Opposite attraction: Making Money With Youtube

Just as Silicon Valley was starting to come to terms with the sudden departure of Apple founder and CEO Steve Jobs, another technology giant dropped a bombshell: Google CEO Eric Schmidt said he is stepping down to become executive chairman of the company. Schmidt says he will focus primarily on government relations, while Larry Page is going to take back the CEO role he held until Schmidt arrived to take the job in 2001. Although Schmidt will still be around to advise on various matters, the executive shuffle makes it clear that Larry Page is now in sole control of the web giant. But does he have what Google needs? That’s not obvious.

After the news broke Thursday afternoon, Schmidt posted a message on Twitter that linked to his blog post about the changes, also writing “day-to-day adult supervision no longer needed!” That comment was a reference to the fact that Schmidt — a former senior executive with Sun Microsystems — was seen by many as the “adult supervision” the two young billionaires needed in 2001, when they were planning the stock offering that eventually came in 2004. The memories of the tech implosion of the late 1990s were so fresh still that many clearly felt Page and Brin needed to be stopped before they blew all Google’s money, and since Schmidt looked the part of a senior executive, the company’s backers felt he would go over better with investors.

Over the past 10 years, Schmidt has repeatedly stressed — as he did in his announcement and on the earnings call — that although he was the chief executive, he and the two founders have functioned more or less as a triumvirate, advising each other and debating various courses of action. Schmidt has suggested this is because of the mutual respect each had for the other, but his role was undoubtedly also influenced by the fact that Page and Brin share ultimate voting control of the company, thanks to their majority ownership of Google’s multiple-voting shares.

Now, Page has taken the reins as CEO, and Schmidt made it clear in his blog post about the news that this was done “to simplify our management structure and speed up decision making.” After the split, each member of the triumvirate seems to be taking on the role for which he is arguably the best qualified: Schmidt, who is the most senior (and tends to wear a suit), becomes the public face of the company when it comes to government: meeting with senators who are investigating the company’s privacy infractions, for example, or appearing before congressional committees, the FTC, and so on. Page becomes the day-to-day leader, and Brin gets to spend time on the projects he enjoys (which may or may not include self-driving cars).

How Schmidt performs in the governmental role remains to be seen. He might have to tone down his penchant for inappropriate jokes about how people “can just move” if they don’t want their houses to be photographed by the Google StreetView car, or his comments about how “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” That’s probably not going to go over well in Washington.

The reality is, Google is facing challenges on a number of fronts. Yes, it turned in another stellar performance in the most recent quarter, with revenues climbing by 26 percent to $8.4 billion. The search-related advertising business is still doing extremely well, and that cash cow has allowed the company to do many other things, including promoting the Android operating system and running a number of popular (but money-losing) services such as Gmail and YouTube. But the tech giant has been unable to get much traction on the social-web front, and that has led to criticism that it’s losing the battle — or is at least in danger of losing the battle — for both users and advertisers to Facebook, whose share of the online-ad pie is growing at a phenomenal rate.

Critics are also getting more vocal about the rapid deterioration of Google’s search results, its core business, thanks in part to the contributions of “content farms” such as Demand Media, with many saying Google hasn’t done enough about the problem because it gains ad revenue from those publishers. Then there are the governmental hurdles Schmidt is expected to help the company leap: a potential antitrust investigation by the Department of Justice into Google’s proposed acquisition of travel-information provider ITA, along with pressure from Congress on the company’s approach to privacy, and continued difficulties with foreign governments like Italy and China.

Larry Page is taking the helm at what could be a turning point for Google. Its core business is under fire; it’s losing ground to Facebook in an important new market; and it’s still relying on search-related ads — a market getting long in the tooth — for 90 percent of its income. It has been unable to build any substantial new businesses, despite a number of attempts, including its recently rebuffed $6-billion acquisition offer for Groupon. As angel investor Chris Dixon put it, some Google watchers are probably asking: Is Page’s return like Steve Jobs coming back to Apple in 1997, or is it more like Jerry Yang’s return to Yahoo in 2007?

Related GigaOM Pro content (sub req’d):

Why Google Should Fear the Social Web

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What We Can Learn From the Guardian’s Open Platform

Everyone wants to know the secrets of the YouTube stars—how did they make successful careers out of YouTube, how do they make money and what advice do they have for hopefuls looking to follow in their footsteps? Tubefilter’s ‘Secrets if YouTube Superstars’ panel at CES shed some light on these questions. Tubefilter’s editor and co-founder, Marc Hustvedt, moderated the panel, which was made up of YouTube megastars iJustine, Joe Penna (aka MysteryGuitarMan), Phil DeFranco, Freddie Wong and Brandon Laatsch.

You can watch the full thirty-seven minute panel in the video below, but I’d like to take a little time to recap some of the most interesting points that were brought up. I think that Hustvedt asked great questions, leading the panelists to shed some very interesting light on the world of YouTube as a business.

Putting In The Work

I think that the most important thing that can be gleaned from the ‘Secrets Of The YouTube Stars’ CES panel is that you can’t go anywhere on YouTube without putting in lots and lots and lots of work. There was a general consensus that these guys work an average of about 80 hours a week. That’s an average of about 11.5 hours a day with no weekend! And these guys have already made their YouTube channels a success, so just imagine how much work goes in to making a name for yourself when you’re starting out at the bottom.

iJustine says, “This is our life. Every second of the day you’re working, essentially. If you’re not posting videos you’re still tweeting, your updating Facebook or you’re updating all these social networks to tie back to your videos and keep people updated on what you’re doing.” YouTube stars never sleep—it’s a 24/7 job. Brandon Laatsch says, “We’ve pulled more all nighters in the last year than we did all throughout college.” But what’s important to note is that these guys love their job. If you have the passion and the drive, and you’re willing to put in the hours it can be incredibly rewarding.

Bringing Home The Bacon

The question on everyone’s mind is, how do YouTube stars make money? The panelists are all paying the bills with money they make from YouTube videos, but how do they do it?

Joe Penna explains the two major ways that YouTube stars make money, in addition to the revenue that they earn through YouTube advertising. One of these ways is through working with brands. The other is through merchandising.

Penna, iJustine and DeFranco all have quite a lot of experience working with brands. They seem to agree that working with brands is fantastic, as brands trust them to take creative control and allow them the budget to make bigger, better videos than they could otherwise. Laatsch also pointed out that over the last year or so viewers have become a lot more accepting of brand deals. At first there was a lot of name calling (i.e. “You’re a sell out!”), but now that viewers understand that this is what these guys are doing for a living they get that branding is a good thing as it enables them to make better videos. All the YouTubers stressed that they incorporated branding into their videos in an unobtrusive way as to not freak their viewers out.

YouTube also helps with revenue through grant programs. They helped DeFranco branch his single channel out into the six-channel DeFranco Inc. and they also sponsored Freddie and Brandon in a project in which they drove around in an RV for a month, making videos with their fans.

Personality

The most important thing that I think can be gleaned from this panel for wannabe YouTube stars is the importance of personality. If you take a look at the top YouTube channels nearly all of them are supported by a personality. MysteryGuitarMan makes music videos, but he’s sure to speak directly to his viewers in each and every one of his videos as well. If you have a strong personality your viewers feel like they know you personally and this is one of the biggest keys to YouTube success.

DeFranco says that YouTube stars are different from television or movie stars because you may want to catch a glimpse of a television star but you’d like to sit and chat over a beer with a YouTube star. You feel like you are friends with them, they influence you and they can’t wait for you to put out another video.

I’d also like to point out that this is fantastic for branding. Brands can tap into an audience of millions when they turn to YouTube stars for promotional purposes and these millions trust these stars and are completely engaged and influenced by them. This is much more direct and effective advertising that television advertising, and cheaper. It’s a lot more bang for your buck!

Check out the full panel below to find out more from five of YouTube’s biggest stars. What did you find most interesting about the panel?

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Monday, 24 January 2011

Making Money With Youtube

Putting In The Work

Bringing Home The Bacon

Personality

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