YouTube Tracks Millions to Prevent Content Creators from Working with Netflix - Sarmad
• The deals include direct funding for some programs or giving content creators a share of advertising revenue from deals
(Bloomberg) – YouTube is offering millions of dollars to popular channels to publish their video content exclusively on the platform for a specified period, in an attempt to curb Netflix’s efforts to attract its top stars, according to people familiar with the talks.
These payments could take two different forms. YouTube has discussed directly funding certain programs, and has also offered to allocate a portion of advertising revenue from deals with major brands to content creators. Although YouTube has not yet finalized any deals with content creators, it is close to reaching agreements with a number of partners, according to the individuals, who requested anonymity due to the sensitivity and ongoing nature of the negotiations.
YouTube has warned content creators that those who strike deals with Netflix will face consequences, according to people familiar with the matter. YouTube will be less likely to involve them in marketing campaigns or events if they simultaneously publish videos on Netflix. Such creators would also be excluded from receiving a share of revenue from some of the brand’s major campaigns.
YouTube and Netflix’s Battle for Top Content Creators
Netflix is seeking to strike agreements with dozens of YouTube’s top stars, paying creators such as Alan Cheken Chao and Nick DiGiovanni to publish their video content on both YouTube and Netflix simultaneously. The company is still holding active talks with dozens of other content creators, channels, and programs, including a celebrity talk show.
Netflix’s deals attract content creators because they allow them to earn millions of dollars in additional revenue for videos they are already producing, while also exposing their programs to new audiences. Netflix has more than 325 million subscribers.
However, YouTube has informed content creators that publishing content on both its platform and Netflix simultaneously harms viewership on YouTube and creates the impression that the channels no longer prioritize the video platform as their primary distribution outlet.
Netflix’s Terms Push Some Creators to Back Away
Some content creators have already decided not to work with Netflix. The service requires them to submit videos days before their scheduled release date, a practice that does not align with the workflow of many creators. It has also asked content creators to remove certain brand sponsorships from their videos.
YouTube and Netflix have led the video streaming services over the past two decades. For most of that period, they were competitors with largely cordial relations, each operating in a separate world.
Netflix dominated the subscription streaming market, focusing on high-cost films and television series designed like Hollywood productions.
YouTube, meanwhile, has been the undisputed leader in user-generated content, helping to spawn a new generation of stars primarily viewed by audiences on mobile devices. Its previous attempts to fund original programming failed to produce a large number of successful works. One such program later moved to Netflix, where it achieved significant success.
Blurring Lines Between Streaming Platforms
The boundaries between the two platforms have blurred in recent years. YouTube has prioritized attracting viewers to watch its content on televisions and now commands more viewing time on these devices than any other service. It has also sought to capture advertising spending traditionally allocated to television, securing rights to major live events such as the Oscars and the National Football League.
Meanwhile, Netflix, which has long promoted its content on YouTube, has secured licensing rights for popular shows such as “Cocomelon.” The company views YouTube stars as a means to attract younger viewers and increase the time its users spend on Netflix.
Competition intensified over the past year as Netflix ramped up its efforts to attract the most popular YouTube channels.
Why did YouTube decide to counter Netflix’s moves?
YouTube considered whether it should respond. Chief Executive Neal Mohan has long maintained that creators who strike deals with competing platforms, whether Instagram or Amazon Prime Video, ultimately tend to drive audiences back to YouTube.
Only a small minority of these creators leave YouTube, which remains their primary distribution outlet. Moreover, funding any single channel could provoke resentment among thousands of other channels that receive no financial support.
YouTube still prefers not to operate as a studio for content creators, a role that would involve financing their work and providing creative direction. However, Mohan and his team recently determined that the steady influx of creators who now publish simultaneously on both YouTube and Netflix has become an issue requiring attention. It becomes more difficult to convince advertisers of the appeal and value of a YouTube video if it is also available on Netflix.
This is not the first time YouTube has responded to competitors in this manner. It previously offered money to creators who had not signed deals with Vessel, a startup co-founded and formerly led by Jason Kilar, which had been trying to persuade social media content creators to publish their work on its app before YouTube. YouTube also launched a short-form video product to compete with TikTok.
