By going pro, YouTube risks alienating its amateur core

YouTube has bigger fish to fry.

No longer is YouTube just about viral memes and videos of people hurting themselves. The business model of online video is evolving and so too are the site’s priorities.

In October 2011, YouTube embarked on a campaign to attract more professional-grade content to the site, dolling out over $150million in cash advances to professional video creators offering slicker material with higher production value.

With this has come an influx of celebrity. Global superstars Madonna, Ashton Kutcher and Jaz-Z have all been drafted in to host YouTube channels, whilst Hollywood stalwart Tom Hanks is currently working on his own YouTube project.

However, such sweeping changes have left one group out in the cold: the legions of amateur video producers who helped transform the site into the entertainment colossus it is today.

YouTube has made several changes throughout the year that have pulled the rug from underneath the feet of its amateur core. One such change involved forcing users into adopting a more streamlined layout on their channels by slashing the number of customisation options available to them.

Tensions climaxed earlier this year when YouTube made significant changes to the algorithm used to decide how clips were recommended to viewers. Thousands of amateur producers protested that the move favoured longer, more professionally-produced material uploaded by high-profile channels, relegating their own content to the YouTube wilderness. 

Unfortunately for these users, these moves are symptomatic of a site maturing in line with digital entertainment’s changing ecosystem. In the US market, the projected revenue from digital advertising is expected to balloon from $2.4 billion this year to a whopping $7.1 billion in 2015, when 40% of the US are predicted to regularly watch TV online, according to e-marketer.

Such game-changing statistics demand an improvement in the service YouTube offers. With the rise of digital streaming services such as Netflix and an increasing number of users opening Vimeo accounts, YouTube needs to remain competitive. Ultimately, the sweeping transformation from user-generated content to professional programming could even aid the site in its quest to become the next-generation TV provider.

“Our big advertisers like the path that YouTube has taken”, says Andy Chapman, head of digital investment at Mindshare, a prominent American advertising agency.

“A number of clients say this looks and feels like the direction the market is going”

But in adapting to the evolving landscape of the video entertainment industry, YouTube runs the risk of alienating the creative, entrepreneurial lifeblood that fostered its rise. The site is seemingly forgetting its roots, but that’s business I guess.

Photo: Reuters

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

Photo: Getty
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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.