YouTube is king of UGC video, and over the last decade it has transformed from a video hosting platform into a sort of social network for video. Just witness the huge growth in subscribers to top channels, and once you check in to see your favorite channels’ new videos, YT’s recommendation algo will keep you glued to the service (and maybe subscribed to a few more channels).
There are many flaws with YT but two stand out for this discussion:
1) It has a very high take rate on revenues generated from ads (ie YT keeps 40-50% of ad revenues), ostensibly because the content creators/channels don’t have an alternate video platform with a large audience where they can monetize their videos easily. Eg if PewDiePie moved exclusively to Twitch or Vimeo or any other video platform, his viewership would drop (and ad rates might be lower too) – he would need to convince his subs to follow him to another platform. So he stays put at YT like all the other top channels.
2) The content creators/channels essentially do all the content work, and they have to abide by all of rules of the platform without a real voice to how those rules are set ie they effectively pay a 45% “tax” to YT without any representation. Unless the content creators bought GOOG stock (out of their own pocket), they have no equity stake in YT either. Their loyalty is almost purely economics.
So the question is: Would it be possible for someone (Eg the failed Quibi or a new startup) to jumpstart a YT challenger by offering YT content creators incentives such as
A) Performance-based RSUs or stock options or preferred stock,
B) Contractual agreements that the new platform will negotiate the platform’s take rate every 5 years, including the right to negotiate the rules/policies and TOS. (Notably, a higher take rate for the platform increases the value of their RSUs, albeit at the expense of a lower take-home income from ads, so then current crop of top channels may prefer higher take-home income today but if their channels becomes less popular (ie overtaken by newer channels) they might opt for a high take rate to maximize their equity value.
C) Better economics for exclusive content on the new platform. Eg 90% of revenues from premium content subscriptions will be paid out to creators.
In effect, would it be possible to give away enough equity but not too much of it so
A critical mass comprising of tens of thousands YT channels would port all their videos to the new platform, and they’d urge all the followers to support the new platform, and
VCs and startup employees can still participate in the payoff of such an platform after ceding a lot of equity to content creators (effectively, paying them equity for their content library, their loyalty/support and their free marketing)
Note: YT is valued at $ 250-350B by some estimates. NFLX is worth $ 250B today. If the new platform could be worth $ 250B in 7-10 years, and assuming half of the equity is shared with content creators, this means $ 125B. For illustration only, if each channel gets $ 10M (on average), that’s enough to reward 12,500 of the top YT channels (some will get more than others), with $ 125B left for investors/employees/founders.