Happy Friday. It’s tech reporter Alexandra Sternlicht here.
This week, YouTube announced it will lay off 100 people from its creator management and operations divisions. Though these cuts are part of a larger plan by Google, YouTube’s parent company, to reduce headcount in 2024, they beg the question: What does it mean for the creator economy?
It might seem like a negative to many, but one creator manager remains optimistic and excited for the future of creators on YouTube. “It’s actually a really good thing,” says Leanne Perice, CEO of creator management company Made By All, which oversees the careers of top creators like Adam Waheed and Haley Kalil, both of whom have attracted over 5 billion views to their YouTube channels. Given this, Perice enjoys a warm and intimate texting-basis relationship with members of the video giant’s team, saying that she and her clients have attended YouTube dinners and invite-only events. With an inside ear to the company, Perice heard a number of YouTube’s employees were merely doing small amounts of work and had to jump through hoops to get approvals. “If people wanted to email me, they needed to verify it with a few people internally before sending it. Now, it’s going to streamline everything and make things move more quickly,” she predicts. Perice did say that Waheed, who has nearly 16 million YouTube subscribers, was assigned a new YouTube creator manager this week.
The YouTube layoffs, first reported by Tubefilter, are part of Google’s initiative to reduce its employee count to “[invest] in big priorities” this year, per a memo CEO Sundar Pichai shared with employees on Wednesday that was seen by The Verge. He noted that this year’s cuts will be smaller than 2023’s 12,000-person downsizing from the nearly 200,000-person Google.
Sure, 100 people cut from this behemoth seems insignificant, but YouTube’s creator management team holds outsize importance as these folks are responsible for communicating with top creators who drive disproportionate amounts of video views like those on Perice’s roster. They also represent the needs of millions of other creators hoping to attract attention and salaries from YouTube.
Perice’s optimism is contrary to data that suggests the creator economy is shrinking. The Information reported that funding for creator economy startups fell 58% to around $1.7 billion in 2023 compared to the previous year (though that came during a year when overall U.S. startup funding dropped 30% to around $171 billion).
Also, despite the image of creators living opulently, most aren’t. A mere 2% of creators (!!!) made over $50,000 in 2023, according to creator tech company LinkTree.
In another sign of a downturn, influencer management agency Gleam Futures, which was acquired by ad giant Dentsu Aegis in 2020, announced it would close, according to Business Insider.
Still, Perice is optimistic, at least for certain creators: “I think content creators are winning more than ever, because everyone, including brands, need content to tell a story. So if you can tell a story, the world is your oyster right now.”
Amid the creator economy tumult, YouTube has remained a bright spot. It has set the tone for creator careers since its 2007 Partner Program launch, garnering a reputation for its straightforward and lucrative (for some) ad revenue-sharing programs and the access to human representatives that it gives to creators. Although the company has made no announcement about whether creator pay programs will be impacted by Google’s quest for efficiency, it’s natural to wonder if cuts to ad revenue that it shares with creators is coming next.
A Google representative did not respond to Fortune’s inquiry. But in a memo obtained by online news site Tubefilter, YouTube chief business officer Mary Ellen Coe explained the job cuts by saying that creators are shifting to using more AI tools and the savings from those cuts will “help us invest our capabilities and expand our impact for YouTube for many years to come.”
Still, brand deals remain an enormous and often platform-agnostic source of income for many creators. Perice says her clients’ sponsorships are only getting bigger, with some making in the mid-six figures per deal. So her optimism makes sense: The creator economy functions much like the actual economy. Those at the very top—Perice’s clients—remain relatively insulated, and maybe better off, from the chaos and consolidation that everyone else experiences.
Alexandra Sternlicht
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NEWSWORTHY
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IN OUR FEED
“Of course this year, all the talk is about AI. The difference is if you’d held an event like this a few months ago, I suspect a lot of the discussion would have been about the so-called existential problems around AI... Whereas this week, so much of the discussion has been about: How does Gen-AI play out in elections?... All of those practical issues.”
—Meta’s president of global affairs Nick Clegg in a video posted on X from the World Economic Forum in Davos, Switzerland. The former British politician added that Davos attendees generally agreed AI companies should partner with other companies and governments, act with an international mindset, and make the tech open-source—which unsurprisingly, are all things that Meta does.
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BEFORE YOU GO
Billion-dollar chips. In an effort to build out its artificial intelligence footprint, Meta is spending billions of dollars on Nvidia’s H100 computer chips, CNBC reported. By the end of 2024, Meta will have 350,000 of the chips, which analysts estimate cost from $25,000 to $30,000 each. It is unclear how many chips Meta has already acquired.
“AI will be our biggest investment area in 2024, both in engineering and computer resources,” Meta CEO Mark Zuckerberg said last year.
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