Google Wins Everything Part 2: How to be a Partner

Susan Wojcicki took over YouTube, Wednesday, from my pal Salar Kamangar.

Salar did an amazing job growing YouTube and everyone is thankful for his efforts; he’s a class act who quietly built the product into the most important asset at Google.

Literally, the most important thing at Google--the land of important things.

Heck, that is coming from me, a person who walked away from YouTube funding and massive growth in viewership because it was clear that there is no room given the current split (55/45) for anyone but Google to make a living. More on that in a bit.

In this piece I want to talk about three things:

1. Why YouTube is the most important product at Google--by far
2. Why Google is blowing it
3. A simple solution for Susan to fix the problem

[ The New York Times actually caught up to my “Ain’t gonna work on YouTube’s farm no more” piece (http://goo.gl/em2VfN) eight months later (http://www.nytimes.com/2014/02/02/business/chasing-their-star-on-youtube.html). NYT is on it! :-p ]

[Read part 1 of Google Wins Everything here: http://blog.launch.co/blog/googlewinseverything-part-1.html]

1. Why YouTube is the most important product at Google
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YouTube is the most important asset in Google’s collection of brands and services. It has a 1b+ users a month.

Over the coming years, the number of people using the service will be 110%+ of the people who have internet connections.

Wait, what?!? How?

Yes, more people will use YouTube then use the Internet itself.

Two reasons:

a. people taking their mobile devices out and saying “watch this video!” to people who don’t have the Internet (aka a smartphone) yet.

b. people with smart televisions will increasingly hit the “YouTube” button on their remote controls--and every TV will have YouTube on their remote in 10 years--pulling the rest of the world in.

YouTube is a more valuable asset than Facebook and Twitter--combined!

Humans love watching video and advertisers covet video ads most.

YouTube revenue will eclipse Google search revenue in the next 10 years. I’m certain.

Given that Google paid $1.7b for YouTube, and it would be worth at least $100b if it was public today, YouTube was the M&A deal of the century.

Google paid for a pony and got a unicorn--with Pegasus wings!

[Click to tweet this editorial -- can edit before sending: http://ctt.ec/C3aLu]

2. Why Google is blowing it
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YouTube has unfortunately inherited Google’s odd--some say passive-aggressive or controlling--”we don't have partners!” position.

By treating everyone the same, Google shuts down any negotiation on price or features. It’s take-it-or-leave-it, and with Google’s search and video monopolies--and they are monopolies--it’s hit the bricks for a few and bite your lip for the rest.

Matt Cutts, Google’s long term public face, was fairly clear saying "Google doesn't have partners," recently at an event we both spoke at.

Ouch!

He actually believes this, and he is the most visible person at Google--1,000x more visible than Larry or Sergey (by design).

For 15 years, however, I had the advertising side of the business--Susan’s side--telling my companies what great partners we were!

How valued we were as a partner, how they wanted to deepen the relationship with Engadget/WeblogsInc/Mahalo/Inside/etc.

Heck, even after the Panda update destroyed all of our traffic at my last company, Mahalo, the ad side of the business was calling me saying “why aren’t you publishing more pages to Google’s search index?” and “how can we help you, we value you as a partner!”

Uhh… we stopped publishing because you destroyed our company!

Then YouTube backed Mahalo with seven figures to make content, and they offered us, and others, use of their studio space as *partners*. They host partner conferences constantly, which we have all attended.

But when it came to discussing the revenue split or getting help to make the business sustainable, you are faced with the “Google Death Glare.”

It’s a blank stare Google executives give you when you express a concern, as if you’re talking to someone who doesn’t speak one word of your language.

Anyone who has Google as a partner knows this stare.

It’s just weird, and very Silicon Valley--in the worst way.

Google only sees you as a partner when they need you to run their ads or they need your content to draw in advertisers. When you need help, Google says “we don’t have partners!”

That’s why folks are so frustrated with Google, and I see that tipping over into hate more and more often. The people I meet who run Machinima, Maker and other major YouTube partners exhibit outright hate for YouTube.

That’s bad news for Google.

In fact, it’s fairly clear to this executive, who has been working with Google since Day One, that Google thinks of content creators--artists--as this necessary evil to put their ads next to.

They don’t really respect us since they won everything. If they did, they would listen to our needs and think about making their platform sustainable.

They don’t listen any more really (that is, unless you need help implementing their advertising technology).

Have a question on how to optimize your ads? They’re all ears!

Have a question about the revenue split, making your business sustainable or why you were replaced in search results by their service (see Yelp v. Zagat)? Google Death Glare!

This gives people, inevitably, the message that Google doesn’t care about them, and it builds massive resentment.

That resentment is coming from protesters in the streets (directed at Google buses) and at conferences at $600-a-night hotels packed with media executives.

Resentment of Google has never been higher, which is what happens when #googlewinseverything.

But it could be easily reversed!


3. How Susan can solve the problem
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Susan: why not create an objective system where not everyone is treated the same. Where you are more loyal to the folks who are most loyal to you?

This was my suggestion to Salar on how to keep YouTube from becoming the most loved/loathed platform in the world--which it now is.

Here is a simple example of how to implement it: create four levels of YouTube publishers.

Level one: Everyone! (i.e. you upload a cat video 1x in your life)

- 50 / 50 revenue split
- standard YouTube feature set

Level two: prosumers with < 100k subscribers

-- 60 / 40 revenue split
-- standard YouTube feature set

Level three: professionals 100-500k subscribers who publish regularly

-- 70 / 30 revenue split
-- ability to collect email addresses from consumers
-- advances of up to six months of revenue to fund production

Level four: elite publishers 500k+ subscribers who publish regularly

-- 80 / 20 revenue split
-- ability to collect email addresses from consumers
-- ability to control 25% of their channel page (as long as they don’t break it)
-- advances of up to one year of revenue to fund production

If YouTube had given me this deal, I would not have launched Inside.com and would not have shut down Mahalo’s video operation.

In fact, I had $15m in venture capital ready to go if Google gave us the features I describe above.

Instead, they gave me the Google Death Glare, as if the idea that they might actually give me or Ellen or Maker or Machinima or iJustine a different deal based on merit would rip a hole in the universe.

I wish Susan and Google the best.

I hope, at some point, Google will look back at what got them to this point: their hard work and their partners.

No one wins alone; we all get there together in life.

Winning everything is awesome, but when it is at the expense of the partners who got you there it becomes a real, real shallow victory.

There is no reason everyone can’t win at YouTube and with Google.

Google doesn’t have to win everything, they can give their “partners” a taste.

[[ SPECIAL: A legend who worked actively with YouTube, but doesn’t want to damage the relationship, comments on my article below! ]]

best @jason

PS -- LAUNCH Hackathon filling up, get in there! http://hackathon.launch.co  Feb 21-23rd. I’m investing $100k in the winners!

PPS -- Had an awesome This Week in Startups interview with Stewart Alsop: http://thisweekinstartups.com/stewart-alsop-history-of-tech

PPPS -- Inside.com has three openings for folks who love the news business: Android, iOS and design. Work from anywhere, change the world: http://jobs.inside.com

PPPPS -- LAUNCH Festival is happening Feb 24-26 in San Francisco (http://festival.launch.co).
Tickets here: http://events.launch.co/festival/#tickets. Want to reach 10k entrepreneurs/startups? partners@launch.co. Thanks to these partners for making the event happen: BitPay (http://bitpay.com), Capital One Labs (https://capitalonelabs.com/), Carvoyant (http://carvoyant.com), Cater2.me (http://cater2.me), CoTap (http://cotap.com), Draper University (http://draperuniversity.com), Pivotal Labs (http://pivotallabs.com), Samsung (http://samsungaccelerator.com/).


From someone deep in the YouTube community for seven years, who values the relationship and wants to stay anonymous:
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“I’d say this reflects a lot of the sentiment out there among YouTubers fairly accurately, though they lack your ability to actually get away and change up their businesses approach to community. If you are Toby Turner or SeaNanners, you really don’t have the option to pivot or pick up and move your content elsewhere -- your army of loyal 12-year-olds are on YouTube, and that’s where they want to see your stuff. Which is why Google thinks it can get away with this stuff -- what are you going to do, post on DailyMotion? You do speak a bit about this -- the notion of YouTube as a video monopoly -- but it’s really on people’s minds a lot these days, particularly as companies like Maker, FullScreen and Machinima have started toying with the idea of breaking off their own domains and video players.

“Some major issues that are also of concern to the creator community that you could also touch on, in this or a future piece:

- Google+ Integration: Essentially, YT content creators are community managers with no control at all over their community and no tools to work with, and the way everyone was forced to switch over to Google+ was just highlighting this larger issue
- Non-Existent Customer Support: Having problems uploading a particular video? Videos not syncing with Facebook properly? You’ve swapped out a thumbnail but it isn’t updating? It’s EXTREMELY hard to get any help with that from Google themselves, and a lot of people’s upload schedules are extremely time sensitive. For the amount of ad revenue creators are sharing with Google, shouldn’t they at least be guaranteed the platform itself will work smoothly?
- No Prep or Consultation Before Sweeping Rule Changes: No one who makes video game-related YouTube content was unaffected by the sudden, massive changes to how “copywritten” game content was being treated. Creators whose livelihoods depend on their deep back catalog of “Let’s Play” videos suddenly saw their content vanish, and others were left confused about what exactly was and was not permissible moving forward.
- Inconsistent Community Outreach: Sometimes it feels like Google is everyone’s best friend and just wants to help their creators blow up and find an audience. But Google also sends a lot of mixed messages. I had one creator who makes almost exclusively comedy videos tell me that he was always being invited to “Comedy Nights” at the YouTube Space, only to find out he was invited to be in the audience while more mainstream celebrities actually performed comedy. Which is insulting -- why won’t Google embrace its own community, the ones who made their streaming site the leader in online entertainment? Look also to events like the YouTube Music Awards, which ignored almost all of the extremely talented musicians who are personally active on YouTube in favor of honoring celebrities who couldn’t be bothered to show up, like Eminem and Taylor Swift.”