Tim Poole had some interesting looks on this during his vlog yesterday. One thing that kept jumping out at me, was that this is intended to increase the value of marketing on their platform by essentially eliminating 95% of the supply.
One of the myths that we should dispel is that creators, who are... let's say... less established provided ads that were lesser in value than that of the 5% that remained. Well the viewer still saw your toothpaste and saw your jingle. I don't think there can be any doubt that the experience of watching your commercial is equally s****y across the platform. Whether the person is watching a reaction of someone getting their first car or learning how to make pasta, they all use toothpaste... well most of them. There's no distillation of effectiveness for your ad when it runs on Jake Paul's channel.
So YouTube has eliminated 95 percent of the supply of ad space on their network, but it's extremely unlikely that the distribution of monetizable content will be optimal for positive cash flow. I actually think YouTube is going to lose a lot of money on this. Probably more than they did for apocalypse 1.0. What do I mean by this? I mean YouTube will have reversed the situation on supply so significantly that YouTube cannot possibly sustain (at least at first) as good of net revenue than they were doing anti bellum.
The amount of monetizable videos available will be so low it will drive the cost of adds extremely high. So now the advertisers will have to bid very high for premium content, but the relative level of content that their adds play on will not justify the cost Increase in terms of value. It's like as an advertiser you're paying the kind of money to get you extremely good placement before the change, but after the change this amount only seems to get you modest placement and engagement. As much as it's ruffling feathers with small creators, I reckon it's going to play really bad with advertisers.
Advertisers want that mystical, mythical engaged high value viewer and YouTube is trying to give them that, but in actuality they're just raising the floor and providing the same value without the available bottom tier, because that ugly bottom tier seemed to mask the value from the remaining partners, however now instead of paying the price for that tier of the 5% remaining partners, that tier will naturally elevate through bidding until the value is still skewed badly, at a much higher cost.