Generally speaking, as a video consumer, we think of YouTube as a FREE mecca for information, entertainment, music, and more. As we’re sure you’re aware, everything free comes with a price. The video viewers pay their way in the form of advertisements watched. The creators pay for their access to the platform by allowing ads to be served on their videos — which is a catch-22 because the video viewers don’t really want to watch ads.

Just like this user, we’re wondering whether YouTube may have some ulterior motives for starting showing even more ads in videos. First, they announced that they would be lowering their threshold for mid-roll ads from 10 minutes to 8 minutes. Not only are they adding these interruptions to shorter videos, but it also seems like they’re increasing the number of mid-roll videos — sometimes featuring roughly two 15–30-second ads every 3 minutes!

You see, video advertiser spend has decreased by almost 50% in 2020. Many companies were lowering their marketing budgets in order to keep lights on elsewhere. So, despite viewership increasing on videos, there was less revenue flowing through the advertising side of the business for YouTube. With so little ads to serve, how can YouTube make money to pay their creators (and obviously, make money in general)?

That’s YouTube’s explanation for allowing more mid-roll ads on shorter videos. It will allow video publishers to earn more money — but we have a different theory.

Why YouTube is Adding More Ads

Our theory at CatapultX is that YouTube has increased serving ads in order to drive users to subscribe to their premium service. Video viewers will get so fed-up with a pre-roll ad and multiple mid-roll ads and decide to spring for the ad-free paid version of YouTube. It’s pretty obvious since YouTube has also increased the number of times that they show the “Want to Get Rid of Ads? Get YouTube Premium” ad. (Let us know how you feel about paying for ad-free video channels here.)

Content creator XJet ran a survey to his subscribers, who all responded overwhelmingly that they’ve noticed more ads on YouTube videos and they do not like it. He let his audience know that he does make money off of his videos, but that he doesn’t allow mid-rolls in his videos — because he hates them. While this surely makes his subscribers happy, this means that he is missing out on income from his videos.

Xjet isn’t a YouTube guru. He’s actually a gentleman dedicated to RC airplane model flying but, he came to the same conclusion as us and others!

YouTube wants to become more like Netflix, Disney+, Cable TV — a subscription service. And why not? Being primarily a subscription service will give YouTube a steady stream of income without having to focus on recruiting new advertisers to fund publishers, to attract video viewers. This would be detrimental to publishers!

What Does Youtube Premium Mean for Publishers

If the platform shifts from being advertiser-funded to user-funded, this means less revenue for the publishers/creators.

YouTube’s Support site states, “Currently, new revenue from YouTube Premium membership fees is distributed to video creators based on how much members watch your content. As with our advertising business, most of the revenue will go to creators.”

Basically, if a user watches a lot of videos, the amount that the creator gets is much smaller — as it is divided among other creators.

A lot of video creators will have to pack up shop and find another way to make money. They won’t be able to monetize their content.

Not only does it mean less revenue, but it also means that YouTube can get pickier about who they allow publishing videos. They become less dependent on the creators as a passenger ship for YouTube’s advertiser revenue. This could mean more shadowbanning, censorship, and platform alignment with YouTube’s political alignments/interests.

Both of these things spell disaster for the vibrant, growing creator community on YouTube as well as making the user experience for those who don’t pay for YouTube premium first.

What’s the Solution to YouTube’s Over-The-Top Ads?

We believe that dynamic, contextually served ads that don’t interrupt a creator’s content can and will allow creators to continue to survive. If you’re like XJet, who puts his viewer’s experience over the amount of money he wants to make, you probably are missing out on income from mid-roll ads.

However, to keep your subscribers happy (and keep money in your pocket), you can run dynamic ads. They show up at the bottom of the video, shrink the video back and show around the perimeter of the video, or show as an overlay without covering the video. These ads are contextually generated, so they’ll also be directly related to what is in your videos — which means your viewers are likely to be less annoyed or more likely to engage.

What’s your opinion on paid video subscriptions? Let us know!

If you’re a publisher, looking to keep your business alive, but also keep your viewers happy, schedule some time with us. CatapultX will allow you to control your content and maximize your revenue.

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Founded in 2019, CatapultX is an AI-based platform at the forefront of innovative video marketing. Serving contextually relevant video ads that don’t interfere with consumer experience, CatapultX brings a profitable, engaging and enjoyable experience to publishers, advertisers and audiences. If you are interested in expanding the profitability of your content or building a more robust advertising portfolio, reach out to us at info@catapultx.com or set up a meeting with someone from our sales team.