Content partners face an increase in YouTube's ad share

This post originally appeared as an insight for Outsell’s customers. Republished with permission.
YouTube has increased the share of revenue it takes form its content parters from 30% to 45%. This may still be cheaper than going independent.
Important details
YouTube is changing the way it shares revenue with its content partners. It’s moving from taking as little as 30% from the ad revenues of (preferred, high-profile) partners to taking 45% of the ad revenue from (nearly) all partners.
The carrot attached to this stick is that partners will be able to keep 100% of revenue above the rate card. So, if a content partner can sell its ads at 150% of YouTube’s rate card, they can equal their current net revenue from ad sales.
YouTube is increasing its share of advertising revenues because…well, because it can. YouTube channels and multi-channel networks need YouTube more than YouTube needs them.
YouTube provides its partners with a reliable, low-maintenance platform for publishing their videos, an opportunity to offload ad sales, an existing social network within which to promote their videos, and a familiar interface for their audience. All of this has tremendous value for channel partners, so it’s not surprising they’re being called upon to share nearly half their ad revenue with YouTube.
YouTube’s revenue split may be a good deal for channels that can charge premium prices for advertising, or sell sponsorships inside their shows. Those channels are the ones that already have strong brands, great relationships with potential sponsors, strong influence with their audiences, and quality dedicated sales forces.
But they’ll need their own video distribution platform if they want a future beyond YouTube. Some MCNs have moved in that direction.
Maker Studios, one of the largest YouTube multi-channel networks, acquired its own distribution platform last summer when it bought Blip, for likely less than $10 million.
Revision3, owned by Discovery Communications, already carries its channels on its own site, in addition to YouTube.
YouTube’s new revenue split is going to split the market further into big channels with strong market presence (Maker, Revision3) and little guys who aren’t ready to cover the overhead of serving their own videos, let alone pay a decent sales force.
There are lessons for everyone in this turn of events:

  • Brands matter: A YouTube celebrity may not be the same thing as real celebrity.
  • Advertising doesn’t sell itself: Even in a programmatic ad buying world, someone has to make the cold calls, and they’ll want to be compensated.
  • Breaking free of ad networks is a key to success: Ad networks can fill gaps in a schedule, but they commoditize advertising.
  • Distributors will get their beaks wet: And they’re going to make long-term planning nearly impossible.

Demand Media's fall is good news and a warning for publishers concerned about quality

Demand Media looked like a promising new model for internet publishing in 2008. Outsell was one of the first to analyst firms to recognize Demand’s rapid growth, as well as its evolutionary content and audience development model (Demand Media: This Online Pied Piper Draws Large Audiences Using a Disruptive Publishing Model, 18 November 2008).
Demand’s market capitalization quickly rose to more than $2 billion, after it went public in 2011, greater than that of the New York Times. Today,
Demand’s stock has plunged to roughly a quarter of its peak value. Revenues for the most recent quarter were down year-over-year for the first time since that IPO.
Now, Demand is focused on spinning off the only healthy component of its business – its commodity domain registration business. Meanwhile, it is attempting to pivot its content business from an SEO-driven advertising model with weak audience relationships to an ecommerce model. Having quietly sustained several rounds of layoffs this year, the media side of the business is almost certain to be sold or taken private after the split.
Demand Media’s rise and fall provides two important lessons for internet media.
Integrity matters. During Demand’s rise, the elephant in the room was always that they were spamming Google. Demand’s content wasn’t very good, but they used questionable SEO techniques to get themselvs on the first page of search results. In other words, their strategy was to make Google a less useful product for Google’s customers. The problem wasn’t simply that the advice on (for example) eHow was poor to worthless. It made Google results less helpful, and it muddied the waters for useful Q&A services. As Google tuned their algorithms, more useful services, such as Stack Exchange, rose to the top. This was good news for publishers who focused on quality content in the dark days of the late 00’s.
There’s a bigger lesson for publishers who care about quality. It’s a bad idea to build a business on someone else’s reservation. Using another company’s API, or site, or data introduces arbitrary risks as a partner’s business priorities change. Facebook schooled Zynga on this. Twitter schooled their third party developers on this as well.
Today, publishers who are using Facebook for their comments and community are risking their relationships with their audiences. Outsourcing comments may be the best business decision, but a fee-for-service company with a sound migration option, such as Disqus, will be less likely to lead to business model conflicts in the future.

Keeping up with media measurement

This post originally appeared on Dow Jones’ blog The Conversational Corporation.

Ethan Zuckerman proposes a new measurement of attention – the Kardashian:

The Kardashian is the amount of global attention Kim Kardashian commands across all media over the space of a day. In an ideal, frictionless universe, we’d determine a Kardashian by measuring the percentage of all broadcast media, conversations and thoughts dedicated to Kim Kardashian. In practical terms, we can approximate a Kardashian by using a tool like Google Insights for Search – compare a given search term to Kim Kardashian and you can discover how small a fraction of a Kardashian any given issue or cause merits.

As Zuckerman notes, Google Insights doesn’t work well for measuring Kardashians. It’s unclear whether Google’s scale is linear or logarithmic.
Factiva, on the other hand, is an ideal tool for measuring Kardashians. Last week, “Kardashian” was mentioned in 5,174 stories on Factiva. So, that week, 1.0 Kardashians would represent 5,174 stories about a topic.
How did some of last week’s other newsmakers fare?

  • Mark Zuckerberg, at the peak of his public attention, received a mere 3.6 Kardashians of attention last week.
  • JPMorgan Chase CEO Jamie Dimon, in a week when he lost billions of dollars, flashed across our consciousnesses with 1.5 Kardashians of attention.
  • Donna Summer had to die to achieve 2.1 Kardashians of attention in her final week. Last year, she averaged 85 milli-Kardashians of attention.

Of course, the value of a Kardashian changes, depending on coverage volume. Eventually, we’ll enter into a period of Kardashian hyperinflation, and we’ll all be overexposed. has a strategy problem, not an inventory problem

I agree with my colleague David Card that the New York Times must cut costs and raise the price of the print edition. David also agrees with Henry Blodget that Times should start charging for its online product. But Blodget’s analysis rests on some on a comparison with the Wall Street Journal, which I don’t think is useful:

  • The Times cannot gather anywhere near the number of online subscribers that the Wall Street Journal enjoys. Journal readers often expense their subscriptions and the Journal’s reporting is far more valuable to its readers than the Times’s reporting is to its readers.
  • The Journal should have gone free more than a year ago. As the Journal goes through its own inevitable cost-cutting, it’s going to be less competitive with free products, such as Bloomberg, Reuters, its own Marketwatch site, Henry Blodget, and the rest of the Internet. They will have to deal with this eventually and it’s going to be more difficult the longer they wait. Finally, the Journal’s readers will always be more valuable to advertisers than those of the Times and the Journal would have a lot less difficulty selling its free inventory than the Times is having.
  • The Times’s problem is not that it has too much inventory. The problem there is not enough demand among advertisers for its readers’ attention. Cutting their numbers will not make them any more desirable. This is where Blodget makes his most questionable assertion: “ would be able to charge more for ads served against known, paying subscribers (the company would have some demographic info).” That reasoning passed its expire date ten years ago.

If’s problem is that it has too much advertising inventory, nothing can save it.

Traditionally, subscribers barely covered the cost of printing and distributing newspapers and magazines. Michael Kinsley did a great job of laying this out way back in 2001. The genius of William Randolph Hearst, among others, was to pretty much give away the product to sell the ads.

The solution to this problem is not as simple as putting a price on your Web site and treating it like a streetcorner vending machine. The eventual winners in Twenty-First Century “paper” wars will succeed by thinking a lot bigger, and lot stranger. No one knows the answer to this problem, but many folks now see the direction in which it lies.

I have a report coming out soon that will address media strategy in the networked era, but my Best Practices in Networked Media report is a good place to start. Bloomberg and Reuters are on their way to becoming networked media giants, and trying to charge for access will only slow the Times’s progress to its own transformation.

Blogging done right

Like millions of Americans, I followed the presidential elections in my favorite blogs, but one source deserves special recognition.
Nate Silver’s published a running summary and projection of the myriad of national and state polls that was astonishing for its breadth and depth, but his projections based on the polls and their trends turned out to be uncannily correct.
Silver first emerged when he called both the direction and degree of the Indiana and North Carolina Democratic primaries — a narrow win for Clinton in Indiana and a whupping in North Carolina.
When everyone else, including the mainstream media, were touting the latest numbers from whoever in whatever state, Nate Silver’s site was one of the few places you could get a clear, concise consensus forecast that didn’t vary wildly from one day to the next.
Silver’s not exactly an amateur. He’s a professional baseball forecaster. But he delivered intelligent and prescient forecasts of surpassing quality for free on his blog.
Now that’s mainstream media we can believe in, my friends.
You betcha.
Originally published on my blog at JupiterResearch.

I'm not a PC…

…nor am I a Mac.
Microsoft’s new “I’m a PC” ads are very postmodern, as they deal with the subtext of Apple’s advertising (PC users are nerds*) but not the explicit message (Macs are easier to use, Macs are easier to set up, Macs are easier to interface, Macs are less likely to get a virus, Macs come with a lot of great software that you know you want, Macs are less likely to need a reboot, it’s easier to move your stuff to a Mac than to a new PC, Vista is making life difficult for millions of Windows customers…).
The audience seems to be wavering PC users with self-esteem issues**. But why isn’t Microsoft pitching the benefits of Vista vs. Mac?
I keep wondering if the real audience for these ads isn’t internal.
* This is demonstrably false. The real nerds are all using Macs and Linux.
** Guys like Milhouse Van Houten, who said, “I’m not a nerd. Nerds are smart.”
Originally published on my blog at JupiterResearch.

No comment? No problem.

I love Matt Haughey’s thoughtful post on the differences between comments on blogs in 2008 and those back in the day (five years ago).

But I think the root of the problem (described in various media outlets over the past year or so) of snarky, or mean-spirited, or generally unhelpful comments becoming the norm has to do with the distance weíve achieved from those original link-and-essay heavy blogs.

Ironically, the comment thread on this post is an outstanding discussion of the issues involved.
There is no one answer to handling comments on the Web. I run a perfectly respectable site in my community that is full of thoughtful and informative posts by real people using their real names. My competitor down the road operates his community section more like an ongoing, anonymous brawl with interesting conversations going on in the corners. I think it works for him and his posters.
I never had a problem with Jupiter’s no-comments policy, even though I love getting comments and mixing it up with my readers. I think it’s a reasonable choice for the way the company does business. Some of my favorite bloggers don’t take comments and it has never bothered me.
The real challenge is finding a voice for your blog and your community and coming up with a style, focus, posting policy, comment policy, and moderation style that suits you. Then choosing a design that reflects your voice.
Some folks have expressed regret that blogging has become more professional and less personal. That depends on where you look.
We’re still living in an age of innovation for social media. Experimentation shouldn’t be encouraged. It should be required.
Originally published on my blog at JupiterResearch.

Google Chrome: Paging Dr. McLuhan

It wasn’t the feature set of Google’s Chrome browser that got me excited, nor was it opening yet another strategic front in Google’s cold war with Microsoft. Nor was it the comic book by Scott McCloud, although that’s really cool. Lately, my mind has been on Javascript.
For most of my career as a creator and critic of media sites, I’ve been disdainful of javascript, a language that was born in the Age of Hype and which it seemed to me did more than any innovation (save Flash) to muck up otherwise perfectly respectable websites.
But things have changed. At first, it was the increasing processing speed of our computers, combined with the excitement of Google Maps, that turned a lot of heads. But now, Mozilla, Apple, and now Google are hard at work improving Javascript’s performance by layering improved execution on top of all that processing power.
Meanwhile, Chrome’s use of a separate process for each page and windows designed to contain Web applications turn windows into something more like applications.
“Browser windows” are becoming applications and “pages” are becoming transactions. This puts even more pressure on us to transcend the page as the metaphor for interacting with the Web and challenges us to rethink the nature of networked media. The developers of Web applications already get this, but media and marketing producers have not even begun to grapple with this shift.
Originally published on my blog at JupiterResearch.

I'm ready to own a top-level domain

Way back in 2002, I blogged “Let a thousand top-level domains bloom“. How about a million? A billion?
ICANN wants to allow anyone with the gumption and the tech chops to own their own top-level domain.
When we end the artificial scarcity of domain names, we’ll end the artificially high prices for “dot-com” domains. The idea of anything dot com will be as quaint as the 4:30 autogyro to the Prussian consulate in Siam.
Sure, it will create some problems with fraud and trademarks. But we have these already and restricting TLD’s is not the solution. I’m done with the current terrible system that gives registrars first grab at expiring domains so they can “auction” them off to the only interested bidder. And I can’t wait until I no longer see the term “domainer” on the net.
But mainly I can’t wait until I can auction off the rights to microsoft.parr and google.parr.
Originally published on my blog at JupiterResearch.