- So let's talk about multi-channel networks.
(smooth techno music)
So multi-channel networks are these companies
that started to serve some of the unique needs
that creators have.
You gotta make content, you gotta build an audience,
you gotta learn how to monetize the audience.
If those three needs are a tricycle,
creators usually think of the content part
as, like, the big wheel pulling the whole thing forward.
If they can let someone else take care
of the second parts, they'd like for someone to do that,
because those things are hard!
MCNs existed to serve those needs, right?
So, a company like Maker Studios, for instance,
formed in 2009.
It evolved out of this project called "The Station"
where a whole bunch of big time YouTubers
got together, folks with really really big channels.
They all got together in like the Venice Beach, Playa Vista,
Merina Del Ray area and they started hanging out
and making lots of content together
and this was called The Station.
A bunch of those folks later went on to found Maker Studios.
Based on the idea that wow if you got 10 people
with a million subscribers, I mean the numbers weren't
that big back then because it was 2009.
But if you've all got big numbers,
than you can sort of all converge them in one place
and that's what the network part was.
It was like we're gonna work together,
for mutual benefit. (computer generated ringing)
These were like the cool kids clubs of YouTube.
When you put a whole bunch of really popular people together
in a group people want to be part of that group.
MCNs realized like wow we could make a buck off that.
So they started producing these contracts
and having anyone and everyone sign them.
At one point Maker Studios was like yeah,
we've got 50,000 creators in network.
And I'm like wow your offices have no more than
a few dozen reps to serve all those people.
Ostensibly you're supposed to get
a certain number of benefits right?
(exciting techno music)
They knew that they couldn't handle that,
the point was so that they could go to venture capitalists
and say on their you know on their Slide Deck.
We've got a billion views, can you believe that?
A billion views, look at the big B on our board!
That means a billion, something that a lot of people
don't realize is that a lot
of the big multi-channel networks that came after Maker.
So like BigFrame, Fulscreen, StyleHaul, Collective Digital.
All these companies were founded in 2011.
Why that year?
Well because there was a company called Next New Networks
that YouTube bought for $50 million in 2011.
That sale inspires a whole bunch of people
to start growing companies.
'Cause YouTube is like a big,
they're a trendsetter if you're a venture capitalist,
You're going to take that as a queue to say
that's what I'm going to invest in.
So within five years all those companies got sold.
All of them.
(exciting techno music)
Anyway back to MCNs did you know that sometimes
they would ask you for 30%
of all of your advertising revenue,
in your contract and then sometimes they wouldn't
specify whether they were asking for Gross or Net CPM.
What that means is like okay, so say you've got a $1 CPM.
That's part of the whole YouTube deal,
you take 55% of that $1, so 55 cents.
If the MCN claims that it's gross, then they're taking
30% of $1, if they're saying net, then it's saying 30%
of your 55%, which is like 16% I think.
The funny thing is that like in Hollywood,
that shit does not happen!
I mean like okay bad contracts happen in Hollywood.
But if you've got an agent in Hollywood.
If you've got someone with like UTA or CAA
or really any agency operating in Hollywood
'cause it's a regulated profession.
Like you have to be licensed by the state,
you have to be franchised by the union.
There's a lot of rules you have to follow
if you're an agent in Hollywood,
and one of them is that you can take no more
than 10% of the gross revenue from the employment
that you procure for your client.
That to me is a really good rule right.
There's another rule, oh agents can't own a stake
in the company that they're trying to get you hired to.
If I own the studio, my incentive
is to negotiate the lowest rate possible for the talent.
But as an agent, like if your client is paying you,
shouldn't you be asking for the highest rate possible?
That's a conflict of interested that is limited
by regulations, state level and the union level.
MCNs don't follow any of those rules,
can you believe that?
They don't follow, and the thing is what they'll say is.
Well we're not an agency because the Talent Agencies Act
in California defines an agent
as someone who produces employment.
Then it becomes a question of like okay,
so if I sign up with an MCN
and they negotiate a brand deal for me,
are they negotiating employment?
Is a brand deal employment?
What's employment for a creator?
They are their own independent businesses.
That's something that we tell ourselves,
like we are independent businesses.
But what that means is that we don't get the same
protections that actors do in Hollywood.
But what I will say is that agencies were not specifically
built to serve the needs of creators.
They are regulated, they are set up in a way,
that reduces the number of conflicts of interest.
But they're not there to help you make web content,
they're not there to help you build an audience
and they're not there to help you monetize that audience.
That's simply not in their DNA.
Specifically they're built to serve these folks
who are outlined in the Talent Agencies Act
and this is like actors, singers,
types of like traditional Hollywood talent.
And what binds those folks together
is like a unique need that they have, which is to get gigs.
That's kind of the whole game,
but for creators it's a lot more complicated right?
You've got, you're doing all kinds of creative work
from you know pre to post production.
You're you know there's the audience building
and monetization stuff that are their own jobs right?
That require unique competencies,
agencies simply don't know how to do those things.
They're getting better, but generally speaking,
they're not they weren't structurally built
with those things in mind.
So this is the dilemma that creators are in right now.
On the one hand MCNs which are built to serve their needs
are not regulated and so have this sort of problem
where oftentimes you can't trust them
not to take advantage of you.
On the other hand agencies who do benefit from regulation
are not built to serve your unique needs.
So there's this gap in the market,
where do you go, where do you go if you need support?
This is not all to say that like no one has benefited
from membership in an MCN,
or from a really nice agent right?
Plenty of people have, but I think that there's
a very real gap that exists right now
and so that brings me to my final sort of series of comments
about a new company that's popping up.
Which is called 368, I think of it as
Casey Neistat's response to this major gap
in the market for creators.
He's been pitching it as this sort of company
where creators will be given assistance
developing their careers, developing their content.
Casey Neistat can do this because he's Casey Neistat
and if he promotes new talent,
people will watch the new talent.
The question is whether internally
the company will look more like an agency or an MCN?
I think it's probably gonna look like a little bit of both.
I wouldn't be surprised if 368 sort of took
structural aspects from the MCN model.
Having a dedicated sales department
for advertising sales and for you know brand deals.
A dedicated events and tours department
or dedicated,
merch department right like I think those make sense,
as roles within the company.
Or it could be that he's going to hire
a bunch of agents who just know
how to develop digital talent to directly interact
with creators on a one on one basis.
To develop their career,
to develop their brand deals.
You know get them to the place
where they want to be, basically,
an incubator for influencers.
The fact that it's in New York is particularly interesting.
Because that's where the advertising money is
as opposed to Los Angeles where
the media investment money was.
That's kind of why the MCN all popped up there.
I think the fact that Jack Conte is involved
and the fact that Casey Neistat has been making
videos with like the founder of Reddit.
I think that indicates that there's going to be
a platform element to this.
Traditionally there's been this sort of
conventional wisdom that it's not really cool
to take a bunch of viewers and fragment their experience
and take them to other websites
to get them to watch content.
But Jack Conte has clearly proven
with his experience on Patreon
that you can do that.
The question remains, will a company like 368
be able to outmaneuver the major Hollywood Talent Agencies
that are slowly moving into the space.
That's a battle that's going to play out
over the next 5 or 10 years
and I think it would you know I think creators
would benefit from paying attention to it closely
and with an eye for the greater context
of the challenges our industry is dealing with right now.
We should take some *agency* [get it?] in you know forming
the new structures that will emerge
from this developing space.
Do I sound like an executive director now?
I'm doing my best!
Peace out guys, see ya.
(exciting techno music)
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