The YouTube User Bubble - also referred to as the YouTube User Revolution - refers to a economic bubble between early-2007 and late-2008 (potentially as far as early-2009) when the global economy saw a significant increase in the marketability of YouTube and other web-based user video platforms. During this time, worldwide revenue as a result of advertising on user-uploaded videos to platforms such as YouTube saw a 750% increase from previous years for users themselves, while total global revenue saw a near twenty-fold increase (while actual statistics are limited, pre-2007 global revenue is estimated at $1.2 million, while mid-2007 revenue is believed to be upwards of $25 million).
During this time, American YouTubers saw the most lucrative YouTube channels, due to the then-most popular channels all being owned and operated by American users. The bubble greatly aided in the success of YouTube video makers such as Lucas Cruikshank , Ryan Higa , Anthony Padilla , Ian Hecox , Shane Dawson , Phillip Franchini, Jr ., and Justine Ezarik , among others.
Background & Cause
In terms of economics, the actual cause of the bubble is unclear, as the YouTube viewer and creator platforms lack any sort of expense paid directly into the market itself. Further adding to the speculation was the fact that very few YouTube channels advertised themselves in any form of mass-marketing; most YouTube viewers would discover channels through a section of the website that recommended videos to each user based on their own unique viewing patterns. It is because of this lack of standard economical practice that many believe that the bubble was caused by a massive influx of users who discovered YouTube via social media networks of the time (the most popular of which was MySpace, who had a partnership with YouTube at this point).
Another potential cause of the bubble was the acquisition of YouTube by Google in 2006. While the aquistion itself did not generate much more revenue than expected for Google, it is believed that Google imposing far more links that lead directly to YouTube or pages within YouTube lead to a massive growth in awareness of the site before 2007. This mass awareness coupled with the heightened mainstream attention YouTube had gained through social media is the most commonly accepted cause of the 2007 bubble.
Revenue Increases & Lucrative Potential
Actual statistics regarding the bubble are limited, as economists in 2007 would not have an outward reason to document the happenings of a website (this due in part to the Dot-com Bubble and Crash was less than 10 years before the YouTube User Bubble, and economists did not trust the stability of online markets as a result). However, hindsight review has estimated the total global revenue of the bubble (2007-2008) as $63 million, with the average YouTube video maker with at least 150,000 subscribers (users with 150,000 or more subscribers made up roughly 17% of the video making community) generating $189,000 throughout the period.
Live telecast services BlogTV and Upstream potentially saw a total revenue of more than $450,000 among users, while user video services such as Break and Dailymotion potentially saw revenue of over $2 million each among the most lucrative users.
This time period also lead to the height of the shock video market, which saw a lucrative potential of over $10 million during the bubble.
Most assume that the end of the bubble was sometime in 2009, with the continued decline of the mainstream popularity of YouTube user-created videos. Despite this decline, no crash was apparent until early 2010, when YouTube's mainstream interest plummeted. Despite the plummet, due to most of the revenue YouTube generated at the time was based off potential, neither YouTube nor Google saw a significant loss of capital. YouTube users, however, saw a massive inflation in the need for subscribers to match revenue made during the bubble. According to user surveys, the average 150,000 subscriber channel had an earning potential of $78,000 in 2008, but only $34,000 in 2010.
Another main contributor to the collapse after the bubble was YouTube ordering that inactive accounts be terminated, resulting in nearly 2.2 million subscribed accounts being completely removed from the site. While the minor losses did not greatly affect channels with subscriber counts beyond 500,000, many channels whose subscriber counts were less than 100,000 reported a loss of nearly 10% of their entire subscriber body, resulting in the loss of roughly $800,000 in user revenue across sub-150,000 subscribed channels (averaging $6,000 per account in this category).
Recovery & Platform Restoration
In 2012, YouTube began its' re-entry into the mainstream media industry in a less economically unstable way; this was mostly achieved via advertising, as well as providing incentives for mainstream industries and celebrities to associate themselves with YouTube, including Jimmy Fallon, Conan O' Brien, Kevin Nealon, Ashton Kutcher, the NBC Network, the CBS Network, and many others. This happened around this time depsite many of the channels owned by these celeberties being created from 2005 to 2007, YouTube's early years.