Skip to main content

The market for online video content – YouTube

The market that I have chosen to study is the market for online media content on the video streaming platform YouTube. In this market, the “sellers” are the content creators on the platform. In order for these people to be successful they must look to differentiate themselves in the market for content by developing their own niches in terms of the type of content they produce. They also must develop a level of trust with their subscribers, and commit to posting content on a consistent basis. The “buyers” in this market are the people visiting the YouTube website and viewing the content. A given buyer’s favorite content creators and genres of videos can be thought of that buyer’s preference profile, where their favorite types of videos are preferred over their least favorite types of videos. Finally, the exchange that occurs is content and videos produced by the content creators are exchanged for views from the population of viewers watching videos on YouTube. Because of this, the currency in this market can be thought of as views. While views on a video is by no means a true form of currency, it does translate into actual monetary profits dependent on how many views a content creator may get. According to USA Today1, YouTuber’s earn a portion of the advertising revenue that their videos generate for YouTube, and the top 12 content creators on YouTube made a combined $70.5 million in 2016 alone. Therefore, more viewers consuming your content leads to more ad revenue being generated for yourself. This new style of market where anyone can enter and be successful as long as they’re creating content that enough people enjoy has led people to make a viable living by just producing content that they love. These are people that without YouTube would likely be having a career that makes them feel much less excited and creatively stimulated, which is why I am so interested and passionate about this network economy.

An interesting aspect about the design of this market is the decision to have an open platform where anyone can join and be a creator. When you think about other forms of video content that a person may consume (i.e. television or movies), it is very difficult and competitive to be involved in the creation of this content. Actors and actresses must audition, and writers and directors must make their case for a studio head in order for their project to be funded. On the contrary, any person with a computer can create a YouTube account and upload a video. From an efficiency standpoint, this design choice is a massive advantage for YouTube, since it has to put in no effort in order to locate talent. The public will select the most talented content creators by viewing their videos the most, and YouTube’s algorithm will simply funnel that creator a certain portion of the advertising revenue. One potential setback of this design choice may be that the platform gets flooded with poor-quality content since anyone can post anything. However, YouTube has mitigated this by featuring the most popular videos on the front page, and removing content flagged as inappropriate in any way. The design choice to allow anyone to become a content creator allows YouTube to skip the talent-sourcing process and organically add content creators that are passionate about producing the best content possible.

In a world where more and more people are switching from watching traditional cable TV to streaming video online, YouTube has positioned itself perfectly to facilitate the market for online media content by organically sourcing content creators to produce content for their massive viewership to enjoy.




Leave a Reply

You must be logged in to post a comment.