Yahoo Wants to Seduce YouTube’s Biggest Stars

Yahoo (NASDAQ:YHOO) has been working for many months on an online video service that could compete with Google’s (NASDAQ:GOOG) YouTube, and according to a recent report from Re/code, Yahoo has begun to poach YouTube’s talent to help it get there.

Sources familiar with Yahoo’s strategy told Re/code that the company is looking to lure away YouTube’s biggest talent with better pay in order to build the first real competitor to Google’s online video service. YouTube’s biggest stars and networks are being offered more money than Google pays to show their content on Yahoo’s service.

Re/code said that YouTube video creators have frequently complained about the low pay they receive from the company, and Yahoo is offering content producers either better ad revenue or guaranteed ad rates for their videos. Yahoo also plans to offer extensive promotion on its heavily trafficked homepage as well as the opportunity for producers to sell their own advertising.

Yahoo CEO Marissa Mayer has been working tirelessly to turn the company around after taking the helm two years ago. Mayer believes video can become a major part of those efforts. She even presented Yahoo’s second-quarter earnings last year in a video presentation shot like a news broadcast, saying she wants to make video a “primary area of investment over the next year.”

Mayer has put her money where her mouth is by hiring celebrity reporter Katie Couric as the company’s head anchor and investing in the archives of Saturday Night Live for the current Yahoo Screen video service. Couric’s show, Yahoo News with Katie Couric, premiered last month. Her first interview was with former New York City Mayor Michael Bloomberg, and leading up to the episode, Couric asked viewers to submit questions they’d like her to ask him via social media.

Yahoo’s video service will differ from YouTube in a major way — users won’t be able to upload their own content. Yahoo wants to make a video website filled with professionally produced content, leaving the homemade videos out, at least for now. One of Re/code’s sources said the site may consider opening the platform at some point in the future.

YouTube stars might complain about the 45 percent ad revenue cut Google takes, but a ranking of the 20 top-earning YouTube stars by Business Insider shows that these Internet sensations still make a pretty penny from their popular Web series. YouTube’s highest-earning star, the potty-mouthed Swedish video game reviewer PewDiePie, is estimated to make up to $8 million per year after Google takes its cut. The next two biggest earners are both channels dedicated to reviewing children’s toys and video games.

Re/code’s sources didn’t say which channels or stars in particular Yahoo was looking at, but given the amount of the top 20 list that involves video game reviews, Yahoo may consider building a channel dedicated to such reviews, as they clearly are almost guaranteed earners. The publication’s sources also said that Yahoo will report some lukewarm first-quarter earnings as Mayer continues trying to prove the company is achieving growth under her leadership.

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