Is Yahoo creating a YouTube Competitor?
YouTube has never had a competitor – Ever. Yes, there may have been other websites in the early days allowing people upload videos. But in essence, YouTube is the first and only truly democratized user-led video platform on the web. Anyone can upload anything at anytime. However, maintaining this was incredibly expensive to the point that no one else in their space could afford the $1.5 million per day price tag (comfortably subsidized by generous VCs and a major ‘Sugar Daddy’ in the form of Google) associated with running a service like YouTube – And that was in 2006. It costs much more today, to the point that anyone with any sense would never dare to even attempt it. Though, who ever accused an innovator of having any sense…
Because of the sheer costs, a collective shock rippled through the internet when Re/Code reported that Yahoo is building a YouTube competitor and planning to lure away popular YouTubers with the promise of higher CPMs and ad fill rates than YouTube could ever provide.
This ‘revelation’ – which has been an open secret for almost a year now – actually makes perfect sense.
Many of the poorly written articles that covered this story after Re/Code failed to mention that Yahoo’s new platform isn’t intended to serve as a YouTube competitor. It’s intended to bolster Yahoo’s standing as a video network, not as a video sharing service like YouTube, which Yahoo gave up on in 2010.
Every major player on the web has spent more than a year been revamping their video offerings. AOL recently launched its ‘On‘ platform, which grew quickly became the largest video network in the U.S.
Yahoo also revamped their Yahoo Screen offering last year. The platform was once a YouTube alternative, but all user-generated content was deleted in 2011 and now it exclusively hosts popular comedy and news clips from television; perfectly complimenting Yahoo’s other entertainment-led properties such as Yahoo Movies. However, one thing that has been missing from the platform since the user-generated videos went kaput is original content. That’s where the popular YouTubers come in. With their fan-base already established, loyal viewers will likely follow their favorite creators to whatever platform they’re posting to.
Yahoo is appears to taking advantage of the current climate on YouTube, where creators are complaining that they’re not included in major decisions about the platform, and that they’re not making enough money for the work they’re doing. For most if not all of YouTube’s most popular creators, advertising revenue has become one of the smallest segments of their earnings, lagging far behind content deals, sponsorships, and merchandise sales.
Yahoo, much like AOL, has a strong direct ad sales team with deep expertise in monetizing original video content. Crucially, they also don’t have to worry about the inventory and quality issues that are ever-present on Google’s YouTube. Because of this, Yahoo can easily guarantee creators higher CPMs for their own content, and more resources than any YouTube network could offer to create original content owned and operated by Yahoo.
Multiple sources have confirmed that Yahoo has been reaching out to popular YouTubers and large YouTube networks over the past few months, offering them the chance to join Yahoo’s upcoming video platform. YouTubers that are in-the-know have also been talking among themselves about these opportunities since at least January.
However, I will make it clear that not everyone is welcome to play in Yahoo’s garden. It will not be an open platform like YouTube. They’re not trying to be YouTube – They’ve tried that already. Instead, they’re trying to challenge AOL as a video network, and will follow the tried and tested strategy of bringing in big names and hoping the eyeballs follow. With the promise of more money, and direct promotion from the Yahoo homepage, it’s likely that a lot of big names will be very interested in what Yahoo is offering.