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Hi folks! I’m back from a short vacation in Texas hill country and excited to serve up some fresh content. Let’s jump into it…

Who's threatened more by TikTok? Meta or YouTube?

To say that YouTube and Meta are taking TikTok’s rise seriously is an understatement. Both have rolled out shortform video products designed specifically to replicate TikTok’s allure.

In Meta’s case, it’s doubled down on Instagram Reels, a video tool that’s favored heavily by Instagram’s algorithm. Not only has Instagram established a $1 billion creator fund to incentivize Reels creators, but a leaked memo from Meta indicates that the company is reorienting its recommendations feed so that it mimics TikTok’s “For You” tab. No longer will Meta trust you to choose the friends and family you want to follow; instead, it’ll serve you content the algorithm thinks you’ll like that’s been produced by people you don’t know. 

YouTube, on the other hand, launched Shorts, a tool that plays 60-second videos on loop and is featured on its mobile app. To spur creators into making Shorts, it set aside a $200 million fund that it pays out based on video performance. YouTube recently announced Shorts were regularly watched by 1.5 billion monthly users.

It’s not hard to see why these companies consider TikTok such a threat. It’s the fastest-growing social network in internet history, poised to surpass 1.5 billion monthly users sometime this year. It’s also become a powerful advertising vehicle, on track to reach $12.8 billion by the end of 2022. What’s more, it’s captured the attention of the younger demographics that nearly every social platform covets, with some surveys placing it as the #1 favorite app for teens. 

But while both YouTube and Meta are trying to capture some of TikTok’s magic, the former is much better positioned to fend off competition. That’s because YouTube has erected a formidable moat that makes it difficult for TikTok to lure away its creators; in fact, YouTube is still doing a pretty good job of luring creators away from TikTok. 

To get a sense of what I mean, consider this year’s Vidcon. The annual conference has become a renowned watering hole where the world’s largest video creators come together to meet their fans. For years, YouTubers dominated Vidcon, but this year TikTok seemed poised to steal the spotlight; it not only sponsored the conference, but also featured many of its star creators on its panels. 

But as NBC News reported, YouTube wasn’t second fiddle at the conference. Instead, many of the featured panelists acknowledged the staying power of longform video and recognized YouTube’s stature as the reigning king of such content:

Social media platforms, creators and industry leaders alike may be scrambling to compete with bite-size content. But long-form YouTube videos — from a 50-minute video essay about the rise and fall of a popular creator to a two-hour-deep dive into a Reddit conspiracy theory — have endured the TikTok boom. 

… On TikTok, lists of long-form video recommendations consistently go viral. YouTube playlists like “best video essays about random niche subjects” and “video essays to fall asleep to” provide hours of background noise.   

[YouTuber Jenny Nicholson], who attended VidCon as a Featured Creator, noted the demand for longer, nostalgic content on a panel featuring pop culture commentary YouTubers.

These trends weren’t just evident at Vidcon. Nary a day goes by without a newly-minted TikTok star announcing that they’ve launched a YouTube channel. If you Google the most popular creators on TikTok — whether it’s Charli D'amelio, her sister Dixie, or Addison Rae — you’ll find a corresponding YouTube presence that’s generated hundreds of millions of views. While TikTok serves as a great platform for thrusting new talent into the spotlight, YouTube is where they go to try and establish a deeper connection with their fans.

Why? A lot of it has to do with money. As Hank Green documented in a viral video several months ago, YouTube was the only major social platform to take the unprecedented step of sharing a fixed percentage of its revenue with its creators, and in doing so it single handedly launched the modern day Creator Economy. Not only did it establish a 55% revenue share, but its ads ran within the videos themselves, creating a direct correlation between a channel’s audience size and its monetization. (It’s also worth noting that the longer the YouTube video, the more ad breaks that can be inserted, which means more revenue for the creators.)

Other platforms like Instagram and TikTok instead relied on fixed creator funds with opaque payout methods, and, as Green showed in his video, the revenue derived from those funds has been paltry, especially since the fund amounts have remained steady even as the platforms’ revenue increased. According to one source, TikTok’s creator fund pays 2 to 4 cents per 1,000 views, which is pathetic. 

But it’s not just about money. It’s also about the staying power of a YouTube video and its ability to pay longterm dividends in the months — or even years — after it’s been posted. In that NBC article I linked to above, the journalist spoke to Kevin Perjurer, a longform video essayist. Here’s what he had to say:

Perjurer has posted on [his channel] Defunctland just twice this year. A video he posted in November about the history of Disney’s FastPass, which was an hour and 43 minutes long, has more than 12 million views. Perjurer said the back catalog of monetized videos like the one he made about FastPass continues to attract viewers, which allows him to space out his posts and take the time to produce a thoroughly researched video. 

“Every time we put out new content and somebody finds us, they have five years’ worth of stuff to look at,” said Perjurer, who launched Defunctland in 2017. “The beauty of the feature piece is, I think, that you’re not reminding people that they’re forgetting about you.” 

TikTok’s magical For You algorithm has its downsides. While it’s great at surfacing content from unknown creators, it doesn’t instill much loyalty to those creators, most of whom report wild swings in view counts depending on the individual video. YouTube, on the other hand, works hard to show you years-old videos from creators you enjoy, which means those creators can capitalize on the views and revenue from their older videos as they continue to grow their brands. 

None of these benefits exist on Facebook or Instagram, which is why Meta is much more vulnerable to TikTok’s encroachment. While those platforms have devoted more resources in recent years to creator monetization, they still hoard most of their advertising revenue to themselves. 

So will cloning TikTok’s algorithm actually work out for Meta? I doubt it. The company has become too bloated and moribund with new features — from Stories to Reels to live audio rooms — and it’s not going to turn the ship around with yet another series of tech updates. To truly jumpstart its user growth, it needs to better incentivize creators to produce content for its platforms, and simply offering “exposure” is not enough. It’s time for Meta — and all other competing content platforms — to start turning over a sizable percentage of its revenue to its creators. The Creator Economy is too mature at this point to accept anything less. 

What do you think?

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Do people want longform Twitter content?

If there’s one thing Twitter’s known for, it’s character limits. It famously only allowed 140 of them and then later expanded to 280. In some ways, that forced brevity made Twitter what it is today: a real-time commentary on what’s going on in the world.

But for years, Twitter has been trying to expand beyond its own character limits. Recently, it debuted a new tool called Notes. Though it’s still in the testing phase, Notes will allow users to publish longer blog posts within their Twitter feed.

But is this something users actually want? Or will it eventually join the very large graveyard of social media features that never caught on?

To answer this question, I brought on Ernie Smith. Not only is Ernie one of the foremost experts on publishing platforms and newsletters, he also got early access to Twitter Notes and tested them out for himself. He gave me his initial reactions to the tool and we discussed whether it would usher in an era of longform writing to Twitter.

To listen to this conversation, subscribe to The Business of Content wherever you get your podcasts. iTunes/ Stitcher/  Overcast/ Spotify/ Google/ YouTube/ Audible

Quick hits

Some good advice here from one of Substack's most successful writers. [Noahpinion]

There's lots of meaty subscription data in this new report from Piano. [Piano] From the report: "nearly 60% of all payment failures are a result of users disabling the auto-renew feature within PayPal’s platform. It’s active churn that looks like passive churn."

The Information is launching its own Hacker News competitor. [Axios] This is a really interesting move. The Information has a very influential readership, so if it can get that readership to start creating user generated content, that would be a big deal.

I've always found it a little crazy that music royalty rates are set by government regulators. Imagine if every form of digital content — from photography to video — were regulated this way? [Puck]

Conde Nast has seen a remarkable turnaround. [Press Gazette]

What's worse for a showmaker? Getting highly inaccurate viewership data from Nielsen or getting no data at all? [Vulture]

ICYMI: How 6AM City is scaling crowdsourced local journalism

The company has launched newsletters in about a dozen cities.

I have some advertising inventory opening up

I maintain an updated Google Doc that tracks my advertising inventory, and as you’ll see if you click on that link, I have some open slots starting in August. I have an incredibly influential readership that includes the upper echelons of tech, media, and marketing. If you think you’re at all interested, check out my advertising page. It outlines my readership demographics, audience size, open rates, and sponsorship rates. Let’s work together!