YouTuber’s Union: A Game Theory Analysis

A group of content creators is unionizing to bring transparency to the platform and has partnered with IG Metall, the largest European labor union comprised of 2.3 million members, to do it. IG Metall has helped to add legitimacy to the movement with its campaign, FairTube, and its ultimatum of pursuing legal options was critical in bringing YouTube to the table for discussion. On the last day before the deadline, Google (the parent company of YouTube) formally replied and now plans to meet with the union. IG Metall has a significant challenge ahead of it however: the scale of laborers they represent – 450 hours of video are uploaded every minute, along with the unprecedented nature of organizing labor on a digital platform.

FairTube Demands:

• Publish all categories and decision criteria that affect monetization and views of videos
• Give clear explanations for individual decisions — for example, if a video is demonetized, which parts of the video violated which criteria in the Advertiser-Friendly Content Guidelines?
• Give YouTubers a human contact person who is qualified and authorized to explain decisions that have negative consequences for YouTubers (and fix them if they are mistaken)
• Let YouTubers contest decisions that have negative consequences
• Create an independent mediation board for resolving disputes
• Formal participation of YouTubers in important decisions, for example through a YouTuber Advisory Board

A typical set of union demands might list higher wages, fewer hours or safer working conditions – the Youtubers’ demands are less tangible. Nonetheless, the demands certainly impose a cost on the platform if it complies. Compliance costs come in the form of additional labor costs (giving clear explanations for individual decisions, providing contact persons to explain negative decisions, contesting decisions) and reduced decision making power (independent mediation board, Youtuber Advisory Board). Since meeting these demands has nonzero cost, the union must impose a cost of noncompliance in order to have its demands met.

Creator Dilution Poses a Challenge

The most straightforward and commonly used method to impose cost on the employer is a strike. However the immense scale of content creation – 450 hours of video uploaded per hour – makes cooperation by content creators near impossible. As the number of agents that must act cooperatively increases, incentive grows individual YouTubers to defect without consequence and reap the reward of publishing video on a less crowded platform.

As the number of agents that must act cooperatively increases, incentive grows for individual YouTubers to defect

To take into account the heterogeneous ability of creators to garner subscribers, we can measure the concentration of YouTubers with the Herfindahl-Hirschman Index (HHI). HHI works to measure market concentration by taking into account the market share of each seller (content creator). When examining the labor market, it is important to think of the content creators as the sellers (of labor) in the market.

The Herfindahl-Hirschman Index is calculated as the sum of squared market shares (expressed as whole numbers), shown above. If there was only one content creator, that content creator would garner 100% of subscribers and the HHI would be equal to 10,000 – indicating a monopoly in the content creation market. If there were creators each with a very small portion of the total number of subscribers, the index would be close to zero, indicating nearly perfect competition.

If we limit the number of YouTubers to the top 5,000 where subscriber data is availableand calculate market share as the share of total subscribers, the HHI is equal to 6.61, while the same calculation using views instead of subscribers brings the index up to 9.43. Limiting our data to the top 5,000 YouTubers conservatively biases the calculation and the true HHI would be even lower as the number of YouTubers increases. This metric suggests that the market for producing youtube subscribers and views is extremely diluted, where individual producers have little ability to affect the market.

Advantage YouTubers?

The union has a key feature in its favor, differentiating the content creator market from perfect competition: YouTubers are not interchangeable. YouTubers’ content is unique by nature unlike factory workers producing a fungible widget, and while any creator can upload a video some YouTubers have greater ability to capture the audience’s attention than others. IG Metall’s ability to commit important creators to the movement will be critical to FairTube’s success. Signing on creators whose strike would be noticeable to viewers could add public pressure on Google to cave to FairTube’s demands.

Legal action provides the other avenue for the movement to find success, considering IG Metall’s ability to flex its legal muscles and threaten the imposition of significant costs associated with fighting a lawsuit. Given the considerable cost of fighting Europe’s largest union in court, YouTube’s best response may be to comply with at least some of the demands. So far, this strategy has proved successful in bringing YouTube to the table for discussion but it is let to be seen if this will ultimately result in any concession by the platform.

Future Outlook

The Youtuber’s union and the FairTube campaign looks to be a case study on the ability of a nontraditional labor force to exert market pressure on a single employer. IG Metall serves to bolster the YouTubers’ chances by aiding in their effort to organize and threaten legal action. If the campaign can increase expected costs to YouTube greater than the costs of bowing to the FairTube demands, YouTube may cave to the Youtubers’ demands and set a precedent for the nontraditional labor negotiations of the future.