhile, Netflix is growing with exclusive content. Youtube is losing its differentiation points and being commodity. The quantity and volume of videos are not reflected in the quality. However, Google’s unique search algorithm is Youtube’s biggest advantage. Curation and search video database will always help Youtube to remain competitive. I am very curios if Google can convert Youtube to a social media platform which will be positioned better against Snap and Insta.

    1. That’s interesting, making YT a social media platform. I can see how they could take aspects of Google+ / hangouts to merge with YT to facilitate social conversations. I guess the main question is whether or not they can change user behavior as they move toward a more socially minded mission. The other challenge would be, in the face of FB’s recent data woes, how Google, who one could argue could do a lot more harm than FB given the data they command, would navigate the privacy issues.

      1. One more thought on the social media nature would be YouTube’s recent feature add to allow users to send each other videos within the app. This serves to increase engagement directly on the platform, and starts to branch into a more “social” type of media.

  3. Hi Sean – Great article! I think Google’s challenges with YouTube Red shows how Google broke some of the “Ten Commandments of a Successful Freemium App”, which is discussed in the Pandora Radio BSSE case (see, and is an interesting article.

    YouTube started as a completely free service, and stayed that way for a long time. Google supported the costs of supplying the vast amounts of costs to consumers through ads. However, one of the “10 commandments” is to “[m]ake sure what you started offering for free remains free.” YouTube Red seeks to take back what was once free (viewing without ads). I’ve also noticed that recently YouTube seems to be showing a lot more ads than they originally did.

    YouTube is also struggling to “[f]ocus deeply on one single domain.” Now that streaming is ubiquitous and relatively cheap to offer, YouTube is losing market share to niche players, like TV/Movie streamers (Netflix, Hulu, HBO), video game streams (Twitch) and social media streams (Snap, Instagram, FB).

    Our BSSE professor commented today that Google only knows how to do one thing really well: Sell ads. They’ve since failed to invent a business model that doesn’t ultimately funnel back to its ad selling model. I don’t think YouTube Red will be successful, and I wouldn’t be surprised if YouTube’s profitability from ad revenues has already peaked.

    1. Really interesting. It seems like YT is experimenting with more traditional models (YT-Red and YT-TV chief among them) and it’s not clear that the original value prop translates. Especially since the viewer behavior is so well trained for the platform, migrating viewers to a subscription service that may not deliver on the content might prove damaging.

  4. Agreed with the comments above – YouTube Red is a dead end. The type of quality of content that YouTube produces just isn’t up to a level that people are willing to pay for… For a paper last semester in BSSE I interviewed a someone who thought they might be able to take YouTube stars and serve as a talent pipeline for bigger screens (TV and Movies), however, what they’re finding is that even with millions of followers on YouTube, those stars aren’t necessarily the same kind of talent who are able to act or perform in a non-video-blog setting, so they aren’t creating these personalities as assets that extend outside of YouTube. They do have power in the numbers of their viewership… I know that an ad model doesn’t sound very appealing, and that the deal they have with advertisers right now is that the advertiser doesn’t have to pay unless the viewer watches a certain number of seconds, but maybe they just need to crack down on the viewers, and stop allowing us to skip ads… (as much as that pains me to say!). Alternatively, they could require users to engage more with videos (e.g. leave comments) in order to get rid of ads (for the very ad adverse), so then they are at least increasing engagement before they figure out how to monetize those who would leave the platform if it becomes too ad heavy.

    1. I’d love to read your BSSE paper. I’ve heard that because many of the YT stars haven’t gone through disciplined training and apprenticeship that traditional actors go through, they have a hard time switching to the larger screen. Furthermore, many of the antics that work as an influencer (degree of authenticity, what they say, etc.) may not be appropriate for a different, non-online context.

      I think your suggestion of “payment” through engagement is interesting. The argument to brands could be a lot more powerful. Take Pinterest for example. The degree of interest in a product is measurable and therefore, actually useful to a brand looking to increase conversion rates by targeting shoppers who are already interested in their products. Maybe YT could make the jump but it’ll take both a strategic and organizational change to make that move successful.

  5. Thank you Sean for the post. I really enjoy reading your thoughts especially on the topic of YouTube stepping away from the community system that makes it unique and the “Adpocalypse” incident.

    On the first topic, I could see YouTube combining the standard YouTube model with the new YouTube Red and YouTube TV. I would imagine that overtime YouTube should allow the audience to rate, comment, and make recommendations to it’s paid services. It would be able to combine the feedbacks with the trend in viewer behavior extracted from the traditional YouTube to create an even more interesting content. I think it will be exciting to see how they leverage their data and translate them into content.

    That being said, I think the “Adpocalypse” would make it more difficult for them to achieve their goal. I believe that many YouTubers were never able to get their income to the pre-adpocalyse level. If YouTube cannot prevent this from happening they will start to lose the content creators and dilute the value of the platform.

    1. You make a good point regarding incentives for creators. Sites like have offered another way for creators to get paid for their work and many influencers are now directing all their fans to their patreon accounts using their presence on instagram, twitter, snap, YT, FB, and, etc. But the question then becomes is it a price war where YT competes by giving creators more and more share? I think you’re right in that the biggest advantage YT has is the scale and the volume of data of user behavior. YT-Red and other paywall services should provide a more detailed data given users opt-in. But then the question becomes, exactly as you point out, how to translate that data into content. Balancing the analytics of audience behavior with creative pursuits is hard. Could we have made “The Shape of Water” if we drove creative decisions with data? Maybe the film could’ve been even better with data?

  6. Thanks Sean for the post! I sure hope the future is brighter for YT Red than my classmates believe, although I find their concerns valid. It’s an odd problem where in order a pay platform to work, it has to have hit content – which requires a potentially million dollar / episode spend, which is, as you state, antithetical to the YT model. However, if Red can get viewers on to watch a hit show with a massive cost, perhaps they can keep those users around for longer (after they finish said hit show) with cheaper content from YT stars, making them at least more profitable than the Netflix’s and Hulu’s of the world which all rely on premium content.

    Additionally, on adpocalypse and regulation – it feels like it’s time for the government to step in. FB and Zuckerberg clearly believe this given his comments last week, and allowing the private sector to be the “moral police” has a history of massive risk (see the financial system in times of reduced regulation). I certainly don’t want to be mired in red tape, but a government solution may be superior to a private sector one in this case.

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