Every time a massive internet service makes a significant change, people get upset. From Facebook to Instagram, Twitter to Tumblr, people are suspicious when something they love is tampered with. This week's announcement of YouTube's subscription service, YouTube Red is no different. Right off the bat, articles suggested YouTube was bullying its creators like a mafia boss, and now we're being told that content creators across the site are in open revolt. It's a tempting narrative, but it doesn't match the facts.
Let's start with the basics. YouTube Red works just like Spotify, Pandora, or Hulu — all big services most people are familiar with. If you want to pay, you can remove ads and get some power features like offline videos and background play. If you don't want to pay, YouTube is the same old service it always was, with ads paying the bills for creators. Next year, a few dozen videos will be released that are for subscribers only, meaning a measly 99.99999 percent of YouTube videos will still be available for free.
No content creator has to put anything behind a paywall, which is why over 98 percent of videos on YouTube are now covered by agreements that make them part of both free and subscription YouTube. So wait, that's 2 percent. Are those small creators who are being abused by the system? Principled artists who refuse to put their work into a system where the rich can skip ads but the poor have to suffer through them? Well, no, actually, that 2 percent is folks like Disney, a massive corporation which believes that it should get a bigger cut of YouTube Red subscription money than the average YouTuber. This blackout will certainly have a negative effect on the YouTube experience for users, but it's hardly an example of the service abusing its size to bully small content creators into unfair terms.
Update: A source familiar with the situation says Disney has in the last day or so signed on for YouTube Red, moving the amount of content not yet licensed to below one percent. ESPN, however, has a number of contracts in place across subscription and paid viewing — many relating to cable deals, video on demand, and regional sports networks — which means we may not see its content on YouTube for a while. ESPN later emailed The Verge to confirm. "ESPN is not currently part of the Red service. Content previously available on the free YouTube service will be available across ESPN digital properties."
It's not "elitist" for content creators to have both free and paid videos
And that's the thing. The system being offered right now for YouTube Red is wonderfully democratic. It means a channel with a billion views and a small time creator with just a few thousand are entitled to the same deal. Each gets a percentage of total subscription revenue based on the total amount of time people spend watching their videos, and no one gets a bigger cut or a bonus just because they're famous or powerful. The cut that goes to creators, just like on the ad side, is more than 50 percent.
Fusion, citing TechCrunch, writes that "[YouTube] creators currently receive 55 percent of advertising revenue on their videos, which, TechCrunch notes, is way lower than similar streaming competitors like Spotify (70 percent) and Apple Music (71.5 percent)." This is wrong on multiple levels. First, Spotify and Apple Music don’t stream videos, and the split received by creators from Google Play Music is roughly identical to every other streaming music service. Second, the 70 percent paid to "creators" on streaming music services almost always gets divided up between labels, publishers, and artists, which is why the final check to creators is often so puny. On YouTube by contrast, anyone with a webcam can start uploading videos and if they succeed, take home the full 55 percent of ad revenue.
So far, this is all we know about YouTube Red. 1. Horrible name. 2. The rich get richer 3. No one knows what it means for other 99% of YT.— Jesse Cox (@JesseCox) October 22, 2015
Yes, if YouTube Red succeeds, the rich get richer. But so do the poor and middle class creators, in equal measure. Perhaps YouTube could have done a better job explaining exactly how creators will be rewarded. The company was straightforward and detailed when explaining it to journalists, but the FAQ they put on the web doesn't do nearly as good a job. The idea that "no one knows what it means" for the majority of creators, however, is patently false. YouTube will pay the majority of subscription revenue back to creators, and everyone gets an equal chance to win their piece of the pie, and that was made clear several times at the launch, both onstage and in the press.
Is it possible that in the future a lot of content from top creators will end up behind a paywall? Sure, anything can happen. But YouTube isn't angling for that. In fact, its chief business officer, Robert Kyncl, told me that he expects the vast majority of content on YouTube will remain free and ad supported, and that YouTube likes it that way. The only change is that creators will have more options for monetizing their videos, users will have more control over how they experience YouTube.
Verge Video: YouTube Red hands-on