With more than one billion monthly viewers, YouTube is the biggest online video service – but in 2015, there are plenty of companies hoping to take a bite out of it.
Videos uploaded directly to Facebook are currently being watched more than 3bn times a day; startup Vessel is offering big YouTube stars more money if they give it three-day exclusivity on new videos; and Snapchat and Spotify have both expanded into video.
All this, plus the likes of Netflix, Hulu, Amazon Prime, Sky, HBO Now and BBC iPlayer in the streaming TV space; Yahoo sniffing around YouTubers; and Amazon paying nearly $1bn to buy live-streaming video service Twitch, with its growing community of gamers and music fans.
As YouTube’s head of content and business operations, Robert Kyncl admits to keeping a close eye on all this, but maintains that competition is a rising tide floating YouTube’s ship as well. “Every company on earth is moving into video,” he says during an interview with a small group of European journalists, including the Guardian.
“Look at large companies: as they grow, as they get larger their growth rate slows down. What’s happening with YouTube: as we are getting larger, our growth rate is accelerating. We believe that it’s happening because of the rise in competition and a massive increase in the mainstream-ness of online video,” he says.
“Video is one of the most attractive places to be. Everybody wants to be in. So okay, we’re in the right place: it would be kinda bad if nobody wanted to enter our space.”
Kyncl admits that YouTube’s challenge is staying “really sharp and on your toes” in the face of this competition, but also delivers a warning to those rivals.
“It’s really difficult to do what Netflix or YouTube has done, which is to drive revenue. Netflix has done it through subscriber acquisition in a paid model, we’re doing it through an advertising model,” he says.
“It’s a very difficult thing: a lot of people can build up a lot of consumer engagement, but to actually monetise it and drive revenue back into the content ecosystem in a meaningful way is incredibly hard.”
YouTube versus Netflix
Kyncl draws a distinction between the free world of YouTube and the paid-subscription world of Netflix, suggesting that the two are co-existing happily.
“If you think about advertising-supported video globally, it’s a little bit above $200bn a year in revenue. If you think about subscriptions, it’s little bit above $200bn. Equal markets. Somehow we’re not eating each other’s lunch,” he says. “Even if all the firms grew really large, we’re not really bumping into one another anytime soon.”
YouTube’s parent company Google never breaks out how much money its online video service is making – not a policy Kyncl is willing to break during this interview beyond claiming that YouTube is “generating tremendous amounts of revenue”.
How tremendous? Some analysts have taken guesses: in February, the Wall Street Journal suggested that YouTube’s revenues rose from around $3bn in 2013 to $4bn in 2014 – lower than the predictions of $5.6bn a year that some analysts were predicting in 2013.
There’s an ongoing debate about whether creators could be making more money on YouTube: the pitch of companies like Vessel is that they could be, elsewhere. YouTube’s response has included packaging up its most popular channels for advertisers in its Google Preferred initiative, to boost ad revenues.
It’s also setting aside more funding for its top creators, so they can produce new shows that are exclusive to YouTube – one recent example being Minecraft gamer Stampy, whose new Wonder Quest show was commissioned exclusively by YouTube.
“What we’ve been doing is focusing on our top creators: we look at the ones who develop large audiences of millions of people following them on YouTube. We look at that as our great advantage: they have a great following, and can tell that following there is something great and new coming from them,” said Kyncl.
These stars are being courted by traditional TV firms as well as YouTube’s online rivals, but Kyncl’s pitch to keep them involves warning that taking their audience back to TV may be harder than they think.
“If they have to do something for TV, they have to take their audience from one platform to another platform. That’s a really hard thing to do,” he says. “What we’re looking for is engaging with people who have large audiences on YouTube who can tell their people to watch it right here on YouTube, with no leakage from one platform to another.”
YouTube will continue to cherry-pick digital stars to invest in from its community, with Kyncl citing British vlogger Zoella – whose online fame has translated into a best-selling book – as a prime example.
“If you think of someone like a Zoella, her following is very strong. She’s a strong influencer over her audience,” he says, before stressing that “I’m not suggesting we’re doing something with Zoella, I’m just using her as an example of someone who has tremendous power”.
It sounds like YouTube would like to do something with Zoella, though. “Us betting on folks like that makes a lot of sense, and makes it unique. And the things we look for are the things that would be native to them, and wouldn’t depart necessarily from what made them great,” says Kyncl.
“You want to do adjacent things rather than complete leftfield. We’re going to learn a lot: we’ll figure out how far people can stretch, what it takes to do scaled-up productions, and what kind of support they need.”
Freedom of speech and regulation
During the call, Kyncl also talks about another kind of support: “the serious side of YouTube” manifesting itself in its support for freedom of speech around the world.
It’s a topic that has been controversial on several fronts in recent times, with YouTube blocked several times in Turkey by courts there – in 2014 due to videos alleging official corruption that were uploaded to the site, and in 2015 due to videos showing images of a hostage being held by militants.
YouTube was also criticised over a film called Innocence of Muslims, whose anti-Muslim content sparked violence in the Middle East and death threats to actors, as well as a copyright claim that initially forced YouTube to remove the video.
How to balance the global nature of its service with censorship and other regulations in individual countries? It’s a question that Facebook, Twitter and any large online service faces, not just YouTube.
“We operate a global service in English, but don’t necessarily do business in every single countries. We analyse countries and whether it makes sense to put people on the ground, build up a sales force and our content partnership presence, and do all the collecting society deals,” says Kyncl.
“When we do, we have to obey by the local laws. It’s kinda tough to do business in a country if you don’t. But there are also countries where we don’t operate, and therefore we don’t believe we should operate under their laws.”
This strategy carries a risk for YouTube of seeming like it is prepared to disregard freedom of speech if it sees money in a particular country. This, too, is a dilemma for Facebook and Twitter.
Kyncl adds that YouTube will continue to argue its case in courts when it disagrees with an interpretation of laws in countries where it does do business, and will continue “building products and support and code to allow for the distinctions” around the world.
“It’s really complex, but it’s a fascinating thing and it’s absolutely worth doing, because it enables a lot of the good things in the world that otherwise wouldn’t happen.”
What about freedom of speech as it relates to comments? YouTube’s comments section has a reputation for toxicity, with one of its most popular stars – gamer PewDiePie – famously turning off his comments while criticising YouTube: “I go to the comments and it’s mainly spam, it’s people self-advertising, it’s people trying to provoke.”
Should YouTube be doing more? “We have a lot of efforts underway in that area. It’s really important, and it’s tied to how the identity is displayed. If people are using a hidden identity, it’s easy for them to make less desirable comments,” says Kyncl.
YouTube’s challenge is to balance freedom of speech – which in many countries with repressive regimes must surely include freedom of anonymity (or, rather, pseudonymity) – with the ability to deal with people who persistently misuse that freedom for harassment purposes.
“One of the hardest things to do is scaling openness, whether you run an internet platform or whether you run a country. Egypt was trying to scale openness. It was not an open country, then it became [open], and there was a lot of chaos through that openness,” says Kyncl.
“It’s the same thing for us: when you’re scaling openness, there is a tremendous amount of awesome stuff being uploaded all the time, and sometimes you get less desirable things. It’s the same with comments.”
“Our product group is working on a whole bunch of solutions that would make it more pleasurable, but at the same time it has to be authentic. How do you keep it open, but at the same time decent and collaborative and constructive? Having those tenets is very important. We think about that a lot, and we’re working on it.”
This article was written by Stuart Dredge, for theguardian.com on Tuesday 2nd June 2015 11.30 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010