Creator & Small Network Power: Where the YouTube Ecosystem is Going [GUEST POST]


The ease in access to the “software layer” will have a marked impact on the way YouTube ad networks function as well.

First, equalization will empower small networks. Big networks and their in-house teams will increasingly find that smaller networks will have access to tools at a minimal cost, the same way creators do. Whereas an in-house team might run a bill of $300 thousand per year for developers, a small company can license software and apps in the software layer for a measly $10-20 thousand per year.

Second, a deflationary effect will kick in for the network ecosystem. There are 200+ networks the last time we checked, and the emergence of the software layer will additionally create indirect competition. These “network-agnostic” software companies will offer value-added tools at a price that networks won’t be able to compete against. Competition, added with the fact that these tools also empower creators, means that networks will have to offer more or charge less. That is, they will have to “up” their value.

If, in the future, networks struggle to compete on price and value, then they will change from the inside out. Instead of networks providing the 360 degree, “come to me for everything, like merchandising, video, production, optimization, management, brand deals, etc.,” they’ll specialize.

I think this is already happening now at different pivot points. StyleHaul focuses on fashion exclusively. Big Frame is known for personalized attention and management. These networks, in my opinion, are the smart ones that saw 5-10 years into the future.

Don’t get me wrong: ad networks are a vital part of the ecosystem. They will always exist. But 80% of that market will be controlled by 20% of the players (if it isn’t already). In a few years, specialization and consolidation will happen — there will be one or two firms who are just extremely good at serving ads, reaching advertisers, and upping CPMs — and hopefully nothing else. (Hint: it’s a bad time for you to be starting an ad network).

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