Introduction

Over the past few years, it feels like the soul of YouTube has fundamentally shifted. I’m sure I’m not the only one who feels this way; I’ve heard so many stories of people noticing a change in the quality of their feed recommendations, or in the content of their favorite creators. And I think the source of this discrepancy, when compared to earlier YouTube, is a change in the underlying architecture that motivates content creation.

YouTube was founded in 2005 to give people a means to share their video content with the world. “Broadcast yourself”, they said. In 2006, Google acquired the company, and by 2007, the YouTube Partner Program (YPP) was launched, giving creators a means to sustain themselves and potentially make content full-time.

The purpose of YouTube was for creative individuals to share their videos, passions, knowledge, etc., with others, and the funding provided by the YPP enabled them to continue doing so. The profit was a means to create.

However, as YouTube–and the internet as a whole–have grown, the paradigm has changed. Individuals have seen the success of large creators, not only in terms of fame and stardom, but financially. The “YouTube millionaire” is a dream for so many young adults, and thus the goal of content creation has turned from embarking on a creatively fulfilling journey to reaching a fiscally lucrative destination.

If there was a button that would provide the same financial support as YouTube, with none of the required video-making, many channels would tap it without a second thought, and leave YouTube in the dust.

Creation has become a means to profit.

Beyond Advertisments

It didn’t take long for alternative methods of generating revenue from a YouTube channel to come onto the scene. AdSense is inconsistent and generally unreliable, so it makes sense for channels to seek ways to “diversify their income” so they can continue creating even in the case of a bad month for advertising.

One popular example is merchandise. Even before AdSense launched, channels like Smosh were selling basic merch like shirts and accessories that let fans express their engagement with a certain creator.

Then, of course, you have sponsorships, the earliest ones dating back to 2007. These were often companies paying to promote products that were related to a YouTuber’s specific niche on their channel, like Baby Bjorn’s sponsorship of DadLabs.

At this level, it’s a reasonable and logical extension of the platform, similar to how sports and media franchises often have sponsorships, product placements, and merchandise to complement earnings from the primary source. These revenue streams supplement the art.

But of course, it couldn’t stop there.

The Rise of the Creator Economy

The idea of a “creator economy”, where user-generated content (UGC) is used to connect with an audience and monetize creative activity has origins dating back to the late 1990s, but the concept never really took off until 2011, when YouTube officially discontinued the term “YouTube star” in favor of the label “creator.

It’s not hard to see why the creator economy flourished as it did. These individuals have built a personal connection with their audience, they become trusted figures with an intimate relationship (albeit parasocial) with those that follow them. The passion that drove their creative process inadvertently created an incredibly lucrative environment to monetize.

But as time went on, and the creator economy has expanded across platforms and proved to be increasingly profitable for those involved, creatives no longer inadvertently developed this breeding ground for monetization throughout their careers. They started their career with the intention of building this environment, and used content as a means of doing so.

Where the Plot was Lost

It’s one thing for large creators to take financial advantage of their platform. Think of all the big YouTubers you know that have “sold out” to advertising and even developing products that seemingly serve no purpose but to pad wallets. But we know fame corrupts–this has been the fact of popular figures in any public-facing industry for hundreds of years.

But it feels like now, channels are being launched with the objective to turn a profit, not to share interests and passion.

More and more I’m seeing small channels attempt to game their community and make a quick buck. Some start off making relatable commentary videos in order to form a bond with the audience, only to turn around and sell a mobile app. Others redirect their viewers to an off-site online community only to sell a program or service. Some even use their first viral video to give themselves the credibility to sell an online course on “YouTube success”. And of course, there’s the entire industry of “YouTube automation”, where the sole purpose of a channel is to generate ad revenue through content made on a virtual assembly line.

These are all real examples I’ve seen repeatedly on the platform as of late.

These cases are different from those of larger creators, as the issue goes deeper than celebrities wanting to cash out after investing their creative energy for years. This new generation of channels perceive YouTube as nothing more than an impersonal means to an end.

What happened? What ignited the development of the “creator economy” and the following corporatization of a beloved artistic platform?

A Paradigm Shift

Very quickly, the world started to take notice of the promise of financial success teased by YouTube fame. Starting in around 2011, organizations known as multi-channel networks started to pop up on the scene. These companies connected with creators, offering them assistance in negotiating ad rates, promoting their content, managing sponsorships, and more, for a small cut of the ad revenue. Popular examples include Maker Studios with Pewdiepie, DanTDM, CaptainSparklez, and Jacksepticeye, among others, and ScaleLab with MrBeast.

MCNs helped kickstart the reframing of YouTube channels as mini-corporations, available to be bought and sold in shares and dividends. And from this reframing, a new era of YouTube was born. One where channels were driven by analytics, guided by agents, and motivated by profit.

As years passed, MCNs faded into obscurity as YouTube added new policies and features that made the concept entirely obsolete, but their ideology of taking a commercial lens to content creation lived on through private equity.

Private Equity

Private equity firms are investment agencies that purchase companies that are not publicly on the market. They reserve the complete rights to control, manipulate, and sell a company’s assets, with the general goal of increasing its value and then profiting when it goes public or is acquired. Massive companies like PetSmart, Burger King, Domino’s, and Dollar General are all owned by these firms.

What does this have to do with YouTube? Isn’t YouTube owned by Alphabet, a publicly traded company?
Yes, but over the past few years, private equity recognized the same value in creators that MCNs did, only in an arguably more sinister way.

The era of private equity was initiated by everyone’s favorite YouTube channel: Cocomelon. In 2021, the private equity firm Blackstone Inc. purchased Cocomelon and three other channels for 3 billion dollars. It is, to this day, the largest private equity investment made on the platform, and is what opened the doors for many other channels to be bought out by similar organizations. Just to name a few: Veritasium, all of the Theory channels, and Dude Perfect.

Unlike MCNs, where the creators still retained control over their videos, any channel bought out by private equity is at the mercy of upper management, whose goal is often to maximize profit, not artistic output. Content quality drops and videos become less personal and more generic in an attempt to improve “scalability”.

Fundamentally, the introduction of private equity into YouTube is what marked the pivot point in the platform’s purpose.

Your Favorite YouTube Channel is (Probably) Owned By Private Equity

The Impact - From Channels to Brands

Overnight, channels became “assets”. They became commodities meant to build value with the goal of generating revenue and maybe be bought out by these financial institutions.

Moreover, since the goal shifted to profitability, the same issues that plague channels bought out by private equity began to emerge in even new channels. Generic content, optimized for the algorithm, and a distinct lack of personality in an attempt to create a stable brand image.

I predict this is also a leading factor motivating creators to divide their limited attention and resources into multiple revenue sources beyond just the channel, such as subscription-based apps or online courses. The more assets under the brand, not only does the creator earn more money, the more valuable a channel becomes.

Conclusion

So it’s not just you; that is why YouTube feels fundamentally different from how it used to. For many, the motivation for starting a new channel is no longer a desire to “broadcast yourself”, but rather to market yourself in an attempt to squeeze what profit can be squeezed out of the stone of content creation.

Many people like to point fingers at specific creators for this change, but it’s genuinely not the fault of any one or any specific group of creators.

Corporations have taken notice of the beautiful landscape of the Internet, and large platforms like YouTube are the first, among what I believe will be many, to take the hit of commercialization.

It’s the unfortunate reality of the global economy that anything that can be capitalized on, will be capitalized on. Because of this, what I think is more important now, than ever, is supporting creators who have maintained a personal touch with the platform. Private equity has encouraged careless “creators” to migrate to the beloved platform from other “get rich quick” schemes, burying the artists who have a genuine passion for creation.

So make it difficult for corporations and profit-driven channels to justify culling the creativity from creation by showing it doesn’t pay. Support independent creators, and try to avoid the generic slop that pollutes our digital environment.

If we don’t, and this trend continues, it’s very possible that this integral corner of the internet may be lost to corporatization.