Focus Changes For YouTube

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Focus Changes For YouTube
Ezra Cooperstein

The original pitch from YouTube networks was strength in numbers. Join our massive community, they told independent video makers, and you can link with other stars, connect with brands and watch your page views (and revenue) swell.

That was in 2011, when the online video industry was smaller and L.A.’s community of YouTube startups, centered in Culver City, was newly forming.

But two years and tens of millions of dollars in venture capital investments have brought a new maturity. The online stars that networks Maker Studios, Fullscreen and Big Frame cultivated are now savvy entrepreneurs who are generally unimpressed by the opportunity to join a team, so the networks have adapted by pushing a different perk: technology.

In recent weeks, many YouTube networks have rolled out complex tech platforms that track earnings, view counts and other valuable metrics. It is software that’s rich with data and analytics – all things Web video stars must have to really make it. And all things, the networks hope, YouTube won’t eventually provide users on its own.

The offerings signal the transition from YouTube networks’ first incarnation as media companies to a more mature tech era in which they scale upward through engineering prowess.

The shift marks a clean break with the salad days of the YouTube economy, said Ezra Cooperstein, Fullscreen’s chief operating officer. Stars now want something tangible and expect the networks to deliver.

“In the early days, it was a land grab,” Cooperstein said. “Companies were trying to figure out what was the fastest way to entice channels to join a network and I think some overcommitted in promises.”

He’s referring in part to the networks’ early offers of guaranteed payouts. It was a doomed policy, one attached mostly to West Hollywood’s Machinima, and many firms were forced to cancel these contracts when advertising rates on YouTube were slow to rise.

Technology alone cannot fix the ongoing challenge of generating ad revenue – that’s a result of the content explosion, which has created too much supply for the advertiser’s demand. But it can help a firm run smartly and cheaply.

“What you’re seeing in the YouTube space is an attempt to move from its genesis to a sustainable business,” said Steve Raymond, Big Frame’s co-founder. “Using tech is a way to scale the company without hiring hundreds and hundreds of people.”

Better advice

In the tech era, networks have learned to give talent personalized strategies to make their content more popular.

To that end, both Maker and Fullscreen have launched tech products for their clients in the last couple of months.

Maker’s offering is dashboard tool Maker Max. It gathers information on a channel’s views, subscribers and average time spent watching videos into a single space, spitting out what the company calls “actionable channel insights.” Maker Max also has a community forum where creators can discuss strategy and perhaps arrange cross-promotional appearances.

Fullscreen, which has long touted itself as the network with the tech focus, rolled out Channel Plus in October. It’s a suite of software tools and a marketing ream dedicated to the network’s higher-profile partners, such as TV networks.

Big Frame, the boutique option among the YouTube firms, has also built up its tech platforms and is keeping apace by doubling its engineering team (it’s still a small company, the increase has taken the departmental workforce from two to four).

Besides being a streaming platform, YouTube is also one of the Internet’s largest search engines, and video makers are increasingly reliant on search results and algorithmically driven recommendations for traffic.

Maker Max, for example, helps its users by giving them data about what key terms in a video’s title or summary are causing people to click.

Courtney Holt, Maker’s chief operating officer, said the competitive YouTube landscape has made its clients very sophisticated marketers. These are professional do-it-yourselfers who demand tools that keep their channels popular. If networks want to keep them, they need to deliver.

“Being an indie YouTube star is a lonely proposition, so you need to make yourself a lot smarter,” Holt said. “Creators are going to make their show and make it great, and they challenge us to do the same.”

Holt also pointed out that although Maker has not traditionally been known as the “tech network,” many of the tools it showed off in Maker Max have been available piecemeal to creators.

Video sponsorship

Tech platforms have also become the driving force in the lucrative field of video sponsorship.

Fullscreen launched Gorilla, a service linking sponsors to a select group of its clients, in 2012. If video makers feature the sponsor’s product in a video, they’re entitled to increased cost per one-thousand impressions, or CPM, compensation, which Fullscreen says ranges up to $40 (on average, video ads on YouTube have a CPM of less than $5).

Over the summer, Venice video technology firm Zefr rolled out BrandID, a service that helps companies identify which creators are promoting their products.

While Zefr is not strictly a multichannel network, it is part of a cottage industry of third-party tech firms that support the YouTube ecosystem. These companies were some of the first to provide services to creators and have since become more deeply interwoven into the networks’ business models.

Fullscreen has partnered with a handful of these third-party providers to offer their services directly to creators. An account with Fullscreen gives video creators direct access to sites such as Tubestart, a Kickstarter-like tool designed for funding online video, or Spreadshirt, which helps creators make and sell custom merchandise.

This embrace of tech and third-party software providers was a necessary step for the networks as the marketplace began getting crowded, said Daniel Altman. His Santa Monica startup, Laffster, which identifies an online star’s most influential fans, has partnered with Maker stars such as Timothy DeLaGhetto.

“There was an initial offering from the networks, which was all about numbers and getting organized,” Altman said. “But there’s so many they need to have these tools in order to have a competitive advantage in the space.”


Wrong competition

As the YouTube networks further embrace their roles as tech platforms, the more they run into a monolithic, and unlikely, competitor: YouTube.

The streaming site is a massive tech company on its own and has a history of rolling out features that make network offerings obsolete.

There’s a cautionary tale from the early days of YouTube networks, when the streaming site had a policy mandating that all Google AdSense earnings information was sent only to networks and not creators. In late 2011, Big Frame and Maker invested heavily in creating software that gave the information directly to clients. Danny Zappin, then Maker chief executive (he has since left the company), even sent out a note announcing the new dashboard and the network’s commitment to transparency.

Days after Zappin’s note, YouTube changed its policy and chose to release AdSense data, the move immediately rendering Maker’s tracking software pointless.

As Cooperstein rationalizes it, these occasional conflicts are the perils of building a tech business on top of a tech platform.

“We’ve always believed YouTube will provide services on their own, and they should,” said Cooperstein. “It motivates us to evolve a as business; you have to stay way out in front of the market.”

Even if YouTube becomes more open with data and other features in the future, executives at its networks argue they’re meaningless without context and insights. That’s the bet as they spend money on this less glamorous side of the media business while making the case to talent that joining a multichannel network is still the best way to be in control of your online career.

“If your strategy is to provide value above the YouTube platform you need to find ways to use tech to do that,” said Big Frame’s Raymond. “Otherwise, it’s hard to justify your existence.”

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