YouTube stars lose money as ad exodus trickles down

Tim Wood sat on a chair inside a house in Hinsdale, N.Y., long rumored to be haunted. He had a Ouija board in his lap and was livestreaming the experience to a group of fans on YouTube.

“You’re not ever supposed to do Ouija alone, let alone in a place that had an exorcism done in it,” he said to the empty room.

As he filmed last month, t he c omments ro l l e d i n, some admiring (“You are one brave ghost hunter”), others fearing for his safety (“Tim, don’t summon what u can’t banish”).

Wood, 39, has amassed a small but loyal following by making online videos of ghost hunts and paranormal activity, using YouTube to broadcast his work since about 2013. Automatically placed advertisements on his channel, LiveSciFi, which has about 470,000 subscribers, have allowed him to turn the videos into a full-time job.

But in the wake of a recent advertiser exodus from YouTube, prompted by major brands discovering they were showing up on videos promoting hate speech and terrorism, his earnings have plunged.

Wood, who lives in San F r a n c i s c o wi t h h i s f i a n - cée and their infant, said his channel had brought in at least $6,000 a month in revenue last year — which helped pay for travel to site locations, the production of his videos and his other day-to-day bills. In January, his estimated revenue was about $3,900.

In February and March, he was alarmed to see that drop below $3,000. Last month, he saw around $1,600 and has been using crowdfunding to cover his shooting costs.

“We’ve never had problems with being told we’re not advertiser-friendly,” said Wood, who said he did not use profanity or offensive material in his videos. He suspects that algorithms scanning for words like “satanic” or “murder” may be limiting ads from running with his content, but cannot be sure as discussions with YouTube product managers have yielded little information.

S t o r i e s l i k e Wo o d ’ s , involving a diverse collection of YouTube personalities with relatively small but engaged audiences — comedians, LGBTQ advocates, political commentators — have become more frequent during the past few weeks. Together, they illustrate the trickle-down effects of the recent clash between companies and YouTube, which is owned by Google, over what content should be deemed appropriate to advertise on.

In February and March, a number of a dver t i s e r s yanked their money from the platform, prompting YouTube to tighten its default settings for where ads appear and to offer new ways for brands to manually and automatically avoid material that violates its guidelines.

Executives at Alphabet, Google’s parent company, hailed YouTube’s revenue growth from video ads on a quarterly earnings call at the end of April and said they were confident in the progress they were making with advertisers. The company announced a slate of new ad-supported shows on YouTube, including projects with Ellen DeGeneres and Kevin Hart.

While companies like Johnson & Johnson and Coca- Cola have resumed spending on the platform, major brands including AT&T and the pharmaceutical company GSK have not yet returned. Enterprise, the car rental company, will resume spending this month, said Laura Bryant, an Enterprise spokeswoman.

In the meantime, several YouTube creators say they are getting fewer ads on their videos, but are not certain whether the changes are a result of less money in the system, new buying methods from advertisers or new algorithms from YouTube that have flagged their content.

While YouTube warned creators in late March about potential revenue “fluctuations” caused by changes in their ad systems, the extent of the drops caught some wi t h s mal l e r au d i e n c e s by surprise, leaving them scrambling to pay rent and other bills. Creators have also been having issues with videos that lose ads altogether, though YouTube alerts users in those cases and allows for appeals.

“Rates are a lot lower and hurting a lot of folks,” said Kri shna Subramanian, a founder of Captiv8, a firm t hat c onnec t s bra nds to social media influencers.

Hi s f i r m re c e nt ly c onducted a survey of 100 YouTube creators and said that channels focused on comedy and gaming experienced the sharpest drops in revenue last month compared with February. At the same time, creators in food, beauty and fashion, and family and parenting had increases. YouTube shares ad revenue with creators, who keep more than half.

Some creators are “looking at a video saying, ‘It got a million views, but I only got $700 — I used to get $2,500,’” Subramanian said.

“I wouldn’t call it the new reality,” Philipp Schindler, Google’s chief business officer, said last week when asked about struggling creators. “It’s really important that we actually find the right balance between the advertisers here and the creators. That’s really what we have to fine-tune the systems to.”

YouTube has dealt with controversies in the past after videos suddenly lost ad revenue because of algorithm changes, but this situation stands apart. Hank Green, who is best known for the VlogBrothers channel he runs with his brother, the author John Green, said, “This is the first substantial volatilit y I’ve seen in about 10 years of having my content monetized by YouTube.”

He said it was difficult to assess how many people were affected, noting, “It’s a big, complicated space with tens of thousands or hundreds of thousands of people making substantial amounts of money.” But he said the disruption was extra tough on niche creators.

“We look at our bottom line, and if we lose 30 percent of our YouTube revenue, we might say yes to some brand deals we would have otherwise said no to in order to not lay anybody off,” he said of his channels. “But if somebody’s making an extra $1,000 a month and that’s helping them pay the grocery bills, those people might not have access to that.”

Alayna Fender, a 25-yearold in Vancouver, British Columbia, said she had been bringing in an average of 700 Canadian dollars (approximately $513) from ads on her videos each month, and saw that drop to CA$130 in the past month. Fender, who has about 177,000 subscribers and turned her video-making hobby into a fulltime gig a year and a half ago, built much of her audience through frank discussions surrounding mental health and sexuality.

She wanted an explanation for why ad revenue had dried up on her series “I Don’t Bi It” and a video of her describing her lesbian crushes on YouTube, while it had remained steady on videos titled “Top 15 Canadian Stereotypes” and “Bleaching My Hair Blonde.” While YouTube’s guidelines say that “sexually suggestive content” and “sexual humor” are not advertiser-friendly, Fender said the videos in question were still running ads, but for far less money.

“If they’re going to pull ads from videos without telling us and giving us no notification and no way to appeal it, they need to at least tell us what it is,” she said. “What rules are these videos breaking? What is it that we need to avoid? How can we remain advertiser-friendly? That’s the main problem — the secrecy and how quiet they’re keeping.”

YouTube said in a statement that it had “lots of positive conversations with advertisers, and many are noticing the improvements we’ve made.”

“While many creators are seeing revenue improvements, some continue to be impacted,” the company said. “We’ll continue to work closely with both advertisers and creators to get things right.”

To replace the ad money, several creators have been turning to Patreon, a crowdfunding site where people can pay them directly by video or per month. YouTube also recently introduced a way for fans to directly support creators through a feature called Super Chat, which allows them to pay to highlight messages they post in live streams. Wood, of the LiveSciFi channel, said revenue from that feature came close to matching his channel’s estimated ad revenue in April.

He said he was frustrated by a call last week with a YouTube representative.

“She basically told me, ‘Your channel is doing so great, especially for the last month,’ and that everything is up — our numbers are way up, our watch time almost doubled from March,” he said. “But our ad revenue is pretty much a quarter of what it was in March.”

Green, who helped start a nonprofit called the Internet Creators Guild to protec t and guide people in the industry last year, said it would be helpful for YouTube to disclose which channels and categories had been most affected by the recent changes, and whether the shifts were being driven by the platform or advertisers.

“The great thing about YouTube, the thing that has made it such a powerful, creative ecosystem, is that you can be getting a relatively small number of views and still be making a good amount of money, which can help you keep it going to do weird and new and creative things,” he said.

While Green expects the s i t u a t i o n t o r e b o u n d a s advertisers return to YouTube’s lucrative audience, he expressed concern about the possibility they may limit themselves to large, established channels.

“The great promise of YouTube is the potential for this to be an important job, for there to be more professional, independent creators than coal miners in the U.S.,” Green said. “If we’re just going to remake TV and put all of the power to make money and distribute content back into the hands of a few people, then burn it all down.”