Creators Generate the Value on YouTube But Don’t Get Much Back

While YouTube has become a talent incubator for big media companies, the creators responsible for the network's profits get little in return.

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YouTube is probably the largest repository of video the world has ever seen. The site is worth more than $40 billion, and users upload more than 100 hours of video every 60 seconds. Within all that video, there is lots of copyrighted content, and Vice contributor Michael Sugarman wants to know where all the money generated from the content is going.

Sugarman points out that a YouTube user has uploaded a Korn album in its entirety, and that video received more than 1.3 million views. Based on AdSense figures taken from a Businessweek article from last year, Sugarman notes: “If TheKhanly truly made out like a bandit, netting $9.35 per ad per thousand views, and if each listener stuck out all 14 ads, TheKhanly made around $175,000 in two years.”

However, as SocialTimes reported previously, actual YouTube CPM rates are murky at best, and totally inaccurate at worst. Guessing how much a creator is earning isn’t informative, but Sugarman has hit on something important: The value isn’t going straight to the users.

Sugarman points out that YouTube’s content ID system works in two ways: First it identifies copyrighted content, then uses this information to persuade larger media companies to monetize content instead of taking it down.

He writes:

This likely explains why TheKhanly’s KoRn stream has so many ads, and implies that in fact Sony, not the user, makes money off this video. Still, TheKhanly’s simple act of uploading an album roped Sony into some digital distribution dealings it may not have bothered with in the first place.

This is why it’s difficult to make a living as a YouTube creator, and why old media is investing in multi-channel networks. There’s so much money to be made, but it’s being split primarily between Google and larger companies like Sony and Viacom.

YouTube’s power is undeniable, and Sugarman is right about YouTube skirting the DMCA and other copyright laws. YouTube’s clout has allowed it to lead the industry in the way it wants. Even though users are still generating the value on the network (copyrighted content aside), they aren’t getting much return for the value created. And that’s the real issue, not a Korn album.