Instigators of Change

From Cute Cats to Political Upheaval: How YouTube Changed The World

Season 2 Episode 1

In 2005, a small company began offering up a way to post amateur videos on the web. YouTube operated on a shoestring, with its founders maxing out credit cards, and debating what the company was really about. The next year, Google - sensing that YouTube would be a powerful force in search - acquired them. This week, author Mark Bergen tells the story of YouTube’s strange birth and breakneck path to success. Plus, the company’s epic battles against traditional media, and the culture clash that followed its acquisition by Google.

Kara Miller:

Welcome to Instigators of Change, a Khosla Ventures podcast, where we take a look at innovative ideas, the people who come up with them and those who invest in them. I'm Kara Miller. This week what happens when you build a tiny company that can barely make ends meet.

Mark Bergen:

There was a likelihood that they could have been sued out of existence or any day their growth could have stopped.

Kara Miller:

Then all of a sudden, the big guys start to realize you're hot on their heels.

Mark Bergen:

YouTube was a massive search engine and a real viable threat to Google, which Google Video was not picking up. Then they had the foresight to know that video was moving online.

Kara Miller:

How YouTube went from a company maxing out credit cards to buy needed equipment, to being acquired for more than a billion and a half dollars. That's all in about a year and a half. The strange story of YouTube coming right up on Instigators of Change.

YouTube went so far so fast. It's hard to know where to start, but as good a day as any is the day that one of the founders of the company collapsed, and initially no one knew why. It was 2007, the night of the CNN YouTube Democratic Primary Debate hosted by CNNs Anderson Cooper.

Audio:

Tonight is really something of an experiment. This is something we've never done before. What you're about to see is, well, it's untried. We're not exactly sure how it's going to work. The candidates on this stage don't know how it's going to work, neither do their campaigns. Frankly, we think that's actually a good thing.

Kara Miller:

If the experiment, the union between an upstart social media company and an old school cable news network, if that was strange, it's because social media wasn't much of a thing yet.

Mark Bergen:

We had just sort of entered the 24-hour cable sort of political circus, but Twitter was just beginning. Facebook was still sort of a dorm room site. It was not mainstream at all to incorporate social media in the politics and the political coverage.

Kara Miller:

That's Mark Bergen, a tech journalist who's written for Bloomberg and Recode, and is out this week with a new book, Like, Comment, Subscribe.

Mark Bergen:

Two things happened. One that cycle of YouTube was like the hot new thing. It was like Bill Clinton playing the saxophone on Arsenio Hall's show. Politicians went on YouTube. John McCain, Barack Obama, at that point I believe Ron Paul may have still been in the running and he was hugely popular on YouTube.

Kara Miller:

As popular as the site had become, it was probably no surprise when YouTube's contribution to traditional politics was irreverent.

Audio:

The most viewed video question on YouTube was this one. What are your thoughts on a recent poll suggesting that 88% of Californian's elected Governor Schwarzenegger in hopes that a cyborg of his nature could stop a future nuclear war?

Kara Miller:

Mostly the quirkiness of YouTube was not the focus of the debate. After the politicians on the stage from Barack Obama to John Edwards, to Dennis Kucinich, to Hillary Clinton, after they chuckled at that cyborg question, they were faced with more mainstream fare, would they call themselves liberal? Are they more than just average politicians, things like that.

That night at the Citadel in South Carolina, Anderson Cooper shared the auditorium with YouTube founders, Steve Chen, and Chad Hurley, and with Eric Schmidt, the CEO of Google, which had recently acquired YouTube.

Mark Bergen:

I would say a political insider, a diplomat, a consummate schmoozer. Eric had arranged from my understanding this partnership with CNN.

Kara Miller:

Schmidt, as Bergen reports in his new book, leaned across to YouTube's founders and said, "You've arrived gentleman." The night would end not in joy but in panic.

Mark Bergen:

Steve was actually taking a flight and he had a seizure and Steve would later, years later, he finally got treatment in San Francisco that he deemed he kind of was a workaholic, too much working, too much drinking, too much staying up all night, too much coffee. This sort of put him out of commission. He would stay around the company for, I believe a year or so more, but more or less stepped away after that medical issue.

Kara Miller:

Chen had been a major force in engineering at YouTube, and he did keep attending some meetings after his seizure, before suffering another seizure about a year later. Only a couple years before Chen, Hurley and Jawed Karim had been present at the founding. Karim had gone back to school pretty early on. By mid 2007, after Chen's seizure, Hurley was the only one involved in YouTube's day to day operations. Things had changed a lot since 2005 when the founders argued over what this site should be. They knew one thing for sure, Bergen says, it was important for the site not to look too good.

Mark Bergen:

There was this idea that something that was too professional looking it might not get users. There's this fascinating debate they had between being a dating site or being a place for high end filmmakers. In some ways it was hot or not. There was a really popular site at the time, Vimeo, which was around the same time, right? Vimeo it's a site for, we still think of it now, it's aspiring filmmakers, an artist. You wouldn't go on there and put your homemade videos or a lot of the lo-fi amateur stuff that really made YouTube take off. They also wanted, I think one of the sort genius aspects of YouTube that really made them succeed is that it was incredibly user friendly and easy to navigate, easy to upload, easy to understand. That was something that had very low hurdles to getting out of the gate millions of users and just really didn't slow down since then.

Kara Miller:

I had no idea that they thought dating had such potential. I think they were offering women like $20 or something to make videos to make this a dating site, but they really thought that's where they were going to get traction.

Mark Bergen:

Yeah, there was a famous, I don't think they considered it for a name, but Tune In Hookup was an early slogan that thankfully for the world they didn't adapt. I don't know exactly when they hired their first female, the team that they hired in their initial hires were a bunch of other dudes they knew from PayPal. It was a male heavy organization. Hot or not, Facebook, as we all know, also started with the same concept. There was an idea I think at the time that if you think about user-generated video, there was this big question about who would even want to watch amateur video and then who would even want to upload it. What were the sort of incentives for it? Dating seemed like a clear use case.

Kara Miller:

Was there do you think a turning point when the founders knew this might work, this isn't just an idea. I think this is catching on.

Mark Bergen:

There's the sort of famous one, Ronaldhino who's the soccer star had uploaded this video. You can still go back and find it from 2006 in October I believe, where he's doing these insane kicks. Initially there was this worry that it was copyrighted. They don't know if at the time he was signed with Nike. Was this something that Nike put up? I think YouTube did something that was a major reason they succeeded is they knew the copyright law, they were willing to take risks like a startup could. They said, "We're just going to assume that it's someone that's uploaded with permission until we hear otherwise." That ended up being Nike's marketing department had actually uploaded it as sort of a stealth marketing tactic. I think it was the first clip to pass a million views, but it was firstly one of the earliest viral hits. The second one came up a few months later, which was Lazy Sunday, the SNL skit.

Audio:

Lazy Sunday, wake up in the late afternoon, call Parnell just to see how he's doing.

Mark Bergen:

That one ultimately was pulled down, but there were some people that will disagree that was a turning point. From what I understand, that was a major turning point of making YouTube go mainstream.

Kara Miller:

That was pulled down because SNL was like, "You don't have the rights to this."

Mark Bergen:

That was pulled down because NBC eventually after several weeks there was this really fascinating, which came up in the lawsuit, this fascinating exchange where YouTube reached out and said, "Is this yours? If it is, we can take it down, we'd be happy to remove it or to monetize it." They had learned from the Nike situation that there were scenarios in which it didn't actually look like it came from a company like Nike, but it actually did. Clearly at one point, actually I think this might have been in the lawsuit, lazy and Sunday were the two most popular searched terms driving people to YouTube. That was a major watershed moment for the company, I talked to a lot of early YouTubers and they're like, "Oh, the reason I discovered YouTube was because of Lazy Sunday."

Kara Miller:

It's interesting because you touch on something there that is an interesting aspect to the both success and peril facing YouTube, which is, it feels like a pile of lawsuits waiting to happen, copyright infringements, all sorts of things. I wonder how worried people were in the beginning about that. Were they just, "Whatever we're young and broke, let's just go for it?" Because I feel like to so many people that would just seem like, "Oh my gosh, I have no idea whether I can use the CNN clip. I have no idea whether I can use this sports clip" or whatever it is.

Mark Bergen:

I think there's a couple things. One is the founding team came out of PayPal, which did have this culture of we are going to be willing to push the limits of regulation and rules and asked for forgiveness later. It worked out really well. PayPal survived the.com crash. It turned into the PayPal mafia. YouTube is part of the PayPal mafia like LinkedIn, SpaceX, Yelp, all these companies that came into these arguably gray areas of regulation and YouTube,

I believe it was almost a year into their founding that they hired their first full-time lawyer who had come from Rhapsody.com, which is where a lot of early YouTube employees came from. This really interesting pioneering online streaming service that had very intentionally not been Napster. Rhapsody cut service licensing deals. They were pushed out because of iTunes and Microsoft, big competition from existing tech companies. Their legal team I think was, obviously Viacom lawyers would argue otherwise, but pretty savvy about copyright law and about DMCA.

Were they expecting a lawsuit the magnitude that Viacom came, which was in the winter of 2007 shortly after the Google lawsuit. From people I talked to inside Viacom, I don't think Viacom would have sued YouTube had Google not bought them.

Kara Miller:

I see. They thought there was some money in this lawsuit.

Mark Bergen:

At the time Viacom was really worried about this site called Grokster, which has gone into the internet dustbin, but it was an early one of the myriad video sites. It was just ripping off MTV and other Viacom properties. The one thing that to note is that YouTube had venture capital funding from Sequoia. I think it was arguably more careful than some of the myriad other online video competitors at the time.

Kara Miller:

It's interesting though, because there's this kind of other side of yes corporations are annoyed that YouTube is taking their stuff and sometimes as you say it results in a lawsuit, but sometimes as with Nike, you realize, wait I can get SNL or Nike or whatever it is to be way more popular if I think of Google as an additional platform to spread the word.

Mark Bergen:

That's what ultimately won YouTube the lawsuit against Viacom, which initial verdict went in 2010 and then it was dragged out until 2013, I believe. YouTube and Google, I'm sure obviously Google's lawyers and Google's assets were major reason why they won, but they were able to demonstrate that Viacom did precisely that, they were Viacom properties that were sort of secretly posting YouTube videos, the marketing teams, because they knew the value of YouTube as a marketing service. Then you had on one hand, they were going out and posting these clips on YouTube. On the other hand, the lawyers were giving take down notices. That was successfully demonstrated that YouTube was not violating copyright law.

An early pitch from the company was we are this amazing marketing channel for media. I think a lot of traditional media was caught totally flatfooted around this. There were a lot of changing dynamics happening in the TV and music world, but for sure this was one of the greatest assets of YouTube and the strengths and a reason why it moved forward with this case and was able to win.

Kara Miller:

If we go back to the beginning of YouTube to 2005, what was the state of regular television at that time? Do you feel as YouTube has grown television thinks of YouTube as helpful? Yes, you can break down Saturday Night Live into little component parts and they can take off on YouTube or do you think they think this is a huge threat? How has that relationship, where did it start and how has it evolved?

Mark Bergen:

At the time in 2005, we were sort of in the late stage of reality TV. I was shocked. I don't remember which season American Idol was, but it was pretty late. At that point reality TV had already had its first major wave, audiences were pretty familiar with it. I think the jig was up as far as what it was. People knew it was scripted and staged, but American Idol I'm fairly sure was the most popular show on TV around that time. There were a lot of things happening where the big major networks were still dealing with some of the issues around cable. Netflix was still shipping DVDs at this point. There was none of this where we are now. As I mentioned, they were focused on threats like Grokster.

They weren't really focused on YouTube as a viable threat, in part because for a long time YouTube just didn't have a clear business model. Its advertising business really wasn't that successful. I think the TV networks for a long time resisted putting things on YouTube for that very reason. There's a famous quote from Jeff Zucker, I'm butchering it a little bit but the idea was that we don't want to trade analog dollars for digital pennies. The idea was that the internet was just not monetizable, certainly not monetizable anywhere near pay TV.

I think over the years YouTube strategy has shifted a lot on this. You can jump forward a bit, like more recently they've just abandoned their... They had a program to do original scripted shows with some of the biggest YouTube stars that had some hits, but mostly a lot of duds. I think now they've shifted towards basically commerce and their competitor to TikTok. I do think that a lot of the traditional media sees YouTube as much more of an ally when they're now going up against in the streaming wars, YouTube's not really competing with them in the streaming wars. Clearly they're competing with them for eyeballs and for time, YouTube, TikTok, social media, everything's a competition for time. YouTube is just taking up more and more of it over the years.

Kara Miller:

You were talking about some of those first breakthroughs, the Saturday night live skit and the soccer, that little clip that people are watching; you say once YouTube starts taking off in a really serious way, there's a quote, "Every day the team had a simple edict, don't let youtube.com crash." It shows where they are in the whole. They're not really planning for the future or anything. Just really trying to make sure things don't just completely melt down each and every day.

Mark Bergen:

I think there's the famous line about startups building the tracks as you're riding it. From what I understood, that's exactly how it felt to YouTube. The engineers were coming in, working on their modems and on the Caltrain, coming into the office. Steve Chen, the co-founder, was sort of famous for staying up super late and responding and forwarding a bunch of user complaints. That was at the time, YouTube was a lot of the engineers worked at PayPal and they had this joke where they would only use cash in their real life because they didn't want to use PayPal because it might tip over their service and make an outage. Similarly they didn't watch YouTube videos, that was the joke around. I mean, I'm sure they did, but they're like, "No, we don't want to watch a video because that puts strain on the servers."

There was a lot of everything from the policy operation to the business operation. It's interesting that the people that were there, they remember those 18 months before they joined Google very vividly. Then they may have spent three years at Google and that's less interesting, that was putting in the operations. It's a lot of melding with Google. It's a lot more bureaucratic. I mean it was a period of tremendous growth and a lot of blind spots, but didn't quite feel as energetic and chaotic as those initial 18 months, which is totally understandable.

I think that there are people there that weren't sure which direction it was going. There was a likelihood that it could have been sued out of existence or any day their growth could have stopped or something like Google or Yahoo could have come out with a competing version to just knock them out. At that point Google Video was a competitor and probably the chief competitor at one point. So Google buying YouTube, I have this really fascinating moment from the day of the acquisition that the founders were there and Sergey Brin from Google and Eric Schmidt came in to talk. One of the first questions they had from YouTube employees is what are you going to do with Google video?

Kara Miller:

Well I thought that was so telling that Google for a long time has their eye on YouTube, not in necessarily a we're going to acquire it kind of way, but in a how do we beat these people kind of way as you say with Google video. Then Google kind of pulls the trigger on the really, really big deal option, which is put Google video on that famous Google homepage, which they're very famous for keeping very blank page. Not that much goes up there. They don't want to clutter it, that kind of thing. The Google video proponents, finally they get told like, yes, we're going to put it there. Then they know that will just blow YouTube out of the water.

Mark Bergen:

There were a couple fascinating things happening in 2006. Google Videos initial strategy was the product was actually just doing close captioning. They were trying to just do what Google did on the web, like index every single webpage, they wanted to index every single TV show. Then they turned into sort of maybe we could do user-generated video. Initially they moved incredibly cautiously. They would screen the videos that were uploaded. If it's uploaded on a Friday afternoon, no one's going to look at it until Monday morning. If you're trying to post something, you can go to YouTube and post it immediately. Why would you go to Google Video?

Part of this was Google had just been sued over Google Books. It had recently purchased Blogger. It's sort of putting its toe in to this new world of web 2.0 user-generated content that is incredibly legally risky. I think that they also in their strategy, it was so fascinating, they started off CES, launching Google video as a sort of place where you could see CBS shows, you could see Rocky and Bullwinkle. You could see NBA games. There was this idea that no one's really going to want to see the sort of lo-fi amateur stuff that's coming up on YouTube. They started off the year at CES in January with this announcement. Then you can just see within the year they're like, oh wow, YouTube, Eric Schmidt had forwarded this email that said YouTube and MySpace are cleaning our clocks.

There was this big pivot they had that included putting Google video on the homepage. It was saying, we're going to operate like YouTube. We're going to have tagging features. We're going to be look more social, look more like Web 2.0. At that point YouTube had too much of a lead and Google Video just couldn't catch up.

Kara Miller:

Then the suitors start saying, we want to maybe acquire YouTube. I didn't realize Rupert Murdoch's News Corp, which owns Fox News, was one of those suitors, Yahoo, Google. How did that play out? How did Google end up winning?

Mark Bergen:

Sequoia, which was the early investor and probably the driving investor behind YouTube has a close relationship with Google. I think that was a big force behind the gate. Something that I reported that I learned in the reporting was that Sequoia was actually around that time looking for a CEO of YouTube, Chad Hurley was running it. Chad was under 30, hadn't run a company before, this is something Sequoia has done with Google. They brought in Eric Schmidt to be a partner with the founders, did something similar with Yahoo. At the time, this was the natural thing to do, which is right.

Kara Miller:

It's like bringing in the adult, they've got the startup person and then the adult in the room.

Mark Bergen:

Now there's a bit more of a culture of the founder and you sort of bring in a Cheryl Sandberg type as opposed to a CEO. They had actually started around the same time they were going out and having conversations with potential CEOs and then the acquisition talks began. I think there's a variety. They were negotiating with record labels. There were some people I talked to that there was a sense that YouTube was sort of aware that if it stayed independent its days were numbered for legal reasons. Eric Schmidt at least people have identified him for being willing to throw on an extra billion in the negotiations. I think at one point it was something like $600 million and he just smacked on $1.6 million at the time, which was a massive sum. This was well before the WhatsApp size acquisitions.

Yahoo was the other contender. Not my original anecdote, but I still love this one that Steven and Chad met with Yahoo at this Denny's trying to be low key. Then the next day-

Kara Miller:

Denny's is like a through line. All the important meanings are at Denny's, that's what I learned from your book.

Mark Bergen:

Maybe you get it mixed up, but they either met with Yahoo and then the next day they decided to meet at the exact same spot to meet with Google.

Kara Miller:

Yeah, because everybody's trying to be incognito and they're like, "Let's just go Denny's."

Mark Bergen:

I did not speak to the Google founders and they haven't talked to media in years, but my sense is that they care about at the time and still do, they think of Google as search. They think of Google as artificial intelligence and YouTube was a massive search engine and a real viable threat to Google, which Google Video was not picking up. They had the foresight to know that digital video was moving online and more and more of entertainment was moving online and YouTube they saw as a really fascinating search property. It's the second largest search engine engine in the world, and not often talked about that way, but it certainly is. A lot of people use it that way. I think that was probably Google had, and Chad and Steve mentioned this before, they really liked that alignment. They liked the promise to keep the brand and operations separate.

Kara Miller:

Google is the biggest search engine and YouTube, which is owned by Google, is number two.

Mark Bergen:

Yes. These are outside estimates, but I think that's fair to say.

Kara Miller:

That just to step back, that wow.

Mark Bergen:

There's some polls. I think there's maybe a couple years to date that more people use YouTube on a regular basis than Instagram and Facebook and Twitter. It's functionally different than social media. YouTube is in some ways social media, but in many ways it's not. It's a repository. Most people use it for how to videos or little clips they want to find. It serves a really important search function. It's also for a lot of people a significant social network, they have this sort of parasocial relationship with YouTube stars. It's the primary entertainment for a lot of people under the age of 24.

TikTok is not really social. We think of it as social media. I think YouTube even more has, just because it's been part of Google for so long, it's got the stronger engineering. It's very, very good at search and that's had a host of problems, but at least that's something that it does fit very well.

Kara Miller:

When YouTube gets acquired by Google, you really describe a culture clash or at least culture shift. How were things different? What did the YouTubers chafe against at Google?

Mark Bergen:

I mean, this is a bit reductive, but I do think people at Google didn't watch YouTube, YouTube it always has been, clearly it's got a wide audience of viewers from all different age range, but it's sweet spot has always been teens, the young, the zeitgeist of youth that was inexplicable to Google and to Google execs. One of the biggest early stars on YouTube was Fred, was this named character. I don't know if you remember this at all. He had this really obnoxious chipmunk squeal voice. Go back and watch some Fred, but Fred was huge. Fred was very bewildering to, and I think representative, and Fred ended up making some movies for Nickelodeon, one of these early YouTube stars.

The culture clash, it was there. There was a lot of the early YouTube people came up in this sort of live journal world of early web. You were navigating what they saw as these communities. One of the fascinating things that I learned in this book was that YouTube had an early team of community managers and their job was basically curating the homepage for everyone. At one point we all landed on youtube.com we kind of saw the same thing. They saw that as this really fast virtual town square, this idea that sure we're all going to watch very different things on YouTube and have different interests, but we can all come together and share something as a shared community.

At that point still early on, a lot of people who watched were also making videos. I think you're seeing that with TikTok too, but back then, it's harder for us to appreciate but back then it was the line between viewer and creator was blurry. That changes as it scaled up. Google pushed YouTube to expand globally. There became a point where from people I talked to and YouTube leadership too, but the Google side that sort of community management curation doesn't scale, one. They also thought they're going up against a lawsuit of Viacom that's accusing them of not going through and finding copyright material. Then you have this team of people whose job is to sift through the site and find things. They felt like that was legally risky. Around 2010, they actually disbanded that team.

I think it was this sort of quiet pivotal moment in the company's history where they move toward... At this point Facebook was becoming this very urgent threat for Google and Google was beginning to work on Google Plus, it's failed social network. Algorithmic feeds became much more important and became the direction of YouTube that they haven't turned away since. That was part of the reason that a lot of early YouTube people there's some nostalgia for the way it was. I do think they thought of the site and its values a lot differently. They didn't really think of it as a platform. They thought of it as a community. I think that's an important distinction.

Kara Miller:

There's been a lot of bumps in the road at YouTube. You alluded to some in terms of the founding, in terms of Steve Chen having a seizure and having to bow out of the company ultimately. You write a little bit about this really jarring moment in YouTube's history, which is there was a shooting in New Zealand at two mosques in the city of Christchurch and the perpetrator who ultimately killed more than 50 people asked people, this was during the course, I think he filmed himself during shooting, asked himself to subscribe to one of the most popular YouTube creators PewDiePie. I want to get into the reaction from YouTube to that in a minute, but just explain for people who don't know, who is this person PewDiePie and what has he meant to YouTube?

Mark Bergen:

PewDiePie came online in 2010, which is relatively late in YouTube's existence. By that time there was sort of a vibrant niche of gaming streamers. People that would they call it let's play format. You open up a video game, a popular one, sometimes a really obscure one and you film yourself playing. PewDiePie he's a Swede, he's an attractive guy. He is charismatic. At the time when his popularity really started to peak, there were all sorts of articles trying to unpack him for mainstream audiences. If you're over the age of 40, it can be a mystery about why this guy is so popular, which is I think the case for a lot of YouTubers.

He also ascended at the same time that YouTube had adjusted its algorithm. Initially the platform was favoring views and that was the core metric that it had. It came to a problem that a lot of the early internet came and arguably the internet is still wrestling with is click bait. Someone will make a video designed just to get people to click, and then people might leave. YouTube saw that in the data. Around that time that PewDiePie came on actually was when the company really started to see one of its first worrying plateaus, worrying for YouTube plateaus and growth and mobile hadn't really taken off yet. The company made this really seismic shift to begin measuring watch time.

They started favoring videos that got the longest watch time and engagement. Gaming, which is tailor made for that, gaming it's relatively low maintenance. You don't need a lot of production values. You're not trying to create films. You can do it in your dorm room, which is where PewDiePie started. At the same time, it's also really tailor made for search. PewDiePie was a master of early on playing a lot of really popular games. You tag the videos, those games, people are searching for them online. They're searching for them on YouTube, his views go up to the top. He became this really significant star, went through a lot of controversy starting around 2016. By the time of the Christchurch shooting in 2019, he was still the most popular, on the way to getting a hundred million subscribers and had just developed this really core fan group. This very deeply strange moment where the "Subscribe to PewDiePie" mantra became this counterculture, like anti-establishment rallying cry.

Kara Miller:

Then it gets mentioned by the killer?

Mark Bergen:

It was mentioned in the Christchurch shooting from the New Zealand government report in the analysis of the Christchurch shooting, the shooter, the terrorist in that case, just mentioned PewDiePie in order to get attention. A YouTube executive described that the shooting was an act meant to go viral. It was a tragedy tailor made to design for internet virality. This is something we've seen regrettably, these tragedies repeat themselves and then latch on to someone like PewDiePie, who's this controversial figure, but deeply popular.

Kara Miller:

Within YouTube, obviously I think you wrote about some of the top folks were at a retreat when this happens. That must have rocked YouTube, the people within the company who work there, and here's this horrific shooting that goes on and what is invoked, a YouTube star.

Mark Bergen:

Yes. It's just one of several moments I think in the company's history where they just had no idea what was happening or how to respond. The thing I discovered in my reporting was that they were just about to... The company had for two years kept its distance from PewDiePie. Just to give a really quick recap for listeners in early 2017, the Wall Street Journal reported that PewDiePie had a series of videos that were being praised by a Neo-Nazi website. He had a partnership with Disney at the time. Disney drops him, YouTube sort of drops their business, they had an original show with him. It began this like Trump era. This was before cancel culture was really a phenomenon, and before social platforms had dealt with this degree of Trump era culture wars, really, to be honest.

For two years, PPI was still very popular. YouTube still ran ads on his channel, but they didn't promote him in any way. Other stars they'll have up on stage. They're tweet out. There's this intimate relationship between YouTube and its creators. They kept their distance from PewDiePie for two years and were just preparing now to reengage because they thought at least he demonstrated to their standards, that he was demonstrating responsibility. I think he had such a huge fandom that they really couldn't afford to stay away. I think that was a major issue that he held them captive in some ways, because of his popularity. There's this tragic moment where it was this mass shooting that was tied up with this big YouTube star.

I think the deeper issue here is that the mass shooting itself was informed by this belief in white nationalism. There's been a lot of research and arguments that that's something that social media platforms, YouTube included, have not done enough to address over the years.

Kara Miller:

When you think about where YouTube is headed and what they want to do, what do you think that is?

Mark Bergen:

There's an anecdote I didn't include in the book, but I'll give it to you here. Awhile ago, there were some rumors about a movie studio being up for sale, and it may have been MGM, which Amazon ended up buying. I remember talking to a banker and this reporter and thinking like, "Whoa, has YouTube ever been interested?" YouTube has this massive library, at one point not long ago they were talking with Netflix about purchasing Netflix and it had an... In the past Google had thought that they could sort of tack on these rather large services and desperate services to YouTube. I remember the banker saying that they spoke to someone high up at Google and they're like, "Why doesn't the studio just put all their stuff on YouTube", which is very telling about how Google thinks that they want to be everything for everyone much rather.

You started to see them do this recently where after years of they initially were trying to put movies and TV shows up and now you can rent a lot of movie and TV shows directly on YouTube. They're no longer trying to compete with the Netflix and Disney Pluses of the world. That's been a recent strategy shift, and I think they are comfortable being this largest ad-supported video service on the internet and not putting as much money. I think there are people that could question that strategy, but they've shifted much more into basically just trying not to get eaten by TikTok.

Kara Miller:

I was going to ask where they saw competition coming from, but it sounds like TikTok is a big one.

Mark Bergen:

TikTok. For a long time it was Facebook. I still think that certainly Facebook is a threat. I think TikTok and Amazon. Amazon is more of a threat to Google's core business. If we think about Google's core businesses in search and search advertising, where people are spending more of their time, especially around consumer commercial goods, they're going to Amazon. Amazon has been quietly building up this digital advertising business. Then Amazon has Prime Video and MGM studios and investing a lot in video. They've made a lot of false starts and Amazon has tried to court creators I think with little luck. TikTok is the one that's had much more traction in where you're seeing a lot of YouTube creators and stars. You have to be on TikTok basically, or spending a lot of time there. A lot of viewers, young viewers are spending much more time on TikTok. YouTube shorts is direct competing. Instagram reels is basically a TikTok clone and it's YouTube's attempt to curb that threat.

Kara Miller:

Do you think that there's real concern inside Google and YouTube that, I mean, the arrival of TikTok could be a real problem or that this could be a real problem for the growth of the business of YouTube?

Mark Bergen:

My understanding of how they think about this is that they think about it as I think what Vine solved first and then Vine got tripped over its skis, but was just the ease of content creation. YouTube has historically been, you could use it with a flip cam, right? As production values, there is this really interesting tension in YouTube. Over the years, creators have felt this demand to have more and more production values. You look at Mr. Beast, one of the most popular YouTubers, has this massive production team that rivals anything on TV. There is this pool towards in order to get advertising dollars or to get attention we need to invest a lot in production. Then TikTok comes around and it's like, "No, you can actually just create videos with your phone."

I think YouTube and talking to people there that was something that they felt like, wow, we had nothing to offer, sort of lo-fi Instagram, TikTok, Snapchat it's really easy to create. Whereas YouTube, it became arguably a lot more hurdles to be able to get up on YouTube. A lot of it is discovery. I think this might be changing given just TikTok moves so quickly. It's hard to say, but talk to a lot of creators about this and they say TikTok is a way to get in front of a lot of people really quickly and get discovered. Whereas YouTube is just so crowded and really hard unless you have millions of subscribers. It's really hard to break through and find a new audience or break through and find any audience to be honest. I think YouTube is afraid of that. They're afraid of that. I think less so maybe even, I don't think there's a real concern about advertising dollars shifting to TikTok right now en masse.

There's an argument that Google actually given its antitrust issues probably wants TikTok to be successful so it can point to its regulators and say, "Look, we have a viable competitor here." I think they are concerned about the sort of demand and supply side of their, that supply side that video creators will just give up on YouTube. That's a major reason why they've invested so much in YouTube shorts.

Kara Miller:

Mark Bergen is the author of Like, Comment, Subscribe, Inside YouTube's Chaotic Rise to World Domination. Mark, thank you so much for being here.

Mark Bergen:

Great. Thanks for having me.

Kara Miller:

Thanks as always to you for listening, coming up next week...

Speaker 4:

I think generally leaders I often find get abstracted away from the thing that they originally got passionate about because now they're a leader and everything's very proper. When they show up, everything's very, almost synthetic and created for them. I think that is a very dangerous position to get into as a leader when you get very far away from your customers, and frankly, when you get very far away from your employees.

Kara Miller:

You can subscribe to Instigators of Change on Apple Podcasts and leave us a review while you're there. Our show is produced by Matt Purdy. We'll talk to you next week.



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