What YouTube sees that you don’t: the future of media is a system, not a bunch of channels
Opinion
Look closely, and you’ll see YouTube is no longer competing with broadcasters, audio companies, or sports rights holders. It is building the plumbing for something much more powerful, says Omar Oakes.
What you know you can’t explain. But you feel it…. That there’s something wrong with the world. You don’t know what it is, but it’s there, like a splinter in your mind driving you mad.”
This quote from The Matrix, when Morpheus explains to Neo that he’s living in a computer simulation, came to mind when reading the latest AA/WARC numbers, which once again paint a picture of our industry in rude health.
So why is everyone so bloody miserable?
Because the way we measure media is making us blind to what’s actually happening to it. We carve the industry into channels — TV, radio, out-of-home, social — and track the money flowing through each one. It’s a useful accounting exercise, but a terrible way to see the future.
The most important thing happening in media right now doesn’t fit in any column of that spreadsheet.
You’re not going crazy. You are living in ‘The Matrix’. Let me explain.
The plumber arrives
The FIFA World Cup is fast approaching and will take over the industry’s headspace, with an explosion of tactical ads and football marketing.
You will also see non-rights holders try to ‘own’ the FIFA World Cup in novel ways this summer, such as Netflix (which has no live games but is paying Gary Lineker and chums to host The Rest is Football live video podcasts during the tournament) and TikTok, where creators are being granted “unprecedented access” to training sessions, press conferences and archives.
And then there’s YouTube.
In March, YouTube was named a “preferred platform” by FIFA. Broadcasters can live-stream the first 10 minutes of every match and select games in full through their YouTube channels.
This looks like YouTube trying to look like a TV company. But it isn’t. As I’ve warned before, look at Google and YouTube’s actions instead of just listening to its clumsily-formed marketing words.
Namely, look at what it has done with Coachella.
As Mike Shields explains, YouTube has treated Coachella not as a broadcast rights deal but as a “persistent product surface” — using it over 12 years to build and test live infrastructure without entering the live-rights arms race.
The FIFA deal is that model applied at a global scale: YouTube doesn’t need to own the FIFA World Cup. It just needs to become so essential to how the tournament reaches audiences that broadcasters have to route through it.
Then last month, YouTube was named exclusive audio advertising representative for SiriusXM, the leading US satellite radio operator. The day after (and, yes, interesting timing…), SiriusXM announced preliminary merger talks with its biggest rival, iHeartMedia.
YouTube is now, quietly, one of the world’s largest audio advertising platforms.
Count the pipes, not the formats
Forget the Matrix thinking of TV, radio, podcast, or streaming. Then it becomes clear.
YouTube is expanding its ad surface across live sport, audio, and video — simultaneously — without acquiring content or rights. It is becoming the distribution and monetisation infrastructure that all those formats will depend on.
Press Gazette looked at the same WARC data and found that two-thirds of all UK adspend — £31bn — now flows to Google, Meta and Amazon. In 2007, all advertising across UK magazines and newspapers was worth £7bn. Last year it was just £1.6bn.
Publishing hasn’t suffered because people became illiterate or developed a distaste for premium content.
It’s because the online infrastructure Google built made publishers depend on it, then squeezed them, and eventually dominated them.
The relationship always inverts
Amazon became ‘the everything store’ in pretty much the same way. It didn’t beat Waterstones by selling better books.
Instead, it built the logistics and payments structure and offered it to publishers, who were grateful to reach readers… until the relationship inverted and Amazon was able to reset the terms.
Sound familiar?
If so, you’ve earned yourself a quiz question. Which media-owner CEO said this four years ago?
Innovative strategic partnerships are [our] speciality, and this new relationship with YouTube is another which will ensure we continue to keep growing our reach with young audiences and build on our unrivalled digital success.”
It was the now-departed Alex Mahon of Channel 4, best remembered for saving the company from privatisation. In future, she may be credited with turning C4 into the Waterstones of UK television.
Because, make no mistake, YouTube is doing the same thing with audience access.
The FIFA deal doesn’t cut broadcasters out. It makes them dependent on YouTube to reach the audiences they think they own.
When infrastructure is shared, the company that actually owns it owns the relationship. Broadcasters putting their programming on YouTube don’t gain a distribution channel. They become content suppliers.
YouTube did exactly the same thing with SiriusXM. It reportedly came to the table a year ago with data showing how much audio-first listening behaviour was already happening on the platform, and concluded the expertise to monetise it wasn’t sitting in-house.
YouTube already had the audience, but it didn’t need to build a radio station. It just needed someone to sell the inventory it had already captured without anyone noticing.
In classic Matrix thinking, the iHeart and SiriusXM merger talks are being reported everywhere as radio fighting back against digital disruption.
Now you see this deal for what it really is: radio consolidating whatever negotiating position it has left before YouTube’s audio layer goes fully live this autumn.
Only one question left
The Matrix is, of course, just a silly movie in which humans are kept busy while their bodies are used as batteries to power an artificial intelligence.
Although one day someone might create a prequel movie and imagine a world that would allow such a thing to happen. Perhaps the ability of AI to see the world in a different way — unconstrained by formats, labels, and silos — is the missing link that is holding us back as a species.
Matrix thinking may fool you into misguided thinking about partnerships, incremental reach and strategic relationships, without seeing the bigger picture.
And then one day, a client sits across from you and asks why they should buy from you instead of YouTube… And the answer you reach for depends on pipes you no longer own.
Omar Oakes was the founding editor of The Media Leader and continues to write a column as a freelance journalist and communications consultant for advertising and media companies. He has reported on advertising and media for 10 years.