YouTube’s testing of a scheme to stop ad blocker usage and limit video plays is being seen by many as a way to further monetise the platform.
How Does YouTube Make Its Money?
Google’s YouTube platform currently makes its money in several ways, with advertising being the main source of revenue. For example, its money comes from:
– Advertising. As mentioned, this is the primary source of YouTube’s revenue. Under this broad term, money is made from different types of ads, such as:
– – Display Ads. These appear to the right of the video and above the video suggestions list.
– – Overlay Ads. These are semi-transparent ads covering approximately 20 per cent of the video content at the bottom.
– – Skippable Video Ads. The adverts that allow viewers to skip ads after 5 seconds. Advertisers are charged only if the viewer watches the ad for at least 30 seconds or until the end.
– – Non-skippable Video Ads. The adverts users must watch the whole of before the video starts, plus they can also appear during, or after the main video.
– – Bumper Ads. The non-skippable video ads of up to 6 seconds that viewers must watch before the video.
– – Sponsored Cards. These ads are supposed to display content that may be relevant to the video, e.g. the products featured in the video.
YouTube Premium. This is the YouTube subscription service whereby subscribers pay a monthly fee to watch ad-free content, gain access to the YouTube Original series, and it also includes a subscription to YouTube Music.
Channel Memberships. Any YouTube content creators with a large enough following can offer their subscribers a membership with monthly payments in exchange for badges, emojis, and other perks.
Super Chats & Super Stickers. During live streams, viewers can pay money to pin their comment at the top of the chat. This gives it more visibility and allows creators to easily acknowledge or respond to them.
The YouTube Merch Shelf. Popular channels can showcase their official merchandise on YouTube itself, i.e. creators can display the merchandise below their videos.
Transaction Revenues. YouTube also makes money by renting or selling movies and TV shows.
What’s Happening With The Current “Experiment”?
As first highlighted by a Reddit user, YouTube is running an experiment (globally). As a result, users who have an ad blocker on when they view YouTube are shown a pop-up that notifying them that “video player will be blocked after 3 videos”.
Below this main message is a three-part statement which says:
“It looks like you may be using an ad blocker. Video playback will be blocked unless YouTube is allowlisted or the ad blocker is disabled.
Ads allow YouTube to stay free for billions of users worldwide.
You can go ad-free with YouTube Premium, and creators can still get paid from your subscription”.
There have also been reports (in June) of YouTube restricting ad blockers on mobiles.
This latest experiment follows one appearing during May when YouTube was stopping users with ad blockers on from viewing the platform.
As shown by the message, it appears that YouTube may be trying to further monetise its platform by pushing users towards signing up to its YouTube Premium subscription service.
Over the last year or so, YouTube has made several moves aimed at this. For example:
– In October 2022, YouTube ran a short-lived experiment where it asked some free users to upgrade to Premium to watch videos in 4K resolution. The test was reported to have attracted criticism and ended with YouTube saying that all users would be able to access 4K quality resolutions without Premium membership.
– In September 2022, YouTube ran another test aimed at encouraging users to sign up to Premium to avoid adverts by playing 11 unskippable ads before a video began.
– Back in July 2021, some may remember that YouTube tested a feature that allowed users to directly purchase products from YouTube that were featured in the video they were watching. At the time, it was reported that YouTube had been asking creators to tag and track the products used in their videos so that the data could be sent to Google. This may have been used to help improve its analytics, to develop shopping tools for YouTube, and possibly (as was thought at the time) to contribute to a future integration with Shopify (a competitor to Amazon).
This time last year, Google’s announced that its ad-free service (with access to exclusive content and other perks) YouTube Premium had 80 million YouTube Music and Premium subscribers globally (including customers with free trials). As a platform, YouTube is vast and caters to a wide array of content and audiences, and its diversity allows it to be relevant across various domains and demographics. That said, YouTube Premium is in competition with several platforms across various domains. Competitors include:
– Streaming services like Netflix, and Amazon Prime Video (YouTube Premium’s “Originals” content is in direct competition with these), and Disney+.
– Music streaming platforms like Spotify, Apple Music, Tidal, Deezer, and others.
– Ad-free video platforms like Vimeo.
– Short-form content platforms such as TikTok, Instagram (Reels), and Snapchat.
– Live streaming platforms like Twitch, which is primarily gaming content-focused but still competes for user attention in video streaming.
What Does This Mean For Your Business?
The many experiments in recent times involving matters relating to adverts and ad blockers appear to be aimed at getting more YouTube users to sign up to the YouTube Premium ad-free subscription service, thereby bringing in more revenue from this well-established video sharing and social media platform.
YouTube is already the largest video sharing platform (1.9 billion active logged-in users monthly) and wants to not only stay that way, but to boost its opportunities for revenue, e.g. the experiment to buy goods featured in videos, driving users to Premium sign-ups, possible integration with other platforms (Shopify), and more. YouTube’s relatively diverse services (within video and music) plus its status as a social media platform and general focus of user attention means that it now has many powerful competitors in the streaming and content platform worlds from Netflix to TikTok. This in itself is an incentive to find opportunities to stay ahead and search for new opportunities and leverage the power of the platform and the strength of its parent company. That said, people are used to using YouTube for free, are frustrated by adverts, and tend to respond poorly to feeling like they are being forced or bored (by long adverts) into signing up to yet another subscription, particularly with a cost-of-living crisis.
Another option that YouTube could consider is a paywall, although this may need a bit of thinking-about and could alienate and even lose them many non-paying but still frequent users, not to mention the bad publicity. From all the signs given by the experiments, more pushes to encourage Premium sign-ups are the likely course for now so users should expect more ad blocker / ad-related issues in the near future.