YouTube Dollars May Come at a Priceon February 12, 2013 at 7:23 pm
Somewhere along the way, about a year ago actually, YouTube decided that it wanted to give traditional television a run for its money. It would transform from a repository of baby and cat videos to an actual entertainment hub. It announced that it was investing $100 million in 100 original content channels, and started partnering with producers to create and distribute exclusive, original content. It initially looking like a win, win, win situation. Google, content aggregators and content producers would all share in the advertising spoils. That’s not the way, however, it has shaken out.
A year or so down the road, a couple of YouTube’s most successful video producers are leaving in protest. They claim that the system resembles not so much an entrepreneurial nirvana as Hollywood’s studio system of the 1930’s and ’40s.
LA Weekly’s Tessa Stuart put it this way:
But a recent string of high-profile disputes is prompting comparisons between YouTube networks and the exploitative Hollywood studios of the 1930s and ’40s: Both convinced young and naive talent with little leverage to sign contracts that leave them at a disadvantage. For networks, that means contracts that bind creators to them indefinitely, demand rights to their content in perpetuity and take large ownership stakes in any resulting businesses.
When the networks first launched, young content producers at one aggregator, Machinima, seeing visions of dollars signs before their eyes signed contracts that explicitly handed over the rights to their videos “in perpetuity, throughout the universe, in all forms of media now known or hereafter devised” to the networks. For their part, the networks promised that they would give the video makers exposure and ad revenues that they could never realize on their own. Don’t doubt the pervasiveness of a channel you may never have heard of…. Machinima’s main channel today has 180.5 million subscribers to 5,621 channels hosting 1.3 million videos, for a total of 43.7 billion network views.
At the heart of the growing disputes is 21 year old Ben Vacas, one of Machinima’s start producers. This fall, he announced that he would stop producing videos rather than be contracted to Machinma in perpetuity. He was soon joined by an even bigger star, Bachir Boumaaza, known as Athene, who announced that he too would leave the network. Then a similar incident at Maker Studios, another YouTube network. There Ray William Johnson announced that he was leaving the network after a contract dispute. For their part, the networks have been doing well with investors. This fall, Maker Studios was looking at a venture round valued at $36 million and Machinma had closed a venture round for $35 million led by Google.
What are the prospects for independent video producers in a YouTube networked world? The YouTube networks well may have made it easier for talented content producers to make money, but it has come at a cost – a lost of independence and ownership rights. That’s what happens when a medium or a distribution channel goes from being the “Wild West” to being a nicely settled suburb. It’s a trade off between risk and reward. You’re trading potential rewards, a potential upside, for security.
It’s the same thing that happened to me years ago when I produced documentaries for the cable outlets. At first I was in the driver’s seat as a producer with new and original content. As the networks became more successful and more professional, I lost whatever leverage I had had previously as an independent. I decided to live with the terms, and that’s a critical point, the terms. It is essential to understand what the terms of the contract is when they’re offered to you. It’s much easier to negotiate before you sign than after.
Some of Machinima’s disgruntled producers have left to start a new network, the Union for Gamers. Interestingly, Machinma is offering, or rather requiring, its contributors to sign a new contract. This one signs them to a three year term, in place of an open ended term. What’s interesting about the new contract is that it signs producers to a contract that is likely to be enforceable, as opposed to the open ended contract, which though highly restrictive, was likely not enforceable.