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May 1, 2019
Google holding company Alphabet saw its share price fall by 8% after it announced disappointing Q1 numbers.
“YouTube’s top priority is responsibility,” said Google CEO Sundar Pichai. “As one example, earlier this year YouTube announced changes that reduce recommendations of content that comes close to violating our guidelines or that misinforms in harmful ways.”
“…while YouTube Clicks continue to grow at a substantial pace in the first quarter, the rate of YouTube Click growth decelerated versus what was a strong Q1 last year reflecting changes that we made in early 2018, which we believe are overall additive to the user and advertiser experience,” said CFO Ruth Porat.
At least one analyst on the call expressed frustration at the lack of further clarity on the reasons why Google’s revenues aren’t what they expected them to be, but the YouTube stuff seems fairly self-explanatory. Pichai made it clear that YouTube is all about reducing perceived harmful content on the platform, while Porat referred to changes made at YouTube in early 2018.
So what were those changes? To YouTubers they were one of many wholesale restrictions on the types of content that are monetised (i.e. have ads served on them), broadly referred to as ‘adpocalypse’. Every now and then a big brand found its ads served against content it disapproved of, resulting in it pulling its ads from YouTube entirely. In the resulting commercial panic YouTube moved to demonetize broad swathes of content.
While this is an understandable immediate reaction to a clear business threat, it also undermines the central concept of YouTube, which is to provide a platform for anyone to publish video. On top of that YouTube increasingly censors its platform, including closing comments, tweaking the recommendation algorithm and sometimes even banning entire channels. These restrictions must surely have contributed to the amount of ad revenue coming in, but Google seems to have decided it’s worth it to keep the big brands sweet.
Here’s some further analysis from prominent YouTuber Tim Pool followed by an example of just the kind of indie creativity YouTube has built its success on (which, to be fair, doesn’t seem to have been demonetised this time). A move towards favouring big corporates over independent producers is a much bigger risk than you might imagine for YouTube, as Google’s disappointing Q1 numbers imply.
As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno
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