TikTok and YouTube gearing up for a fight

Show me the money!

That phrase isn’t just the most famous line from a mediocre 1990s Tom Cruise movie, but also the rallying cry for Social Media personalities that are looking to cash in – or continue to do so — on their popularity.

It’s also a cry that has increasingly fallen on deaf ears as the golden age of influencers making big money through self-directed content is largely seen as being over now.

Most of the creators that did manage to cash in were found on YouTube. That platform made stars out of early adopters like Logan Paul and Lily Singh, along with a host of lesser-known creators, that were able to make a living off of their videos.

YouTube is owned by Google (NASDAQ: GOOGL) which, at least partly because of YouTube’s success, has been as safe a bet as you could find over the last 5 years. It’s gone from about $750 USD in 2016 to about $2,300 now.

to bring it back to the influencers, that living they were making was sometimes a very good living. A rough estimate suggests that you could have made about $60,000 USD per million subscribers at the time. A select few made much more than that.

However, things started to change a couple years ago as YouTube adjusted its focus to move away from the independent creator and instead focusing on more predictable (and controllable) mainstream programming.

In 2017, you could spend all day surfing YouTube discovering a multitude of new independent creators that the recommendation AI would suggest to you. Today, you’re probably going to be served up a variety of Hollywood clips that aired on network television.

There are all kinds of business reasons why YouTube made this change, but it has left the independent creators angry and disillusioned. By “demonetising” channels overnight YouTube was literally taking money out of the pockets of many of the creators that helped build the platform to the juggernaut that it is.   

Those creators argue that by devaluing the independent content that was YouTube’s bread and butter that the platform has become sanitized and, eventually, that will drive users away to places that they can find the new and unique content that once was on YouTube.

The places that have that will be the platforms that find a way to monetize content the best and that give creators the best chance to be rewarded for popularity and creativity.

Right now, that looks like it will be TikTok.

The Chinese-owned site is about to enter its most important stage of its development – the move from hip update to established platform.  If it navigates it well then it will have a chance to remain a first choice destination for young users. So far, much of the content is being produced “for the love of it,” at least outside of China. That’s to say that creators aren’t making a lot of money from it.

However, last month TikTok started to unveil its plans to change that. It’s looking for ways to open up payment opportunity for its creators in an effort to keep them on the platform and to pull users from other platforms, like YouTube.

Unlike YouTube, the primary way they are looking to create revenue opportunities will not be based off of ad views. Rather, it will be through e-commerce partnerships that will allow creators to push products and services directly to their viewers.  

Although this will likely not allow for the huge profits that the very top YouTube performers were receiving at the height of the YouTube star system days, it could actually provide a greater opportunity for more creators to make modest, but decent returns.

The model also takes some of the control away from TikTok itself and will avoid the ill will that comes from demonetizing creators.

It’s early days for this, but as TikTok rolls out these plans – and YouTube continues to struggle to work with independent creators – we could be on the verge of a very interesting battle for eyeballs in the video sharing space.