“Through technical devices like the radio and loudspeaker, 80 million people were deprived of independent thought.” —Albert Speer, Minister of Armaments and War Production in Nazi Germany during World War II
Here is a startling statistic. The average YouTube user spends 13 hours watching videos every single month. That translates to over 3 hours per week or roughly 26 minutes of YouTube watch time every day [1,2].
YouTube is the second biggest search engine on the internet by volume (second to Google Search). With 2.3 billion monthly users, it captures the attention of a full third of the Earth’s population [3].
As with every business, YouTube provides a service or a product. What do they sell?
A YouTube Video
Let’s sneak a peak of a standard day in the life of a YouTube video.
Say a guy named Joe records a video and uploads it to YouTube. Say his video was about how to dribble a soccer ball. As Joe uploads the video, YouTube analyzes it in the background, checking the audio for copyrighted material (most often songs or movie clips) and converting the spoken words into text for use in search indexing and closed captions.
A few minutes later, BOOM! that video is now listed on YouTube and available for search. But there’s more. If Joe already has a subscriber base and has proven his videos get watched, YouTube will place his video higher up in the search results.
Later that day, a young soccer player named Alfred searches “How to practice dribbling a soccer ball” on YouTube. Since Joe’s video matches the topic, YouTube displays it in Alfred’s search results.
Alfred clicks on the video.
The page loads and an ad about a sporting goods company seamlessly plays. After 5 seconds Alfred skips the rest of the ad and he’s off to the races, learning how to dribble a soccer ball.
End of story. . . or is it?
Behind the Screens
The YouTube algorithm places an emphasis on videos and content creators that command attention. YouTube’s goal is to keep its users watching videos for as long as possible, and they do that by ensuring you watch videos that have the track record of keeping your attention [4].
Therefore, if a video has the reputation of being watched all the way to the end, YouTube promotes it. If the video loses people partway through, it gets ranked lower in search results.
The bottom line, YouTube wants to grab and maintain your attention for as long as possible.
Why?
To answer that we have to ask a different question.
How does YouTube make money?
YouTube makes its money primarily through advertisements. These ads are played at the beginning and, depending on length of the video, at various points throughout. A myriad of companies pay YouTube big money for those small advertisement slots [5].
The YouTube advertisement algorithm is complex. YouTube wants to make money, and the advertising company wants as many ‘qualified’ viewers as possible. So YouTube has made itself attractive to the marketing efforts of certain companies by putting those ads in front of the viewers who are most likely to buy.
Let’s finish the story
Remember Alfred, the soccer player who watched Joe’s dribbling video? Before his video played, he had to watch five seconds of some not-so-random advertisement.
YouTube got paid to play that ad.
YouTube sold Alfred’s attention.
Let me repeat; YouTube SOLD Alfred’s attention.
To answer my question above (as a business, YouTube provides a service or a product, what do they sell?): YouTube sells the attention of their users!
Let’s break this down further
Here is what happened in the interaction between Joe’s soccer video and Alfred’s desire to learn soccer.
The executives at a sporting goods company, Matt’s Sporting Goods, decided they wanted to use the internet to advertise. Matt’s Sporting Goods is located in Noname, California. As it happens, Alfred lives in Noname, CA.
Matt’s Sporting Goods goes to YouTube and requests to play some ads. They send YouTube relevant information about their ideal customer. Things like location, target age, target gender, target video type, etc. They draw up a contract. Matt’s Sporting Goods will pay YouTube $1,000 for every 100,000 views.
YouTube puts the ad in their systems and starts playing it for videos and viewers that meet the criteria (it goes much deeper than this, but we’ll keep it easy for now).
Matt’s Sporting Goods pays for every ad that YouTube displays to a viewer.
Joe, the soccer ball coach, comes along and creates a video that matches the Matt’s Sporting Goods ad criteria.
Subsequently, along comes Alfred who’s search (interest) also matches the criteria.
YouTube’s algorithm decides to play the ad.
Matt’s Sporting Goods pays YouTube to play the ad.
YouTube then goes and pays Joe the soccer coach (under certain rules) because his video enabled an ad view.
In the end: Matt’s Sporting Goods purchased Alfred’s attention (in the form of viewing their ad) from YouTube.
Which brings up another question:
How much does YouTube get paid to sell the attention of their viewers?
Great question.
I’ve got an answer.
On average, for every hour a viewer watches videos, YouTube gets paid $0.06.
SIX CENTS!
YouTube is selling YOUR ATTENTION for 6¢ an hour!
According to my calculations
How did I come up with this number?
Statista.com reports that YouTube made $19.8 billion dollars of ad revenue in 2020 [6].
As of January of 2021, YouTube had 2.291 billion monthly users [7].
Users watch over 1 billion hours of YouTube every day, or 30 billion hours every month [8].
Some quick math: 30 billion hours of YouTube per month, divided by 2.291 billion users per month equals 13.1 hours of YouTube watched per user per month, or 157 hours every year.
$19.8 billion dollars of ad revenue per year, divided by 2.291 billion users (assuming the behaviors of the monthly users remain the same for all 12 months of the year) equals $8.64 of ad revenue per user per year.
Finally, that $8.64 of annual ad revenue per user divided by 157 annual hours per user gives us $0.06 per hour per user.
What do we do with this?
Think about how you are using your time and attention. Realize that companies like YouTube sell your attention, and make huge revenues.
Next time you find yourself down a rabbit trail on YouTube (it happens to the best of us, myself included), think for a moment. Do I value my time and attention more than YouTube does? If you value your attention more than 6¢, do something else!
Now, YouTube is a great place to learn about the world. There are millions of hours of great education to be had on YouTube, an example being Alfred’s soccer dribbling. Additionally, there is plenty of entertainment to be had on YouTube. It is not wrong to be entertained every once in a while.
At some point the entertainment (or downright mindless clicking) loses its value and becomes excessive. You are worth more than 6¢.
I’ll expand on this question in future posts.
Get after it. Live on purpose.
If this interests you, I’d love to hear from you! Schedule a phone call or send me an email.
