Why YouTube's power to create stars could kill it
Grumpy Cat may not really have made $100 million in two years for her owner, as some reports claimed. Still, with two books, a TV movie, an endorsement deal with Friskies, licensed merchandise and an agent, the popular frowning feline is no doubt more than earning her keep.
Thank YouTube. The Google (GOOG)-owned video site has become a new kind of starmaker, bringing online fame, and sometimes wealth, to even the unlikeliest of Internet users. Take the pair of brothers, ages 6 and 8, who make more than $700,00 reviewing toys. An advertising rep for Google told CBS News that the company has hundreds of thousands of content creators who make over six figures.
And that's only from advertising. Some break though in a big way. Love him or hate him, Justin Bieber got his start by posting videos of his singing on YouTube. It's where his manager found him. Now Forbes calls the Biebs one of the 10 most powerful celebrities and estimates his earnings at $80 million.
The potential opportunities, and pressure, can be immense. British YouTube fashion and shopping video blogger Zoella, whose actual name is Zoe Sugg, was getting 12 million views a month on her YouTube channel. Then the 24-year-old came out with a novel that proved to be a smash hit, with 78,000 copies selling in the first week. Only it was ghostwritten, possibly for a pittance. In the middle of a new Internet drama, Zoella announced on Monday that she's taking some time off from online.
Although the really big money may come offline, YouTube can lay the groundwork for earning potential fortunes. Rather than waiting for a traditional studio to discover and promote talent, people can get the kind of public exposure that attracts industry interest.
That dynamic is changing how YouTube operates. For example, the site makes money from ad views, so it needs to promote winners. Although viral hits do happen, the mechanism of something catching fire from person to person is rare. Instead, viral exposure really happens by getting the word out through big online media sites -- like YouTube.
To make money, the company must focus on pushing the videos and content producers that immediately look like they could take off. To that end, Google has started offering bonuses to talent that will sign multi-year deals to keep Facebook and other video services from luring them away.
That poses a conundrum for YouTube: Could its very importance as a medium for generating attention eventually undermine its value as a forum for the weird, wacky and unexpected? The site's focus on minting new Internet stars could require YouTube to exercise more control over promising content creators. After all, before the book and movie deals are signed, exactly what makes videos of a grouchy looking cat go viral remains a mystery.