Youtube is not profitable for anyone, neither creators nor the company.

so it used to be widely presumed that
YouTube was not making a profit that YouTube was either operating at a loss or just barely at a break-even basis but the fact is we still don't know YouTube probably generates 16 billion to 25 billion in assets let's just let's just pause to appreciate how big the gap is between those two numbers that have just been presented to you with estimates maybe 16 billion maybe 25 billion that's the sort of thing a stock market analyst should know much more precisely everyone likes to complain about their job even at the best of times and needless to say if making content on YouTube is your job this is not the best of times when your life is just this tiny apartment and in a couple of computer screens it adds up and at the end of the day like my ability our ability to make videos comes down to our mental health which was you know lacking earlier this month I watched a video about D monetizing on YouTube called YouTube biggest lie and it really hammered home a very common problem with YouTube is that they just don't communicate with content creators there was a wildly popular video from a YouTube channel called nerd city in which he gathered together the perspectives of several critics including those that support a really interesting lawsuit in Germany backed by a trade union really raising the question what if we start to take YouTube seriously as an employer as a company that has responsibilities to its employees it's an interesting philosophical question but I think it's wrong I think this is a question framed in a way that's really looking at the whole situation from a kind of false perspective what can I tell you I don't have a better word than wrong stick with me here I'll explain it to you here's where the discourse in YouTube was at in 2050 most of you are old enough to remember this YouTube's 1 billion viewers no profit so again if you're old enough to remember that used to be this widespread discussion especially in you know financial times that kind of source about the curious fact that YouTube had kind of global popularity and yet was at best a sort of break even and perhaps a money-losing operation for this enormous corporation Google and remember at one time YouTube was a separate company but that it was purchased by Google this is part of a widespread phenomenon of post tech boom companies trying to encourage the same kind of reckless optimism on the part of investors as was endemic to the earlier period of the tech boom many of you will not be old enough to remember that so think about uber the uber ride share Corporation those of you watching this video 100 years in the future when uber has been completely forgotten uber was a self-styled technology company that basically allowed people to in a streamlined way use their mobile phones to order a taxicab and it motivated the taxicab drivers this is the important part but offering them many you know amazing bonuses and incentives for example recruitment bonuses if you drove a car and then you encourage someone else to drive a car and then they did ten rides in a week or something some threshold to show that they were really doing the job seriously then you got paid a bonus the bonus is for doing the job and recruiting new people bonuses bonuses bonuses absolutely none of those bonuses absolutely none of those payments were economically sustainable because the company as a whole was not profitable right and people who really started to plan their lives around doing this job for for who thought oh hey this could be a way to earn a living long term then they figure out at one point hey these bonuses these special incentives they don't last forever and you start reading in the newspaper nobody's even sure if uber can stay in business it's growing it's becoming a worldwide phenomena but it is fundamentally not profitable so a company like that can't continue on the basis of being a charity with its employees as the beneficiaries it just doesn't make sense and on the contrary the rise and fall of Ober demonstrates to you what the advantages are to a conventional taxi cab company taxco companies they may be horrible in a lot of ways my my got my grandfather my great uncle my great uncle was in the taxi business I guess that's who he was Oh something like that anyway I had family in the taxi business believe it or not when you're looking at a business like that we said look for all of its defects for all of its inefficiencies this is providing people with the ability to pay their rent and put their kids through college for a period of many decades consistently then maybe there's something we have to learn from the analysis of that model and in this video I'm gonna try to sling provocative and getting you to question YouTube and its financial situation not in a vacuum but with the kind of brief parallel brief comparison to how the how the publishing industry works okay it's fair if you're saying like why you had one video do kind of wonky for a couple hours dude get over it I hear you I wish I could have it had been such a such a year for us you know I've been doing this 12 years now and 12 years is a long time to do anything and 12 years is a long time for to do something that people have cared about the entire time so it used to be widely presumed that YouTube was not making a profit that YouTube was either operating at a loss or just barely at a break-even basis but the fact is we still don't know and one of the most fundamental rules of economics is that when people keep numbers a secret they're not good nobody imagines that YouTube is fantastically profitable but that the Google corporation is keeping these numbers a secret I don't know for just creative reasons for artistic reasons because it's more inspirational that way know whatever the reason is for why the numbers have been kept secret not just from the general public but from investors and analysts it can't be good so here's a here's a much more recent article 2019 YouTube probably generates 16 billion to 25 billion in assets let's just let's just pause to appreciate how big the gap is between those two numbers that have just been presented to you with estimates maybe 16 billion maybe 25 billion that's the sort of thing a stock market analyst should know much more precisely if you have to round off to the nearest billion that's a problem when you've got a gap of 10 billion in your estimates it's a big big problem and again everyone presumes you know Google is not letting people know because whatever the numbers are it ain't good it ain't good for business it's better for business if you don't know okay so between 16 and 25 go and have an annual revenue making the video service big enough to crack the top half of the fortune 500 but that's just a guess YouTube does not disclose revenue profitability how many ads it runs alongside videos user numbers and how often those users visit the site all metrics that would help an investor quote understand the health of the distance and its purpose trajectory close quote said mr. Paget so if you guys can remember when dating websites used to be discussed in the newspapers all the time these would be precisely the statistics or some new website says hey we help husbands find wives we help husbands cheat on their wives or whatever these different websites that were offering romance very often the first thing they would be boasting and newspaper interviews in the first piece of information they'd be presenting and you know to the press or what-have-you would be exactly this type of statistic so why would Google be keeping that a secret for this website you're watching right now for YouTube the arguments made by alphabet corporation to the SEC for not disclosing YouTube separately quote don't hold water close quote quote I'm surprised that the SEC hasn't pressed it more close quote sadness Noreen Weldon it's a legitimate question for shareholders given the size of the business so there is an open question right now in 2019 as to whether or not government regulators will finally force Google Corporation to disclose whether YouTube is profit-making money-losing operating on a charitable break-even basis or what but no matter what the scenario is this has to profoundly influenced the way content creators the way we perceive ourselves if the company as a whole is not profitable then your role here is more like a parasite you can't really be expecting to be earning a good living and you know furnishing your house and so on when you're part of a company as a whole that does not work that isn't profitable that isn't sustainable same with an uber driver if you're making a long-term decision for your career for example should you be a normal limousine driver who does limousine rides between the airport and the downtown of the major city or should you take the same car and drive for for uber well I think if you look at the economic fundamentals the situation you're gonna see why it is that the taxi industry has been sustainable why the conventional limousine booking businesses have been sustainable and what uber has not been sustainable and how you should live your life accordingly if you want to be a filmmaker if you want to do news politics you name it there are a lot of different ways to earn a living through YouTube I think if you look at the economic fundamentals situation you're gonna figure out that YouTube should really not be the place you do any of those things and hey let's keep this in perspective nobody is trying to do Facebook as their career I wish I could say nobody was trying to do Instagram as their career bizarrely there are some people try to interpret living just by come on Instagram I hope I hope I can say nobody is trying to do Twitter as their courier maybe but you mean the fact that a website exists the fact that a website gets millions of viewers or millions of participants does not mean that a sustainable model for even the corporation that owns the website let alone for the content creators let alone for the participants so let's take a look back at the the book publishing industry so obviously this is an article from Forbes magazine say a typical publisher wholesales ten thousand copies of a new business book at twelve dollars and fifty cents apiece marketing printing and editing expenses might eat up another sixty thousand and the author's advance another twenty thousand as for royalties the author might take home 20% of the wholesale price this is a very generous estimate I used to work in book publishing specifically nonfiction book publishing but you'll see in a moment this is 20 percent as a generative estimate okay but the only other note is he says 20 percent of the wholesale price the devil is in the details how do you define the wholesale price maybe with some publishers maybe it would be 20 percent but it's 20 percent of a very low price you know much lower than the price that's on the on the cover the author might take home 20% of the wholesale price however he has to earn out his twenty thousand dollars advance by selling at least eight thousand books before getting any more if all ten thousand books fly off the shelves the author makes his advance plus five thousand dollars for a total of twenty five thousand and the publisher bags a gross profit of forty thousand if the booksellers move fewer than six thousand four hundred copies the publisher loses money but the author still gets his advance hence all that risk so deep you know everyone likes to complain about their job everyone likes to complain about their boss and their employer and you talk to authors you can talk to authors who have become multimillionaires through book publishing and the first thing they're gonna say to you is how terrible the book publishing industry is and how oppressed they are by their editor or the corporate owners or what-have-you okay what we have here in terms of the economics that have just been sketched out to you this is a very reliable very profitable business model that has worked for at least a hundred years we're probably talking about 200 years things haven't changed that much okay and you know what if you're planning you want to do with the next 12 years of your life use that number for a reason you'll see any money if you're playing what you want to do for next 12 years life you know what being an author or even opening your own publishing company it's not that bad a bet again I used to work in publishing yes the internet has changed the game but the Internet has also made many elements of the game easier and more streamlined you can now print a book and then dump it in an Amazon warehouse so you don't have to physically own your own warehouse and actually physically put a label on each book you sell and when I worked at a publisher we did all that we literally had cats in the warehouse to prevent mice from eating the books and it was a kind of inspirational place to be but you know we are involved with physically owning you know metal plates that are used to print the books you know you you give them to a craftsman and they itch the plates and then you get them printed and so on you know the warehousing the shipping it's a lot of work so yeah the Internet has changed things but it's made it much easier to find an audience it's made it much easier to get involved with retailing and warehousing and distribution it's opened up all kinds of possibilities it's made it much easier for a small group of people to start their own publisher print their own books distribute own books and guess what the fundamentals make sense you're actually making the world a better place by publishing books people want to read by educating people by doing research and sharing it with the world what have you I mean if you know publishing books is a morally positive thing and enriches the reader it enriches the publisher and it enriches the author this is proven to work okay what we're doing here on YouTube is no more to work then Wikipedia Wikipedia provides information to people but it does not provide a living to the content creator of Facebook maybe you're the manager of a Facebook group with thousands of members I am actually I'm the manager of like the largest I think the largest Facebook group for vegans in Japan I do no work it's incredibly easy but I'm the whatever I'm the editor for that group I don't have any money out of it I guess Facebook the corporation earns a little bit of money out of people coming there and discussing how hard it is to be vegan in Japan whatever right so the fact that you know a portal exists on the internet doesn't mean it can replace the role of cable television radio or even the paper book but in the same sense that uber or taking advantage of the technology of the mobile phone doesn't mean they can actually replace you know the the business elements the economic elements that make it possible to really employ people provide them with health care benefits and pensions you want so on and so forth from driving taxis and driving limousines you've got to look at these things with a little bit of skepticism okay traditional versus self-publishing how much money can you really make the math is simple if you are a first-time author and you go with the publisher you can expect the following deal advance two thousand to four thousand dollars and then payment your royalties six percent to 10 percent of the book sales I've definitely heard five percent guys I think five percent is Kauffman six to ten percent of sales usually in two tiers a lower percentage up to ten thousand copies and then one to two percent higher after that and 20% to 30% of the e-book sales so this means that if the book sells for just ten dollars and you managed to sell 50,000 copies you'll be making fifty thousand dollars okay there are numerous absurdities in the the book publishing industry and what most people resent about it is exactly the authoritarian nature of the relationship between the author and the editor I know I used to be an editor and I was pretty demanding editor to alright I wasn't gonna publish anything that was factually false or grammatically wrong or what have you I was trying to represent a standard of excellence raise the quality of the books we were producing there you know people don't like that what people like is the freedom that you have on Facebook and Twitter and YouTube okay why is it that a news broadcaster on TV gets paid so much more money than I do so I'm about to do a YouTube video talking about politics of Chile politics and economic problems in Chile all right you know I'm probably gonna do a better job than your a local news broadcaster on TV Ontario or your look you know I probably put more hours into researching the situation and I probably have something more interesting more valuable to say okay why am I not paid by YouTube to say that whereas the news broadcaster on TV is paid really quite a very good wage even if it's just a local news broadcaster that just reaches one town one city they may they may only reach you know a few tens of thousands of viewers total viewership for terrestrial you know TV broadcasts are not that great okay it's unless it's nationwide or international or something you know but they are in a good living I don't you know why you know why it's that same thing freedom okay I get to come on camera and say whatever I want to say I get to work on my own schedule yes I get to make a video about Chile but I don't have to make a video about politics of Chile I could instead make a video but the politics of China or the politics of Taiwan and the politics of Canada I get to do whatever I want to do whenever I want to do it so there's a difference here that's similar to the difference between someone who likes going to the gym and someone who's actually an athlete okay I've mention this in a channel like five years ago people call themselves athletes because they look good on Instagram no no homie doesn't matter if you're handsome or beautiful okay being a real athlete means that you don't work out on your own schedule you work out on a schedule imposed on you by the coach by the team ultimately by the sponsors and the investors be an athlete means precisely that you get uncomfortable everyday that you don't just work out for your own joy in your own gratification you work out to satisfy a higher standard that's set for you by coaches by other authority figures right and it's denigrated and people hate it just like people people love to complain about their boss real athletes love to complain about the coach or the trainer or the other members on the team okay it's brutal and it's denigrating and it's exhausting whereas going to the gym whenever you feel like it and taking a sexy photo of yourself and putting on Instagram whatever you feel like it that's not being an athlete and fundamentally what we do here on YouTube is not rewarded economically in the same way because this is not being a broadcast [Music]