Social Media

YouTube Is Turning Into a Shell Company


I've been mulling over this revelation that AdAge and Silicon Alley Insider dropped on Monday regarding YouTube allowing the users to sell their own advertising.  I keep going back to the leaked PDF and looking it over to see if there's a hidden incentive built in somewhere.  I keep looking at all the analysis to see if someone's come up with the silver bullet theory that makes this somehow a good deal for producers.

I keep coming up empty though. The whole idea just doesn't make sense to me, until just a few minutes ago.

Tossing the idea over in my head, I had an epiphany.  Google clearly can't figure out a way to make any money with YouTube, so the next best option is to turn the whole endeavor into a shell company. If you're not familiar with the term, it means you've either not taken a business accounting class in your life, or you've never lived in South Florida or Nevada, where shell companies seem to be unusually popular.

Essentially, a shell company is a company that exists only on paper, and usually is there to obfuscate other businesses or to act as an umbrella for a number of other operations.

YouTube is a shell company for entertainment production.  Obviously the first thing they outsourced (or the more politically correct term "crowdsourced") when they started was the production aspects.  They coopted you into creating content for free, so they could serve it up to others. The next thing they did was outsource/crowdsource the role of program director, by creating "channels" where folks could select line-ups of quality programming.

Next, of course, was the ratings system, which they tasked the users with by creating stars, comments, and recommendations.  Along the way they co-opted the users into marketing and distribution, too, when they made their videos remotely embeddable.

And then of course, they tried to make money with it, by selling their own advertisements. Somewhere along the line, they realized that they were exceptionally poor at this and weren't able to make a profit, so now they're co-opting the users into doing that as well.

Here's the kicker. After you've produced, acted in, rated, programmed, marketed, distributed AND sold advertisements for your own work, they LET you keep 55% of the money.

Thanks YouTube. Thanks for nothing.

What's left for YouTube to outsource? Well, I suppose they could fire their programming and community staff and farm out the work to Chinese children for five dollars a day.

Perhaps then YouTube could cut a profit.

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