HN Distilled

Essential insights from Hacker News discussions

YouTube is a mysterious monopoly

Original Article

Hacker News Discussion

Here are the key themes from the Hacker News discussion about YouTube Premium:

Value Proposition of YouTube Premium

A significant portion of the discussion revolves around whether YouTube Premium offers a compelling value proposition. While many users express frustration with YouTube's core experience (ads, recommendations, Shorts), others find premium features like ad removal, background play, and YouTube Music to be worthwhile.

  • "For my money, it’s the best bang-for-the-buck subscription service on the market"
  • "For me, Premium's only value proposition is removing ads. Recommendations are still the same (quite shitty)." - troupo
  • "You also get youtube music, instant skipping over sponsor sections, and the ability to play videos in the background" - SchemaLoad
  • "Aside from Music, these are all negative features that are valuable only because YouTube is so obnoxious." - makeitdouble
  • "We'll stop spitting in your soup if you pay us extra' isn't a nice value proposition." - makeitdouble
  • "So you want people to freely watch videos without paying anything or watching ads ??? how this works then, creator need to be paid, bandwidth need to be paid, infrastructure is not cheap it is a nice value proposition, if its not somebody would already make a better alternative that not require those 2 (without paying and without ads) the fact there is not then its notPossible" - tonyhart7
  • "I watch youtube more than any streaming service ... I really really value not having ads in my life So the price for ad-free youtube really seems phenomenal." - Magmalgebra
  • "Because the tools that allow them to take almost 50% of the revenue (they say you earn) have low friction?" - Supermancho
  • "If I have to lose a lot of money for a long time to compete, how is it ripe for disruption? YouTube works because it has eyeballs, content/creators, advertisers, a cdn, and has made enough piece with large copyright license holders that it's allowed to continue." - toast0

YouTube's "Enshittification" and User Experience

Many users feel that YouTube's core experience has degraded over time. They cite issues with the recommendation algorithm, search functionality, the aggressive promotion of Shorts, and the overall user interface as evidence of a deliberate decline in quality for free users.

  • "Recommendations are still the same (quite shitty). Search is unusable (4 relevant results then unrelated recommendations). Shorts are pushed aggressively no matter how many times you hide them." - troupo
  • "The fact that people can get all of that for free with some minor limitations is fairly generous." - SchemaLoad
  • "It feels bad as a consumer, but the alternative is usually worse." - Magmalgebra
  • "The other useful Youtube Premium feature is the ability to offline download videos to your device. Useful for long plane rides and elsewhere where internet is limited or nonexistent." - kelseydh
  • "The new thing that YouTube Premium includes is the one button press to skip over "commonly skipped parts of the video"- typically the in-video promotions. This justAppend showed up last week on my nVidia shield connected to my TV. So finally there is a way to remove ads for real. It would be nice if it did it automatically." - jhallenworld
  • "If I open the Youtube app on my phone, I have to click through 3 menus before I can even see the newest video from the users I'm subscribed to, and then I have to watch 2 ads that change the entire layout of the app to present me more information about those ads" - devmor
  • "The issue is you're still not paying for the content nor paying the creators. You're paying YouTube to stop annoying you" - makeitdouble
  • "The recommendations I am being recommended are still about how natural McDonalds food is, how this natural supplement from XYZ is disrupting healthcare and how this coffee machine will revolutionize the way I make coffee. If the recommendation algorithm would be a bit less corporate, I’d be a happy customer." - cung
  • "The problem with monopolies is that it's very hard to boycott them." - eqvinox
  • "My bet is that some of these channels actually do real and honest reviews. So what’s the point of companies spending millions on YouTube ads if those same channels they criticized get more views—precisely because they’re better and more honest? I feel like this is a kind of selective nerf." - delduca
  • "The thumbnails are good but the disclaimer about paid content is so large that often I click to watch the video and get the paid content info page. Translates stuff depending on my browser language and IP. Very annoying Add to queue button sometimes doesn't work and just plays the video right away. Very annoying When I'm listening to songs, sometimes I just let it auto play the next song it picks and often it picks 2 hours long video of songs sticked one after another. Very annoying The share button adds som ID that I have to remove every time, it's probably to track my sharing behavior. Annoying When chromecasting, tapping on a video or receiving it through airdrop used to give me an option to add it to the queue or play it right away. Now just plays right away. Annoying If I navigate from a page and go back I'm presented with a different page and often the video I noticed previously isn't there." - mrtksn
  • "I use Brave and it's the premium experience already." - MinimalAction
  • "You have to pay for bandwidth and storage are free? scarface_74" - scarface_74

YouTube's Monopoly and Market Dominance

A recurring theme is YouTube's entrenched position in the video streaming market. Some users argue that this monopoly allows YouTube to "enshittify" its service and dictate terms to creators and users alike, while others defend its dominance due to the high costs of running such a platform.

  • "That's the hallmark of a monopoly: people can complain about it as much as they want, it won't have any material difference." - makeitdouble
  • "Youtube are simply the best, deal with it" - tonyhart7
  • "Monetizing your marketplace monopoly with 45% rents is even more egregious than the App Store which people complain about at 30%. In fact, it might be the highest monopoly tax in all of tech." - pembrook
  • "YouTube simply enjoys a classic network effects monopoly, and that’s why their margins are high compared to any other business in the S&P500." - pembrook
  • "If the bandwidth bankrupts them, then boo hoo. They take advantage of network effects so no one can go anywhere else." - beeflet
  • "Youtube has been in the red at least until 2010 under most estimations. For reference that's around the point Vimeo started pivoting to different strategies and blocking long content as they couldn't pay for the infra. That's also around that time that Dailymotion went down the pipes with the French gov stepping in to save the remains. YouTube thrived from there as creators and advertisers had nowhere else to go at that point. That's the dumping part." - makeitdouble
  • "Youtube is such a dominant and ubiquitous monopoly that it is almost easy to forget about it as a monopoly because there is so little competition to contrast against and to even remind you that there ought to be." - jdprgm
  • "Competing with YouTube is certainly possible, and there's a lot of fun technical work, but there's also a big challenge to attract the people you need to make the thing work. You probably already need to already have two out of four of users, content, advertisers, cdn. And you need to get licenseholders on board quick. And probably law enforcement as well." - toast0
  • "Their network effects are just too strong." - recursivecaveat
  • "It's a hard question to answer for products that rely on user created content like this. Rumble and vimeo provide basically the same service, but if you got fed up with YouTube and wanted to take your money (eyeballs) elsewhere, you can't, because rumble and vimeo don't have the same content at all. And if you were a creator you can't take your content elsewhere because there's no viewers." - p1necone
  • "The state of things now is that people will complain relentlessly about youtube and then still use it because there is no alternative. This is the nature of monopoly." - eqvinox
  • "Then why isnt everyone jumping at the opportunity to make a competitor? If it is soooo easy, we should have competitors. Nobody is stopping you from launching margalabargalatube.com and win the market." - bitpush
  • "Google can promote YouTube using its other monopolies/oligopolies. Most notably, google search prioritizes videos on YouTube over other videos." - thayne

Creator Compensation and Monetization

The discussion touches upon how creators are compensated, with differing views on the fairness of YouTube's revenue split and the impact of Premium subscriptions on creators. Concerns are raised about how revenue is distributed, especially for smaller or demonetized channels.

  • "The AceOfHearts: YouTube pays creators more for each Premium view."
  • "YouTube seems to be pretty explicit that it is paying 55% of revenue from watching videos to creators" - frankchn
  • "As you point out, that revenue split has a set of conditions, which also require a level of contract on Youtube and other requirements (not being DMCA stroke for instance) So where does your Premium money go when you watch a very small creator ? where does it go for a demonetized video ? etc." - makeitdouble
  • "A "demonetized" video is technically called a "limited or no ads" video in YouTube Studio - it means YouTube has determined that advertisers do not want their ads seen on the video for reputational reasons. Premium views still pay out for them since they are not paid through showing ads." - kalleboo
  • "Youtube premium users on average give creators more revenue per view than non-premium users. 55% of the premium revenue is split between the creators you watch." - msrp
  • "The AceOfHearts: YouTube pays creators more for each Premium view."
  • "The creator is getting paid more from my Premium subscription, so I definitely do not want to see their own ads." - jhallenworld
  • "They are essentially asking for 45% of revenue for a service that requires almost no marginal cost. This is more egregious than the App Store's 30%." - pembrook
  • "Premium pays out to creators by minutes viewed (vs AdSense which pays out by ads viewed) I've heard some creators say that in total, they make more money from all their Premium viewers than they make from all their AdSense viewers, even though the former are a small fraction of the latter." - kalleboo
  • "YouTube giving some of the Premium money to creators doesn't make Premium a good product. If I'm not that utilitarian to think any single additional penny going to some creators is good whatever YouTube takes in the process and the general impact on the whole field." - makeitdouble
  • "If the quantities of money paid to all the YouTube freelance advertisers is anything to go on, a video platform having their own ad network would itself be highly profitable." - margalabargala
  • "If you think you can do better, you are welcome to set up your own server and stream your own video. Do you think bandwidth and storage are free?" - scarface_74
  • "The YT YT YT YT YT YT YT YT YT YT TT YT YT YT YT YT YT YT YT YT YT YT YT TT YT YT YT YT YT YT YT YT YT YT YT YT YT YT YT YT YT YT YT..." - scarface_74

Discussion on Infrastructure Costs and Business Models

The cost of delivering video content at YouTube's scale is a point of contention. Some argue that the infrastructure is incredibly expensive, justifying the current business model, while others believe that, at scale, the costs are diminished and that YouTube's 45% cut is a "monopoly tax."

  • "Streaming video requires excruciatingly expensive infrastructure. It's one of reasons why there are no competitors to be seen." - SXX
  • "It requires less expensive infrastructure than AI, and AI has tons of competitors." - pembrook
  • "Physical shipping goods across the world is far more expensive than delivering video. Are you sure? It is a logistics issue, not a technology issue. Streaming video, near instantly, around the world, without any perceivable user-experience issues, infinite times, for infinite users is a massive-massive technology issue." - bitpush
  • "Bandwith isn't free for sure but at googles scale the costs are close to the cost you have copying data to your own NAS in your LAN. Multiple orders of magnitued below what AWS charges for bandwidth." - bauruine
  • "Video especially with high-bit rates is most expensive medium to deliver and store. Well, I suppose Youtube could move to model where they charge for creators for both of those and drop their cut to 30%..." - Ekaros
  • "Storage costs money. Bandwidth costs money. Someone needs to pay for it and the only way to cover those costs at any meaningful fraction of Youtube's scale is to have a money printing machine like Google's ads." - egypturnash
  • "It's not 45% of revenue expensive. The fact that we’ve accepted such ridiculously high profit margins from tech companies is simply due to their network effects monopolies, and the impossibility of competing with them." - pembrook
  • "Youtube's profit margin isn't that high so it is pretty close to that, it took a long time for it to get profitable even with Google ads, unlike the digital stores that serves customers for basically nothing compared to how much revenue they bring in." - Jensson
  • "At those levels, the basic “senior engineer solutions” to problems stop being as appropriate, and I think those kinds of problems are ridiculously fascinating." - tombert
  • "I think if anyone disrupts it, its going to be over money. Either reducing the number of ads (they really have increased quite a lot) or give a bigger piece of the advert pie to creators." - bawolff

Alternatives and Disruption

The conversation also explores potential alternatives to YouTube and the challenges of disrupting its market dominance. Many believe that due to network effects and Google's deep pockets, YouTube is extremely difficult to compete with.

  • "There will be no competitors if one of the player in the field does it for free for enough time. We'd call that "dumping" if it was a manufacturer." - makeitdouble
  • "This space is ripe for disruption" - geerlingguy (author of linked article)
  • "Many successful tubers monetize with sponsors. That is replicable, if a (single) tuber has enough views. I think there can be markets for smaller, paid video sites... but that's not really a competitor to YouTube. It's more like competition for substack." - netcan
  • "If anyone disrupts it, its going to be over money. Either reducing the number of ads (they really have increased quite a lot) or give a bigger piece of the advert pie to creators." - bawolff
  • "YouTube is not social media. Nobody makes new friends whilst on YT. However, broadcast TV in the olden days before satellite TV and video recorders provided a shared conversation for the whole nation." - Theodores
  • "So... you aren't using YouTube because you detest the service so much? Supermancho" - bitpush
  • "Maybe it's just me, but I don't find such kind of work "fun". I would have a constant feeling of "well, we are simply trying to mimic what YT did, maybe we should just hire someone that worked there and do the same, instead of going through the same inevitable mistakes"." - mystifyingpoi
  • "Peertube is not comparable. P2P has tradeoffs... The problem PeerTube has is that there isn't demand for what it is doing because YouTube is a pretty good video custodian." - whatevaa
  • "For a few years now, I've been doing my own archiving of channels with content I enjoy. I know that doesn't help the general population..." - JKCalhoun
  • "Some company could implement YouTube by running large servers as peers if the unit economics made sense and it'd work." - roenxi
  • "It's just so big that this process takes much longer than usual. But do not be fooled, it is happening." - gethly
  • "Some people think dealing with the following are fun. Handling massive amount of video ingestion from content creator; Transcoding to various format that is optimal for various devices, Live streaming with Live to VOD, Geo restriction, Live Commenting, Ad insertion and penalise adblocker, Recommendation engine." - phantomathkg
  • "The key problem for any competitor is that YouTube has a vast library of content - if you are a creator, you need an audience and if you are an audience you need content. YouTube has both. None of the claimed competitors have the same content which then makes it hard to attract an audience." - p1necone