YouTube's answer to Netflix: pay for absence, dock the creators who cross-post

The argument YouTube is putting to creators is about ad pricing. It has told them that cross-posting depresses viewership on YouTube and signals that the channel no longer treats it as the primary outlet ^[9], and, more concretely, that a video also available on Netflix is harder to sell to advertisers ^[10]. That is the mechanism, and it explains the timing. YouTube spent years pushing its audience into the living room, where it now draws more viewing than any other service, and buying event rights including the Academy Awards and the NFL ^[17]. Inventory priced on that basis is worth less when the same file also sits inside a subscription service.

Note what neither side has been buying until now. Netflix's deals with creators pay for simultaneous posting on both services ^[5], so nothing has been removed from anywhere; YouTube's offer is the first attempt by either company to take a video off the other's platform ^[3]. And look at how that offer is shaped. One half is direct financing of programs, the other is an allotted slice of major brand campaigns ^[2]. The brand-campaign money is the same money YouTube says it will withhold from creators who cross-post, which means half the inducement is a redistribution of cash it already routes to creators rather than new spending ^[1]. The financing half sits closer to a line YouTube says it does not want to cross: it defines a studio as funding plus creative direction ^[14], and paying for programs while staying out of the edit stops exactly one element short of that ^[2]. Its earlier original programming push produced few hits, and one of those shows became a hit for Netflix instead ^[15].

The tactic has a precedent inside the company. YouTube previously paid creators to stay away from Vessel, the startup co-founded and formerly led by Jason Kilar ^[16]. Vessel was trying to persuade social creators to post to its app first; Netflix arrives with more than 325 million subscribers ^[6] and a reason to keep bidding. Money that saw off the first will not necessarily see off the second, which is why the conclusion Neal Mohan and his team reached in recent weeks ^[12] reads less like a strategy than a holding action while both companies work out what one video is worth when it plays in two places at once.