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YouTube Ads Don't Support YouTube Videos, Says YouTube Producer on YouTube's Stage

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Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

YouTube has hosted an extravagant sales pitch for advertisers in New York City for the last four years. So the one it put on this week had lots of familiar elements: Fancy production values, eye-popping statistics and a music act ad buyers had heard of — this year’s Bruno Mars was last year’s Pharrell.

But YouTube also did something I’ve never seen before. It brought on a speaker to explain why YouTube didn’t need advertisers.

I don’t think YouTube thinks that’s what John Green was doing during his 12 minutes of stage time during its “Brandcast” on Wednesday.

I’m assuming YouTube execs thought the video producer and novelist (he’s the guy who wrote the “The Fault in Our Stars”) — was telling advertisers to move their money from old, dumb TV to new, exciting YouTube. Or risk losing their audience. That’s the big theme for all of YouTube’s sales pitches.

It seems quite clear to me, though, that Green was doing several things during his presentation. And one of them was explaining why YouTube advertising was “undervalued” and didn’t support the video work he and his brother Hank did. And that he was okay with that.

Instead, Green explained, he and his brother, and the people who make videos with them, rely on alternate revenue streams like donations and merchandise sales.

“For the most part, everything my brother and I have done, we’ve done largely without advertising. …Today, Hank and I have 30 employees helping us create shows that are both educational and fun to watch. And even though our subscribers and views have grown 10-fold in that time — 10 million and counting — less than 20 percent of our company’s revenue comes from advertising. And that percentage is shrinking by 5 percent every year.”

And if you wanted to know more about the way the Green brothers think about video advertising, you could head over to the post Hank Green published on Medium last month, where he also explained that the advertising model on YouTube is flawed.

In a rush? There’s a helpful sub-headline to save you some time: “Advertising is a kinda shitty model. It’s very exciting that we’re moving beyond it.”

Video makers have been complaining about ad dollars on YouTube for years. Usually YouTube tries to placate them, not highlight them. So what were they thinking on Wednesday?

Then again, when you watch and read Green’s speech — and you definitely should — you may end up with a different takeaway. Everyone I talked to who saw him speak Wednesday said he was the highlight of the show. Not everyone thought he was directly undermining his host’s business model. Check it out for yourself:

Hi I’m John Green; I’m a novelist and videoblogger and unlike the other people onstage here tonight, I’m not here to entertain you. I’m not here to educate you. Tonight, I’m here to scare you.

See, most people onstage tonight are arguing why you should advertise on YouTube. But I’m going to offer you something different. I’m going to offer you a vision of what will happen if you don’t.

But first a little background. My first novel “Looking for Alaska” came out in 2005, one month before the first video was uploaded to YouTube. You might’ve heard that 2015 is YouTube’s 10th anniversary. My God are they excited about it. Like, okay, Congratulations YouTube. You’ve done something only previously accomplished by, like, every fourth grader.

So anyway my book came out, got good reviews, won a big award, and sold about 8,000 copies. What you might call, modest numbers.

Ten years later, my novel “The Fault in Our Stars” has been on the New York Times bestseller list for 160 consecutive weeks, and the film adaptation of the book grossed over $300 million at the box office worldwide.

Two books, two massively different results. So how did that happen?

On January 1st, 2007, my brother Hank and I began a project called Brotherhood 2.0 in which we made YouTube videos back and forth to each other every weekday, and eight years later we’re still at it.

Through these videos, we developed an incredible legion of fans who call themselves nerdfighters, because they celebrate intellectualism. This community has done all kinds of amazing things — they’ve loaned more than $4,000,000 to mostly female entrepreneurs in the developing world through kiva and they run the Project for Awesome, an annual 48-hour event on YouTube where thousands of creators make videos about their favorite charities to raise money for organizations like Partners in Health and Save the Children. Last year’s p4a raised over $1,200,000 from more than 21,000 donors.

With our community’s help and support, we expanded our online video presence. In 2012, we launched the educational channels SciShow and Crash Course. SciShow is a celebration of scientific inquiry and discovery and Crash Course introduces topics from Chemistry to World History at an AP level, and it’s now used in thousands of schools around the world.

There is tremendous hunger for educational and how-to content online: People want context and well-researched information presented to them accessibly, and today CrashCourse and SciShow both have over 2,500,000 subscribers. Hank and I also co-own DFTBA Records, which distributes music and merchandise for creators who build audiences online; every year we pay out millions of dollars to creators.

So we’ve had a lot of success because of YouTube.

But here’s the part that should worry all of you: for the most part, everything my brother and I have done, we’ve done largely without advertising. Crash Course and SciShow are funded mainly by viewers who voluntarily donate to support the shows through Patreon. And DFTBA Records provides more revenue from merch than we’ve ever made from ads, not just for us but for dozens of creators.

Today, Hank and I have 30 employees helping us create shows that are both educational and fun to watch. And even though our subscribers and views have grown 10-fold in that time — 10 million and counting — less than 20 percent of our company’s revenue comes from advertising. And that percentage is shrinking by 5 percent every year.

Of course this isn’t true for all online video; lots of it is well-supported by advertising and geared toward advertising models. But many of the strongest communities, and much of my favorite content in online video, is frankly, undervalued by advertisers.

That’s forcing these creators to find other paths — they’re doing live events and publishing books; they’re crowd-funding and producing albums and getting grants. In short, they’re building a world where they don’t have to depend on advertisers. And they’re thriving. You may not see that success, but it’s happening.

You all are probably familiar with this tired narrative that young people are only interested in distraction and have no interest in the world outside of themselves, but my experience has shown otherwise. While the world has talked about their insularity and solipsism, young people have created a fascinating and complex world of deep engagement online, a world in which they are not just watching content but becoming part of it by being community members whose comments and fanfic and artwork and passion have profound impacts on the broader culture.

One of those young people was Esther Earl, who inspired much of my novel “The Fault in Our Stars.” Esther was one of the earliest nerdfighters and a key supporter of the Project for Awesome who was also living with cancer. I learned from Esther that people with disabilities are not defined by those disabilities, that their lives and loves are as important and complex and meaningful as any others, and that a short life — she died in 2010 when she was just 16 — can also be a rich life.

Without the YouTube community, I never would have met Esther. I never would have been inspired to write my book. And I may never have seen just how passionate, committed and caring this new generation of fans could be. I would have never known how deep their desire was to be engaged, not just entertained.

Meanwhile, we adults who criticize this generation for its apathy and narcissism are watching “CSI Miami” and “The Blacklist” and congratulating ourselves for our intellectual sophistication and connectedness.

But here’s the truth: Way down deep in what Robert Penn Warren called the darkness which is you, there is a great and terrible feeling that our life and work is meaningless, a clawing fear that everything we do will be for nothing. And “CSI Miami” is really good at distracting us from that fear. Don’t misunderstand, I think that’s great. The distraction business is a great business and because the number of eyeballs a distraction attracts is a reasonably good way of judging the effectiveness of the diversion, advertising is great at funding it.

But I and the most passionate creators on YouTube, we are not in the distraction business. We’re in the community business, and number of eyeballs is a terrible metric for my business. I can say, “Our videos have been viewed more than a billion times” and it sounds impressive, but it’s not actually an important number. I don’t care how many people watch or read something I make. I care how many people love what I make.

And that love is tougher to measure. Like, I’ll happily watch 44 minutes of “Deadliest Catch” and I might even tweet about it, but it won’t be nearly as important to me as spending three minutes with Vi Hart as she explains to me how we know that the infinite set of real numbers is larger than the infinite set of natural numbers. “Deadliest Catch” is something I watch. Original content on YouTube — whether it’s let’s play or beauty tutorials or introductions to Nigerian history — is something I treasure.

So if you want to stay in the eyeballs business, that’s fine. I don’t blame you. It is a good business. But you risk losing relevance with an entire generation of viewers that looks to video not just for distraction but also for engagement and connection.

And that’s where there is a tremendous opportunity, and one you won’t find on television or anywhere offline: If you support creators through advertising we can build and foster better, more diverse communities. If we’re able to rely more on you for support, we can spend more of our time building the type of engagement that can help your brands. We could bring more interesting stuff into the world. And if you help us do that, you will win over this next generation just as you have in the past.

Thank you.

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