A controversy among YouTube influencers has led to a series of lawsuits accusing browser extensions like PayPal Honey of swiping their commissions. PayPal said it disagrees with the claims in these lawsuits and look forward to defending itself. The litigation shines a light on the sometimes murky world of affiliate marketing, a $12 billion business. Further Reading: -Creators Insist Coupon Browser Extensions Are Stealing Their Money. Will the Courts Agree? Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What controversy is surrounding YouTube influencers and Honey?
I'm not someone who spends a lot of time on YouTube. But recently, a spicy controversy that has to do with how influencers make money had me on a call with a YouTuber.
I'm a YouTube creator. I go by the name Yub. I'm based in Texas. Hello, y'all. And I make gaming videos, very immature style, like the kind your kids probably watch on the iPad. That's so annoying. That's me. That's what I do.
And you probably get asked this a ton. Why Yubb?
It was just the shortest URL I could find that was short, but you could still say it as a word out loud.
And it's not your real name, obviously.
No, no. My real name is Dylan. That would be crazy if my mom named me Yubb.
Dylan Russell, aka Yub, has about 1.6 million subscribers on his channel, and he's been making a living entirely off YouTube for years. Most of his income comes from ad breaks in his videos.
That's where I make probably 95% of my income. My eggs are definitely all in that basket. And then I have a small portion that comes from merch sales. I have like little silly Yub t-shirts and stuff and hats.
Another common way that Yub and other YouTube creators get paid is through sponsorships, basically promoting products in their videos. One company that sponsored Yub was a service called Honey. In fact, Honey paid a lot of YouTubers to promote it.
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Chapter 2: Who is Yub and how does he make money on YouTube?
But late last year, a YouTuber posted a video with some big accusations against Honey. He said the browser extension was misleading its customers and stealing from the very same creators it had sponsored. In an email, PayPal disagreed with the allegations.
And some in the e-commerce business say that Honey is just playing by the industry's rules and that it's long been a standard that the last link clicked gets the credit and the cash. But the video ended up getting millions of views in just a few days, and outraged YouTube creators started sharing their reactions.
We've got to talk about this honey situation.
You need to talk about the honey influencer scam.
Turned out to be a big scam, allegedly. I can't believe it. I can't believe it.
Now, Honey and other services like it are facing several lawsuits. And this dispute is drawing scrutiny toward a multibillion-dollar industry that helps drive how money gets made online. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, February 20th. Coming up on the show, whose money is it, honey?
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Honey was launched in 2012 in Los Angeles. And basically, it automates the process of searching for coupons online. Users who download Honey get a pop-up, either offering them a bunch of coupon codes or telling them that Honey didn't find any better deals. And Honey offers that service for free. The platform makes money through commissions from some online purchases.
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Chapter 3: How did Honey gain popularity among YouTube creators?
The kind of revenue that is being, we think, siphoned away is exactly the kind of stuff that would help more creators do more art. And we're talking hundreds of thousands of creators who might have been affected here.
So you've got your sleeves rolled up for this one.
Got my sleeves rolled up. I've got my tie loosened. We're going at it.
That's all for today, Thursday, February 20th. The Journal is a co-production of Spotify and The Wall Street Journal. This episode was reported by me and Alan Rodriguez-Espinosa, with help from Angel Au Young, Megan Graham, and Peter Rudiger. Thanks for listening. See you tomorrow.