YOUTUBE’S AWKWARD STAGE
As the streaming giant fends off advertiser complaints—and aggressively recruits A-list stars— CEO Susan Wojcicki is under pressure to transform Youtube from an unruly adolescent into a dominant grown-up.
OOutside of the Jacob Javits Convention Center on New York’s far West Side—where Youtube is hosting the Brandcast, its annual presentation to advertisers—fans crush together behind barriers. Young and mostly female, they hover giddily on this chilly May evening, angling for a glimpse of the Youtube stars who are making their way down a red carpet toward the entrance. One fan clutches a sign that reads I’M COLD, BUT IT’S WORTH IT.
Inside, the cavernous hall is filling with 2,800 ad-industry insiders, video creators, and members of the press who will soon sip wine and nibble popcorn as the streaming-video giant debuts a slate of original series. They will be entertained by indefatigable Late Late Show host James Corden, who will perform a splashy number (“Youtube: The Musical”) alongside dancing T. rexes and a Pikachu. Katy Perry—her hair in a new blond buzz cut—will tout her upcoming live-streamed special and return to end the event with a concert.
But even the surprise appearance of the world’s most successful comedian, Kevin Hart—the star of an upcoming funny fitness show on Youtube—isn’t the evening’s most memorable moment. That comes when Youtube CEO Susan Wojcicki stands alone onstage in a purple dress, issuing something you normally wouldn’t expect to hear at a bash like this: an apology.
For the previous two months, Youtube had been beset by controversy in the wake of newspaper investigations that discovered brand advertising being paired with videos featuring terrorist and
white-supremacist rhetoric (and thereby funding their creators). AT&T, Johnson & Johnson, L’oréal, and reportedly as many as 250 other advertisers suspended campaigns. Youtube was able to quiet the unrest by installing new machine-learning technology to better identify questionable content—it said it was able to realize a 500% improvement within weeks—and offering marketers more finely grained controls for specifying where their messages will appear. It also allowed thirdparty firms to audit where clients’ ads show up.
Even so, it’s clear that marketers expect humility from Youtube about the whole affair, and that’s what Wojcicki gives them. “We apologize for letting some of you down,” she tells the crowd calmly, in an even tone that sounds natural, genuine, and not overly rehearsed.
The ad-placement kerfuffle was intensely embarrassing for Youtube, but it nonetheless reinforces how different the service remains from traditional television—which is the other part of Wojcicki’s message to the audience tonight. “Youtube is not TV, and we never will be,” she says. From Wojcicki’s perspective, the differences are, in fact, advantages.
TV in its conventional form is among the most micromanaged, focus-grouped businesses on the planet. Youtube, by contrast, is varied and authentic, even slightly anarchic. “We really value the role that Youtube plays in the ecosystem for freedom of expression,” Wojcicki tells me during a conversation a week before Brandcast. “We take that incredibly seriously. We want to make sure we’re enabling all these voices to be heard.” Old-school TV viewing still boasts an awesome 1.25 billion hours a day of watch time in the United States, but Wojcicki states that 18- to 49-year-olds, TV’S most ad-friendly demographic, watch more Youtube on mobile devices during prime time than they do any broadcast or cable network. The service also recently passed 1 billion hours of daily watch time worldwide, prompting Netflix CEO Reed Hastings to confess to pangs of “Youtube envy” during an earnings call in late April.
Youtube sits at the white-hot center of the global evolution of the entertainment and advertising industries, at the precise moment that the boom in mobile video consumption affects how half a trillion dollars per year is divvied up among TV, digital, and other media. For Youtube’s owner, Google—and Google’s own parent company, Alphabet—the stakes are enormous. It wants Youtube to dominate like Google does with display ads and search marketing.
Research firm emarketer estimates that Youtube netted approximately $5.6 billion worth of advertising sales in 2016, only 9% of Google’s total but up 30% over the previous year. Alphabet doesn’t disclose Youtube’s financial results (including whether it’s turning a profit) but regularly cites its contribution to revenue growth—something it did during its investor call for the first quarter of 2017, dispelling analysts’ warnings that the advertiser backlash could drag down Alphabet’s performance.
Wojcicki’s boss, Google CEO Sundar Pichai, simply says that she “has always been someone who could do pretty much anything.” Since joining Google in 1999, she helped create Adwords, the system for auctioning off space for text ads that turned Google into one of history’s most efficient profit machines; she grew the company’s advertising efforts from $400 million in 2002 to $55 billion in 2013; and she had the foresight and persistence to persuade Google to acquire Youtube in 2006 for the then-controversial sum of $1.65 billion. Wojcicki is “as nice as she seems,” says Youtube VP of engineering Scott Silver, “but she doesn’t ever give up.”
Even at its current size, Wojcicki tends to talk about Youtube as if it’s just getting started. “Our goal, really, is to take this amazing technology, continue to grow it, make it available to all people around the globe, across all platforms, and for all creators,” she tells me. She’s so matter-of-fact about it, one can lose sight of the audacity of her ambition. She pauses for a beat, then allows, “It’s a big mission.”
It’s a Friday afternoon in March at Youtube’s headquarters in San Bruno, California, and Wojcicki is hosting this week’s installment of Youtube Fridays, the company’s all-hands meeting. Standing behind a lectern bathed in light, she helps direct the event. Ten new recruits— “Newtubers”—get their official welcome, and there are presentations by staffers including an engineer who demonstrates how Youtube uses Google Brain AI technology to predict what a user will want to watch next. Wojcicki wryly shares her account of attending the Oscars for the first time the previous weekend (as a guest of producer Harvey Weinstein), which culminated in her guiltily eating a cheeseburger at the Vanity Fair after-party even though she’s a vegetarian. In addition, there are, naturally, videos, including a new Samsung commercial featuring Youtube star Casey Neistat, and the whole thing segues into a concert by Matt Jaffe and the Distractions, a local rock band with an active Youtube presence.
Wojcicki instituted the weekly ritual shortly after arriving as CEO in 2014, hoping to encourage the company—already the rare startup that wasn’t screwed up by the big enterprise that acquired it—to become even truer to itself. “It’s a challenge to build a brand within a company,” she admits.
Youtube, like Google, is largely driven by engineers. But it also serves a vibrant community of creators and media companies. To really understand their concerns, Wojcicki says, “we need to learn how to think like an artist. Like a publishing house. Like a label.” This is why videos are featured at Youtube Fridays. It’s why the meeting ends with a concert. And it’s perhaps why Wojcicki, a mother of five who does not generally seek the spotlight, took the time to attend the Oscars.
Forging deeper bonds with the creative community definitely helps explain why, in 2015, Wojcicki recruited Susanne Daniels to spearhead original content. The veteran network programming executive can take credit for developing such youth-friendly programs as Buffy the Vampire Slayer, Dawson’s Creek, and MTV’S Broke A$$ Game Show.
Before Daniels’s arrival, Youtube’s history of funding its own shows was checkered at best. In 2011, Youtube spent $150 million to commission channels from A-listers like Madonna, Tony Hawk, Deepak Chopra, and Jay Z. All of them fizzled. In a cruel irony, at the same time that Youtube was throwing money around Hollywood six years ago, two sketch-comedy performers, Abbi Jacobson and Ilana Glazer, were creating a series of micro-comedies on the service; Comedy Central later hired the duo to bring Broad City to its network, where its fourth season will premiere in August.
Daniels has been intent on not letting homegrown talent get away. She’s developed vehicles for Youtubers such as comedian/rapper Lilly “Iisuperwomanii” Singh and the popular Korean pop group Big Bang. These series, movies, and documentaries run on Youtube’s Netflix-ish Red service, which charges users $9.99 a month for this premium content (and also includes ad-free viewing). In 2017, 30 new series and movies will debut on Red.
This experience of fishing where the fish are, as Daniels puts it, also informs her new initiative funding original programming for Youtube’s ad-supported service. There will be shows from native performers such as comedians Rhett Mclaughlin and Link Neal, whose Good Mythical Morning is already Youtube’s most popular daily show with nearly 100 million views a month, which will now expand to a 22-minute format. But the stars that Daniels and company have recruited are also already proven Youtube draws. Kevin Hart’s stand-up clips and late-night appearances garner high traffic, and Ellen Degeneres, who will produce
“She has an incredible balance,” says VC John Doerr of Wojcicki’s strengths. “She’s aggressive. She’s calm.”