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A worrying move by YouTube

We all love YouTube, right?

In the couple of decades since YouTube first appeared on the internet it has been as transformative as television was back in the 1950s and 1960s.

In the mid 20th century, when TV arrived, most people regularly went to the movies for their audio-visual entertainment. Within a couple of decades however, the little screen in the corner of everyone's living room soon all but replaced that trip to the movie theatre.

For the next few decades, TV reigned supreme. It was "the" entertainment medium of the masses. As a child I could recite the schedule of TV programs for the entire week from memory. Programs such as The Thunderbirds, Maxwell Smart, The Beverly Hillbillies and others were the cornerstone of many a discussion in the schoolyard.

People began scheduling their other activities around the TV schedule and instead of spending an evening playing cards with friends or enjoying a BBQ with neighbours on a mid-summer's eve, people could be found sitting on the sofa, watching Coronation Street.

TV was a hugely disruptive technology but it has largely been surplanted by the internet and primarily streaming video on demand (VOD).

Within the streaming VOD market YouTube is clearly the largest and most influential player.

We can see just how preeminent YouTube has become by observing that every smart TV on the market comes with the YouTube app pre-installed, as do most Android phones.

Right now, YouTube all but "owns" the VOD market and it is making very handsome profits from this but the great thing about profits is that there's always more profit to be had, if you are smart/evil enough to go after them.

Right now, YouTube has reached the peak of its revenue/profit capabilities while operating under its existing model.

What is that model?

Well people upload content to YouTube, the company scatters a few ads across that content and then shares the revenues with those who did the uploading.

It's a simple model that has worked incredibly well for over 15 years, ever since the YouTube Partner Program (YTPP) was launched.

The YTPP has incentivised millions of creators to shoot, edit and upload some amazing video content and that content is what has made YouTube the number one app on all those smart TVs and phones. It is the content that has turned YouTube into the number one VOD platform on the planet.

However, as I suggested earlier, corporations believe there's always more profit to be had and right now I see YouTube working very hard to deal with the stagnation that has hit its revenues and profits. The challenge for them is to continue to lift profits even though they've reached saturation point in respect to the number of users and those users' consumption of its product.

Well sadly, this involves getting a little more evil than they already are.

Having already lifted the price of YouTube Premium (the ad-free version) to a level where people are now reconsidering whether it's worth the money, the company is now engaging a number of other mechanisms to squeeze more blood out of its stone.

First up they've announced that VPNs are a no-no if you're subscribed to YouTube Premium. They want to avoid the situation where people subscribe to the ad-free service in a country other than their own in order to save a little (or sometimes a lot of) money. The price of YT Premium varies immensely across the face of the globe, mainly because they've priced it on a "what the market will bear" basis rather than the more traditional and ethical "cost-plus" calculation.

This change won't boost profits by much however, so they're left with coming up with other solutions and as anyone in business knows, reducing costs is one of the few ways to hike profits in a static market where sales have hit a plateau.

Aside from hosting and network expenses, the single largest cost to YouTube is the cost of content creation -- it's the fact that it has to pay those who upload videos to the platform around half the revenues that content produces.

Now they could have simply rewritten the YTPP contract to give creators a smaller cut of the revenues but that would likely have created a huge uproar and could have seen a reduction in both the quality and quantity of content being uploaded. Also, it's not a sustainable way to grow profits because it would be a "one-time" boost with very limited ability to repeat.

Instead, I believe YouTube are going into "full-evil" mode.

It has been discovered that YouTube has been altering uploaded content using generative AI to "enhance" the videos created by those on the YTPP. This "enhancement" has produced some really weird looking results that look oddly like AI-generated footage.

When challenged, YouTube has said that this was just an unannounced "trial" of technology that is designed to make video footage look better by boosting contrast and sharpness using machine-learning algorithms.

Yeah... right! If you believe this is an innocuous and benign attempt to simply improve the quality of video footage I have a bridge you might want to buy.

Some may call me a cynic but I prefer to think of myself as a person who is a scholar of observation and this is exactly the type of thing I would expect from a company that has made huge investments in AI tech and is looking to leverage that tech to double its profits overnight.

How can YouTube do this using AI?

Simple -- replace human creators with AI. Replace the hard work of real people who regularly upload interesting content with AI-produced video that closely tracks the interests of people and which, once created, costs YouTube nothing to show.

Traditional creators will not be evicted from the platform but instead, YouTube will create an endless supply of AI-generated content that will be offered up to viewers in preference to that man-made material The profit margin on this AI content is 100 percent, rather than the mere 50 percent that is left after those "real people" are paid their share of ad revenue.

In the past 3 years YouTube has, by its own figures paid out over US$70 billion to creators throught the YTPP. That's probably around US$30 billion a year right now. If it can effectively eliminate the cost of paying out that money through the use of AI-generated content it produces itself, that is a *HUGE* hike in profit.

My first thought was (of course) but nobody would watch this AI drivel -- but that's not the case.

Already, some of the most popular content on the platform is totally AI-generated. Just take a look at these cat videos which are 100 percent AI generated and scoring as much as tens of millions of views each.

People are watching this crap and coming back for more.

YouTube is watching, learning and preparing to launch its own tsunami of similar stuff and it won't require them to pay a single red cent to creators so the revenues will all go directly towards hiking the company's profits. What's more, "the algorithm", which YouTube itself has full control of, will make sure that your YouTube feed is filled with this stuff in preference to other videos that might require a payout to human creators.

It's perhaps now easy to see why YouTube is currently working to blur the line, both visually and otherwise, between human-generated content and AI-generated content. If you make human content look like AI then people are less likely to notice when you serve them up AI instead.

Goodbye YouTube, we used to love you when the "You" in YouTube actually meant something.

Carpe Diem folks!

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