How the cut in YouTube ad revenue is effecting online news channels

In recent weeks, Google has cut the ads for many news sites on YouTube because a few of its ads happened to be shown on channels for racist and hate groups and advocates for terrorism. The Wall Street Journal has run a series of sensational articles about how advertising on YouTube was helping to fund hate and terrorism, which has caused a number of high profile advertisers to pull their funding from YouTube in recent days such as Walmart, Pepsi, Starbucks, MacDonalds, Disney, AT&T and Verizon. Analysts estimate that YouTube may loose $750 million in revenues due to the controversy, out of a total of $10.2 billion in expected annual revenue. Some of these companies may be pulling their ads from YouTube in an effort to secure better advertising deals on more favorable terms, but they also may be spooked by the potential public relations scandal of advertising on offensive YouTube videos. The mainstream media also may be hyping the controversy partly because it helps redirect advertising funds toward the traditional media, rather than the new online formats like Google and Facebook.

A few of the allegations in the WSJ articles turned out to be false, such as misidentifying people as racists and calling a reviewer of body armor an advocate for terrorism, nonetheless, it was also clear that YouTube’s algorithms to filter out unacceptable content for advertisers were allowing a small percentage of ads to be placed on videos containing racist, sexist, sexual, and terrorist content. Google claims that only 1 out of a 1000 of the YouTube videos which received ads have been flagged as inappropriate, but even that low number is deemed unacceptable by many advertisers.

In order to allay the doubts of its advertisers, YouTube has recently implemented very strict filters that removes any videos for advertising that have even the possibility of controversial material. Over the last couple weeks Google has removed all ads from sites which even mention taboo words like ISIS, Al Nusra, terrorism, Palestine, BDS, atheism, etc., so many online news sites are now being defunded. The result has been that the YouTube ad revenue has been cut for progressive news channels such as the Young Turks, The David Packman Show, Secular Talk, The Benjamin Dixon show, etc. Google’s recent actions have imperiled the survival of alternative news channels on YouTube. David Packman reports a 98% cut in his revenue and calls it “an existential crisis existential crisis for the show.” Kyle Kulinski of Secular Talk also says that over 90% his revenue has been cut. Likewise, the Young Turks report that “many of our videos have been demonitized” and “this has probably effected us more than any other channel.”

Google is currently working to better improve their filtering algorithms for unacceptable content. Google plans to allow 3rd parties to monitor YouTube videos to check for offensive content for advertisers. They have also announced that they will allow advertisers to see exactly which videos their ads appear in, but this new functionality won’t be ready until the third quarter of 2017, which means that many YouTube news channels probably won’t have much ad revenue for the next 3 to 6 months. Moreover, YouTube just announced that it will restrict ads to channels that have at least 10,000 total views, so it can filter out most of the minor channels and only focus on monitoring the content in the most popular sites.

These measures raise the possibility that Google will simply stop allowing ads on sites that mention controversial topics that someone might find offensive. Right now any mention of the word “ISIS” will get all ads pulled from the YouTube channel. Maybe Google will figure out how to write algorithms that distinguish between advocates for ISIS and news covering ISIS, but I doubt it. Instead, I suspect that Google will rely on a combination of a larger list of controversial terms to avoid, greater monitoring by its advertisers who will be able to see the videos in the future, third party monitoring of the videos, and maybe even a user rating system to figure out what YouTube channels have controversial content, so Google can pull the ads from those channels. This filtering will put financial pressure on YouTube news channels to steer clear of controversial topics.

For a while it appeared that the online media had broken free of the influence of advertisers’ money over the news media. I have been a news media critic since I read Manufacturing Consent over 2 decades ago, but I have found a number of online news channels to be refreshingly free of the kind of bias I so readily see on CNN, NBC, ABC, New York Times, Washington Post, Clear Channel radio stations, etc. Today, there are a plethora of YouTube channels that critique Capitalism, cover environmental activism, publish stories about corporate greed and the effects of income inequality, criticize US foreign policy, cover 3rd party candidates, etc. Part of the reason why this is possible is the fact that the capital costs of a YouTube news channel are very low comparted to traditional media, so it has opened up the media market. Another reason is the fact that advertisers on YouTube have no direct contact with the creators of news content. Instead, the content creators deal only with Google, and people like David Packman and Kyle Kulinski at Secular Talk report that Google doesn’t contact them about their news coverage the way advertisers would call a traditional TV, radio or newspaper company when it airs content they don’t like. They often don’t even know who advertises on their shows, so they feel little financial pressure to tailor their content to fit the whims of advertisers.

Even when news sites know who advertises on their sites, the amounts of money from any one advertiser are very small and they are widely dispersed. Kulinski estimates that he gets a 1/4 of a cent for every person who watches an ad on his YouTube channel. The advertisers are not specifically choosing his channel, but rather a category of viewers such as “young, urban consumers with progressive values” so they are less likely to be monitoring his channel and even if they are, there are many other companies paying for ads in the same demographic, so the loss of a few advertisers doesn’t substantially effect Kulinski.

To address the recent hysteria, I fear that Google will change their advertising system on YouTube in a way that will allow advertisers to either communicate their wishes to the creators of news channels or provide a more effective filtering system that financially discourages news channels from airing controversial content. Google recently sent a letter to content creators saying that they can appeal the decision to cut advertising on their YouTube channels. YouTubers will have to try and justify why their alternative news channels meet YouTube’s advertising-friendly content guidelines. According to those guidelines, “content that is considered inappropriate for advertising” includes “controversial or sensitive subjects and events, including subjects related to war, political conflicts, natural disasters and tragedies, even if graphic imagery is not shown.” In other words, most topics covered by an alternative new channel are grounds to deny advertising revenue. The brief era of online news that was refreshingly free and able to address controversial topics may be coming to an end.

Anna Kasparian of the Young Turks lays out the conflict between advertisers and news channels in these terms:

…also understand that the decision to demonetize doesn’t necessarily lie within YouTube and the people who work there. It has more to do with what the advertisers want. Now what kind of content usually gets flagged as as not friendly for advertising material? … Google advertisers don’t want to advertise on videos with controversial subjects and that is super frustrating, which is why its important for, you know, the membership program that we have, for instance. Our members allow us to report any topic that we think is important, any topic that they think is important and we don’t have to worry about whether we are advertiser friendly. All we worry about is whether we are audience friendly and we’re serving them.

Measures by Google to filter out the YouTube channels which don’t conform to advertiser’s wishes will undoubtedly limit the kinds of topics that can be covered by alternative new channels. David Packman comments that it will be very hard for his show invest a lot of time and money in making a long, in-depth video on a controversial topic when he knows that it will never generate any ad revenue for his show.

Of course, the cut in YouTube ads doesn’t just help stifle progressive news channels on the left, it will also harm many right-wing news channels. Some of the most interesting right-wing commentary online comes from libertarian YouTubers like Joe Rogan, Dave Rubin or Sargon of Akkad. The discourse on the right will be impoverished if left to just the news channels, such as The Blaze and Breitbart, which have funding from right-wing billionaires and conservative foundations. Alex Jones’s conspiracy theories online are largely funded on the sales of his “health” products. Without ad revenue, we may end up with some of the worst news channels on the right and some of the tamest and most controlled on the left.

If the left-wing news channels have to start turning to billionaires and rich foundations for their funding, they might be able to find a few like George Soros who are willing to be rich patrons in the same way that Robert Mercer currently funds Breitbart. The problem is that those channels will be subject to the editorial bias of their patron, as is shown by how Rebecca Mercer currently reads every article on Breitbart and offers her continual feedback to the writers about what she likes.

Some popular left-wing channels like the Young Turks probably have a large enough pool of paying members to be able to defray the costs of their show. David Packman reports that only 1% of his subscribers on YouTube are paying members of the show. He hopes to move that percentage up to 2% or 3%, plus get viewers to contribute through patreon.com and by linking to products on Amazon so that his show will receive a percentage of the revenues from online sales.

These sources of funding may help make online news channels independent of advertisers, but only a limited number of shows will be able to make this kind of appeal and build up a critical pool of contributors to financially support them. People might be willing to contribute to 1 or 2 shows, but not the wide diversity which currently provide news content on YouTube. Also, news shows which continuously hawk products online also have a financial incentive to bias their reporting in favor of selling products of dubious value online for inflated prices as Alex Jones does.

Some may celebrate YouTube’s strict filtering of videos for advertising, believing that it will help cut down on the amount of “fake news” on the internet. It is hard to know whether the defunding of online news channels will effect the amount of “fake news”, since the measures outlined by Google to filter out offensive videos for advertisers are not designed to measure the veracity of the news on YouTube. However, the greater monitoring of video content promised by YouTube, the advertisers and third party services will clearly serve to stifle controversial views which are not part of the mainstream.

While nobody should decry the defunding of news channels that are not based on a verifiable fact and some semblance of objective reality, Google’s measures to reassure advertisers will also help to stifle the growing online critique from the left of the current system. Opinion polls show that the American public has shifted toward the left over the last decade, especially among people under the age of 35. A major cause of this shift in public opinion among the youth has been the rise of progressive online news channels which challenge the conventional views presented in the mainstream media. The potential loss of these critical progressive voices from the public sphere should be of great concern to everyone who worries about the quality of public discourse in the age of the internet.

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