Skip to main content

How much does YouTube contribute to the UK creative economy?

YouTube and the multichannel network (MCN)/ vlogger ecosystem it supports represents the largest current emerging media type. By my estimate, YouTube streams 4.2Bn hours of content a month, much of which (probably) ends up substituting for time spent with traditional media. But all of the coverage of the platform focuses on whether YouTube itself is profitable for Google, rather than the impact of a global platform on local creativity.

Just as was my intent with the report we published on TV last year, which highlighted the impact of accelerating sports rights spending on the creative economy, I'm now looking at the effect of a global platform that exchanges local viewing, flowing directly to local creatives, for consumption of global channels, which goes into international pockets.

Numbers on YouTube are really very hard to obtain as the platform is not independently reported on by Alphabet, Google, or anyone else. Even estimates of its top line revenues vary wildly, being as low as $5Bn and as high as $9Bn for 2015. Starting with a Credit Suisse number that seems sensible, I've tried to show how money flows through to UK creators.

This is a simple analysis that assumes two types of creatives monetising the platform, both through MCNs. The larger group are music artists, via the Vevo and Warner Music networks. The smaller are the independent vloggers, disproportionately represented in the UK thanks to the presence of millionaire megastars PewDiePie and Zoella. This latter group is solely dependent on YouTube for sponsorship and other ancillary revenues from books and other content, for which I've made a directional estimate based on the going rate for a placement, versus the amount of revenue made from advertising.

My current thinking (as shown in the schematic) is that YouTube takes about $600Mn from UK advertisers and gives back about $180Mn, much of the latter coming from non-UK advertisers (it's a global platform). This actually compares very favourably to the contribution of ad-funded TV in the UK, which brings in about £2.7Bn and returns about £600Mn to the creative sector... but of course even despite the significant difference in creative ROI, the reality is that thousands of people make a living wage from the UK TV industry, versus a handful on YouTube, which supports only a few thousand creators globally.


Anyhow, this is far from a complete analysis and I'm going to continue to work it up, ahead of a report we're hoping to release in the late spring.


Comments

Popular posts from this blog

Differences between Industrial and Digital businesses

Since I'm stuck on a Eurostar crawling through western France I thought I'd use the downtime to share this table I've made on the differences between Industrial and Digital companies across the main business functions. A strange insight into how my mind works... but hopeful a useful summary!

Strategic lessons from Debenhams

Yesterday’s news cycle brought with it the announcement that Debenhams, a staple of the UK high street, was now in the control of its lenders . This kind of news is sad for the employees of Debenhams and certainly for its shareholders, but it is also a good opportunity for reflection. A business that can trace its history back to 1778 may be about to cease trading forever. For leaders in the retail and associated consumer industries, now is a good time to consider what lessons can be learnt from Debenhams and what could be done to seize the opportunity presented by its passing. I’m thinking about the topic of strategic responses to emerging events at the moment because of the seeming inevitability of a recession this year or next, which will doubtless bring with it many similar situations. Before I get started, a disclaimer. I have no inside knowledge of Debenhams, I have never consulted for them, pitched to them or even met anyone in their management team. This post uses Debenham...

Impacts of a handset leasing model on mobile telcos

Following yesterday's post, here's some related thinking on the impacts on operators of handset leasing. Handset sales represent around 25% of operator revenues in a typical European market, but generate only around 5% of margin. It may therefore be the case that the scenario described would lead operators to a more profitable structural model than exists today. Oil companies are consistently and acceptably profitable, despite being (literally in some cases) the ‘dumb pipe’ that operators are so desperate to avoid becoming. One of the reasons for the oil majors sustained profitability is clear focus on their role in the value chain – to supply the fuel that enables transportation, relying primarily on location, then brand and finally product innovation to compete. BP or Shell do not need to subsidise the purchase of a car in order to drive consumption of fuel because consumers are ‘hooked’ on it (it gets them from place to place) and there are many credible car manufacturers an...