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For YouTube's top video creators, being compensated for the Web traffic and ad impressions they generate isn't all it's cracked up to be
When Christine Gambito first uploaded a video to YouTube, she had more in mind than sharing her creative side with strangers. The creator of the humorous one-woman online series HappySlip wanted to support herself without leaving her young son with strangers. She viewed online video sites as a way to become a stay-at-home actress, able to reach mass audiences without traveling to theater rehearsals and commercial auditions. "I think that really truly from the beginning there was a hope that I could make money," says Gambito.
While Gambito was thrilled with the May 4 announcement that Google's YouTube will share ad revenue with her and a handful of other top creators, her goal is to make money without the site. For budding Internet celebrities like Gambito, the real value of posting videos to YouTube and others like Revver is the potential to drive traffic to her own site, where she can reap the full financial benefits from her work. "You can't sell your DVD on YouTube," says Gambito.
Like a growing number of online video creators before her, Gambito is coming to terms with the mixed blessing of compensation for online content. Video-sharing sites are a valuable asset, but the slice of the ad revenue they dole out to successful producers isn't how you really want to cash in on the Web. In fact, for the truly successful content creators, such sites threaten to steal audience from what really pays the bills: building your own site.
Sure, there's money to be made when your video does well. Metacafe gives $5 per thousand impressions to any video creator whose piece has been seen more than 20,000 times (see BusinessWeek.com, 10/30/06, "Don't I Know You from the Internet?"). But once you're successful, being known as "that guy from YouTube or MySpace" can work against you, says Ze Frank, former host of the daily vlog "The Show with Ze Frank," who has built his own brand and generates a healthy income from selling ads on his own site. "What some people are finding is the crappiest situation is to be popular on these massive platforms," he says. "There is a big value to having your own site that is under your control because that is the easiest space to sell ads against."
That's not to say that the YouTubes of the world are not important. Their ability to aggregate millions of videos makes them a destination for the mass audiences so coveted by independent—and often unknown—creators. It's a first step to grabbing audience and then ad dollars. The sites' considerable traffic also helps the sites broker deals with large marketing firms that an independent creator with an audience of only 5,000 individuals a day—Gambito, for instance—would have difficulty getting on the phone. "Brands don't even want to go through the effort of the legal stuff unless they can spend $200 grand at once," says Frank, adding that a site with several thousand dedicated viewers won't grab that kind of cash.
At the same time, the ad revenue these sites share often can't compare with the amount creators could get if they built their own sites into destinations complete with advertising and merchandise. Gambito wouldn't disclose the financial details of the YouTube deal, which is in a testing phase and requires some of her new videos to appear exclusively for two weeks on the site. Revver evenly splits revenue it gets from clicks on ads appended to videos. Gambito's own site sells t-shirts, bags, and other merchandise. She hopes eventually to sell ads as well.
Frank's path through the online video advertising world is one that many content creators would like to emulate. When he first started the show, he grabbed advertising anywhere he could find it, particularly Google's AdSense program, which shares ad revenue with the owners of sites where ads appear. As Frank became more popular, he sought more personalized and lucrative ads tailored more specifically to his audience.
After finding the right advertising combination, Frank had another problem—how to keep his content from being distributed on sites where Frank did not have creative control and did not see any revenue from the audience. Frank started by politely asking his viewers not to put his content on YouTube, which was not paying creators at the time. He also filed a few takedown notices.
As more video creators move from experimental sharing to serious business, they'll confront similar conflicts, Frank reckons. Do they want their stuff to spread virally across the Web, or do they want it to stay in a few key places where they have more control and a greater financial stake? Do they want some content to appear on mass market sites for publicity and other content to appear just on their own site? "You are going to get content creators to think about that stuff," says Frank.
In an unexpected twist, creators made famous by video sites may become more like the major media companies fighting YouTube. In fact, Bill Hart at Proskauer Rose is banking on it. His law firm, along with several others, filed a copyright infringement class action against YouTube on behalf of England's Football Association Premier League and independent music publisher Bourne Co.
Hart believes that the class, which will be certified over the next few months, could include many small independent publishers. "As the Internet matures and it becomes big business and young people see it as a potential market for their work, they will take it more seriously too," says Hart. "It isn't just a free-for-all."
Staying Out of Court
To an extent, the sites themselves hope that the Internet remains a free-for-all, regardless of who is paying the content creators. The hope is that the payments encourage more people to create better and better videos, as well as legitimize both the sites and the creators as places for professional, licensed content. "It encourages people to contribute more content," says Metacafe CEO Erick Hachenburg.
What they don't want is for that compensation to create more limits on content or, worse, lawsuits. "It is our belief that content is destined to move freely," says Revver founder and CEO Steven Starr. Hachenburg agrees. "If we get into exclusive licensing relationships with creators, I think that is a step backward," he says.
Still, Starr acknowledges that creators will want, and struggle, for control of their distribution. In addition to takedown notices, he suggests more people inform their users politely where they don't want them to post their content. Besides, turning away a little revenue from YouTube will be a lot easier than grappling with Google (GOOG) in court.