Whether or not you have an army of nine-year-olds, be warned! Buried in the lengthy $170 million settlement between the FTC and YouTube – dispensed due to the world’s largest video sharing site’s violations of kids’ data privacy law COPPA – are required changes to the platform and details on how advertising on YouTube will work moving forward.
These changes will affect thousands of YouTube creators who are completely unaware the vast majority of their advertising revenue could disappear in less than 10 weeks. But there is a brief window for creators to raise their voice to the FTC and have an impact on how we’re all affected. Here’s a primer to get you up to speed.
What is COPPA and what’s it got to do with me?
COPPA is a 1998 U.S. law that restricts operators of websites and online services from collecting the personal information of under-13 users without parental permission. Its original goal was to prevent kids from giving out their names, addresses, phone numbers, and other data online that could put them in danger from online predators. However, in 2013, the FTC amended COPPA, broadening the scope to (1) expand the definition of “operators” to include creators who publish on ad-assisted platforms like YouTube, and to (2) expand the definition of “personal information” to include persistent identifiers (such as web cookies), which advertisers rely on to run ads matched to an appropriate audience (colloquially known as “targeted ads” or “personalized ads”). For six years, this amendment was never enforced against YouTube creators; however, as part of the aforementioned settlement with YouTube, the FTC has stated that they intend to start enforcing the regulations on creators individually.
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In practice, that means as of Jan. 1, 2020, all content creators will have to designate whether or not each of their videos is “directed to children” (aka “kid-directed” aka “child-directed”) by checking a box during the upload process. Checking that box will prevent the video from running personalized ads.
Newly uploaded videos aren’t the only ones creators will have to categorize. Per the FTC’s current settlement, every single video on every single channel must be categorized, including all previously uploaded videos. That amounts to millions of hours of content which must be manually reviewed by tens thousands of creators to see if their content meets a number of factors that would make it “directed to children” .
YouTube has notified creators about the impending changes and published preliminary information about it on a YouTube Support forum, but plenty of individuals and organizations are still unclear about the broad strokes and idiosyncrasies of the new protocols.
So what exactly does “kid-directed” mean?
“Kid-directed” might seem self-explanatory at first – if you’re thinking about “Baby Shark” or the latest Ryan’s World video – but it’s a frustratingly vague term. Plenty of adult creators make content that could, by someone, somewhere (like one of 10,000 contracted humans hired somewhere in the world to review YouTube content) be designated as appealing to kids, even if creators didn’t intend for kids to watch it.
The exact definition of “kid-directed” is entirely based on the discretion of the FTC, and is determined by evaluating the given video against 10 factors, including:
- the subject matter of the site or service
- the video’s visual content
- the video’s of animated characters or child-oriented activities and incentives
- music or other audio content in the video
- age of models featured in the video
- presence of child celebrities or celebrities who appeal to children in the video
- language or other characteristics of the website or online service
- and whether advertising promoting or appearing on the website or online service is directed at children.
What’s more is the FTC wants to expand the above criteria to also encompass “child-attractive” content, which would even more broadly include anything that children might be interested in. (Consider anything from toy reviews or any form of cartoon or animated programming, to “Draw My Life” videos or Minecraft “Let’s Plays”.)
The bottom line is if you make content that is intended for teens or adults, but also contains elements from the FTC’s list of 10 factors that appeal to kids under 13, you’re in danger of being demonetized starting the beginning of the new year.
Why does personalized marketing make up so much of creators’ ad revenue?
On YouTube, advertisers can choose to whom their ads are shown to make sure those ads are matched to a relevant audience.
When an advertiser uses YouTube’s backend marketing customization tools to target a specific demographic for its ads, two things happen. 1) The ad ideally gets put in front of more people who might actually want to buy the product, based on their personal data, viewing history, browsing activity, and more; and 2) in exchange for that targeting service, the advertiser pays YouTube more to run the ad. That means creators with videos that run “personalized ads” take home more revenue than they would if non-targeted ads ran against their content.
How drastically will creator income be impacted? By our assessment, very drastically.
We asked creators to go into Creator Studio and disable personalized ads (called “Interest-Based Ads”, under the “Advanced” tab) for a few days. Based on our initial testing, a video not running personalized ads sees a loss in revenue somewhere between 60% to 90%. So, if a video on a given channel could generate $100 in revenue for a creator right now with personalized ads running, categorizing the video as “directed to children” (and therefore removing the personalized ads) would mean the video’s revenue would drop to somewhere between $10 and $40.
Facing a loss that large might be enough to make some creators consider not checking the “directed to children” box even if they make videos for kids. But consequences for that are stiff. If the FTC decides an uploaded video is kid-directed, but sees it is not marked as kid-directed, the creator could face a fine of over $42,000 per video. That financial liability is enough to bankrupt most creators.
YouTube also plans to use machine learning (for better or worse) to implement a system that will find kid-directed videos and identify them as such, even if the creators didn’t check the box.
Why is the FTC bringing creators into this?
This enforcement action isn’t happening to protect kids from all ads. Nickelodeon and the Disney channel run content-based ads all day long (while abiding by the Children’s Television Act). It’s happening to protect kids from a perceived threat from personalized ads and the data collection inherent in the distribution of those ads.
The FTC believes that creators running personalized ads poses a privacy risk to kids, despite the fact that the creators themselves have no access to data about individual viewers. The FTC assumes that banning personalized ads on any content kids enjoy is in a child’s best interest; it doesn’t see the unintended consequences for creators who, in some cases, rely almost entirely on personalized ads to make their livelihoods.
Without revenue from personalized ads, creators could be forced to stop making quality, kid-friendly content. That will only hurt kids and parents who depend on free, ad-supported entertainment. Meanwhile, the FTC’s privacy concern already has an available solution. Parents concerned about privacy issues can let their children watch YouTube via the free YouTube Kids app (which has never and will never run targeted advertising) without the FTC needing to disrupt YouTube’s main platform. That’s a choice easily available to every parent. The FTC should not be punishing creators for the fact that parents choose to let their kids watch YouTube instead of YouTube Kids.
Is there anything creators can do?
Yes. Yes, there is.
The FTC is now asking the public for comments about its enforcement of COPPA, including the 2013 changes, before the Jan. 1 enforcement begins. This is a rare opportunity for the creator community and its fans to raise their voices and be heard. The FTC wants to hear from creators about the impact this will have on their businesses, and from parents about the impact this will have on them and their children.
In response to the first wave of comments, the FTC already extended the deadline for people to provide input. We want to use this opportunity to request the following:
- The FTC should allow parents to decide whether their kids will use YouTube Kids or YouTube’s main platform, without punishing creators when parents choose to let kids use YouTube’s main site.
- The FTC should not expand the scope of COPPA to child-attractive content as it pertains to content creators.
- The FTC should put out an enforcement statement on how it intends to enforce COPPA against individual content creators.
- The FTC should provide clarity on the rules defining what constitutes “directed to children,” as the definition is extremely vague in the creator context.
- The FTC places a six-month moratorium on enforcement against content creators, allowing us more time to adjust to the new post-settlement YouTube ecosystem.
- Roll back elements of the 2013 amendment as they pertain to content creators to preserve our ability to continue producing free, ad-supported content for the families who choose to consume our content on YouTube’s main site.
In coordination with Jeremy Johnston of the channel JHouse Law, we are planning a massive mobilization of creators and fans to flood the FTC with comments starting today, Nov. 5, 2019. We’re asking for your help in three ways:
- Share and tweet this article to your fellow creators to spread the word about what is happening
- Sign this Change.org petition
- Most important of all, take three minutes to make a comment on the FTC’s proposed rule, and encourage your peers and fans to do the same
We’ve put together a comment template below, and have provided talking points for creators and viewers to help express their thoughts to the FTC.
Talking points for creators are here. Talking points for viewers are here.
I am a Content Creator on YouTube and as an entrepreneur and small business owner, I rely on revenue from YouTube to be able to continue making content [that serves XYZ audience].
[Insert YouTube channel name if you want, or describe your videos, the audience you’re trying to serve, or the story of your business.]
[Describe the impact that the anticipated reduction in revenue will have on your business]
I understand that the FTC is reviewing its COPPA rules and enforcement policies, and I am concerned that the discussion so far has not factored in the impact to the overall ecosystem of Content Creators. As the YouTube settlement hasn’t gone into effect yet and the 2013 amendment has not previously been enforced against Content Creators, there are still many unknowns as to how YouTube’s changes to comply with COPPA enforcement will affect our businesses. As such, we request the following:
- The FTC does not expand the scope of COPPA to child-attractive content as it pertains to Content Creators
- The FTC puts out an enforcement statement on how the FTC intends to enforce COPPA against individual Content Creators
- Clarity on the rules defining what constitutes “Directed to Children” as the definition is extremely vague in the creator context
- The FTC places a 6-month moratorium on enforcement against Content Creators allowing us more time to adjust to the new post-settlement YouTube ecosystem
- The FTC should allow parents to use YouTube Kids or YouTube Main, without punishing creators when parents choose to use YouTube Main.
- Roll back elements of the 2013 amendment as they pertain to Content Creators to preserve our ability to continue producing free ad-supported content to the families who choose to consume our content on YouTube Main.
Jonathan Katz is an attorney who has been representing the creator community full-time for the past six years. Victoria Fener is a startup consultant who advises creators on how to develop their businesses. Together they launched Clamour Summit in 2017, an annual conference allowing professional creators to develop business skills, network, meet with brands, and build a stronger community.