YouTube puts its money where its mouth is regarding revenue diversification
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YouTube puts its money where its mouth is regarding revenue diversification

The world’s most popular video hosting site, Alphabet-owned YouTube, is willing to spend big bucks in exchange for a more diversified revenue stream – both for itself, and for the talent that drives it. The company, which is widely considered to be one of the jewels in Alphabet’s crown, wants to evolve into more than just a (insanely lucrative) advertising platform. This transition is likely to be difficult, but if any company has the know-how and financial clout to pull it off, it’s YouTube. What’s more, the move is popular with investors and with YouTube stars.

Alphabet’s share price has appreciated by 17% year to date

graph 1508 youtube

SOURCE: Yahoo Finance

YouTube is debuting a number of new features including paid memberships, and enhanced chat, and it’s willing to pay video creators on its platform up-front sums if they choose to adopt them. That’s likely to be a welcome development for many creators, who have complained about their reliance on advertising revenue. Why is ad revenue a problem? At least partially, it’s down to the fact that Google’s policy of shielding viewers from controversial content has unfairly penalised a number of videos on YouTube. Competitors like Twitch have capitalized by offering more lenient terms of service – this is YouTube’s way of fighting back.

The company’s chief product officer, Neal Mohan, said: “It’s something creators have been asking for, and we’ve built the products hand-in-hand with them.”

In a separate statement, the company said: “We have no new initiative in place. We have always invested in our creators’ success and will continue to do so to ensure they have a great experience and can find continued growth and opportunity on YouTube.”

Disclosure

Dominion holds Alphabet in its Global Trends Ecommerce Fund.


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