X's natural advantage vs YouTube.
I've been creating videos on YouTube for the last year and a half, and it's been super rewarding. I'm super happy it exists.
However - there's a mechanism YouTube seems to employ which puts X at a natural advantage.
<First, a quick crash-course on how YouTube makes money.
YouTube has a revenue share with creators (just like X) where creators get a certain % of the income YouTube generates.
This income is generated by Advertisers paying YouTube for ad-space on their videos. You know those ads you always skip? Ad companies pay YT for those precious seconds.
In turn, YouTube takes that money and sends a cut to the creator for which the ad was shown on. YT does this millions of times a day on every video for every creator.
However, what happens when an Ad company doesn't want to show its ads on a video?
This creates a disincentive for YouTube to show that video on its home page, on your search results, etc.
Why? Because showing that video takes seconds away from showing a video that advertisers ARE willing to show their ads on - thus generating more money for YouTube (and the creator).
Why is this a problem?
YouTube has just created an environment where advertisers get to dictate what sort of content is pushed to viewers. Get enough advertisers with an agenda… you see how this can devolve pretty quickly.
This is one of the primary reasons why we've had so much censoring on places like YouTube, Facebook, and other platforms. Ad partners have put a tremendous amount of pressure on these companies to dictate what content gets shown, mainly because ad revenue is the single biggest income line item (often times the only one) for these companies.
in addition - YouTube is public company under Google (Alphabet). So is Facebook (and Instagram). These companies have a fiduciary duty to investors to generate as much revenue as possible. In their eyes, it's bad business to go against the wishes of their ad partners.
Ad companies not willing to spend money with you means your company dies. What this also means is that ad companies now have you by the balls. Going against the wishes of these companies could mean massive revenue loss and a sinking stock price. Most executives at these companies make most of their money from a rising stock price. Do you think their incentivized to go against the wishes of their ad partners?
As an example - look at what X had to do the second @elonmusk bought the company - 80% of the company is gone because 50% of the ad spend is gone. The company was weeks away from bankruptcy the second any semblance of going against the wishes of the ad partners came in view.
However, now that X is MUCH leaner and seems financially stable, this is where X's natural advantage comes in.
We've all heard that X would become a provider of financial services at some point. Another way of thinking about this is that this is a second income that X will generate that will move it away from being so dependent on Ad revenue.
Why is this good? If there's content on the platform that Ad companies don't want to advertise against, the impact to X is dramatically reduced due to X having multiple income streams.
And since X is a private company, it doesn't have public investors to appease when investors yell "X IS LEAVING MONEY ON THE TABLE BY PUSHING CONTENT AD COMPANIES DON'T WANT TO ADVERTISE AGAINST!!"
This means that X can get eyeballs on its platform in the most organic way possible. Allow creators to create. Allow eyeballs to naturally end up where they do - however controversial.
This means that the diversity of content on X will be SIGNIFICANTLY BETTER over time vs competitors, since Ad companies will have little to no say on what X decides to "prioritize" with its algorithm.
Instead of being a platform that pushes content based on what Advertisers want, it will push content based on what viewers want.
My hope is that X reaches this level of independence from advertisers as quickly as possible. It feels like they are already there, but it also feels like it's super early days.
As much as I love YouTube, I'm significantly more excited about X's long-term potential. There will be missteps along the way, but the end result should be quite special.
Imagine a media network that has 0 influence from advertisers, and instead advertisers are tripping over themselves because X has most of the eyeballs, while X is financially independent.
Let that sink in.
Sorry, couldn't help myself.
https://x.com/farzyness/status/1693708055312035978
ELON: “excellent analysis”