The more things change, the more they stay the same.

Collaboration is, and will always be, a tool to drive growth and build an audience online…  rising tides lifts all boats.

The Hype House is an LA mansion TikTok stars formed in December of last year to live and collaborate. 

These TikTokers are co-creating content, featuring and promoting one another in an effort to cross-promote one another and collectively grow their audiences. The ideal outcome is an ever expanding audience.

Influencer A has X audience and Influencer B has Y audience. The two promote one another to capture both X & Y audiences and (ideally) capture additional followers in the process.

If history is any indication, the Hype House could be the start of a massive business that may change the course of media.

This fundamental principle of collaboration has been key to influencer marketing, and social media marketing (and expanding ever outward, you could argue for a great deal of success in life in general), since the beginning.

You scratch my back I scratch yours.

Going back to the late 2000’s we first saw this tactic brought to life with the YouTube community in the form of The Station. The Station eventually morphed into Maker Studios, which went on to be acquired by Disney for nearly a billion dollars.

The Station started as a loose federation of YouTubers who came together in the summer of 2009 to share resources and collaborate on content creation in the form of a collective sketch comedy channel.

Working out of a few Venice Beach, CA homes, the groups was affectionately dubbed, A Modern Brat Pack of YouTubers, TheStation was comprised of Shane Dawson, Kassem G, Phil DeFranco, Dave Days, Shay Carl, Lisa Donovan, with cameos from other YouTubers like iJustine.

Before a video was ever launched, their collective YouTube channel, was among the 25 most subscribed channels across all of YouTube. By winter 2009, after only a handful videos had launched, The Station had become second most watched web series.

Eventually, several creators from the original crew parted ways, but LisaDonovan, ShayCarl, Kassem and a handful of others soldiered on. The team moved into crappy offices above a Taco Shop, rebranded into Maker Studios, raised money, became an MCN, began signing YouTube channels to power that MCN, and by 2012 were generating over a billion views a month.

In 2014 Disney came knocking and acquired Maker Studios for $550 million dollars, with benchmarks, that if hit could bring the total earn out to close to a billion dollars.

This isn’t to say that absolutely the Hype House of today will follow a similar path, but I certainly believe that it is possible.

In its infancy YouTube was filled with silly dance and lip sync videos, which made the whole phenomenon easy to discount. In many ways it mirrors the common perception of TikTok today.

However, as the saying goes, “First they ignore you, then they laugh at you, then they fight you, then you win.”

Brat creates original scripted programming catering to teenage girls. The company has shown explosive growth – in just over a year they’ve generated over 22 million views and three million subscribers. Brat has grown, at least in part, due to its regularly featuring popular influencers such as Anna Cathcart, Addison Riecke, Francesca Capaldi, and Emily Skinner.

What I find really interesting about Brat is their approach to working with influencers – they incorporate influencers to build audiences, but their IP doesn’t live or die based on any individual talent.  Instead, Brat has modeled itself after the Marvel Cinematic Universe where all characters and shows exist in a single universe of the same (fictional) county.

Brat gets to capitalize on influencer audiences – essentially building a market into the content/product itself. Most influencer content is lo-fi (when compared to traditional TV and films), as a result Brat is able to create more ‘native’ looking/lower cost content, which costs less. Rob Fishman, co-founder of Brat, said that they’re keeping costs very low/that they’re “spending in the hundreds of thousands of dollars for every season.” This budget conscious production is necessary given the YouTube environment where CPM’s are low (and at times disappear entirely).

In looking at Brat I see a lot of parallels to AwesomenessTV – they both cater to a younger, female demo, and produce content featuring influencers. Where they seem to differ is Brat is operating more lean and mean, and has a more straightforward path to becoming a profitable business.

In Digiday, Brat Co-Founder, Fishman stated that “If you’re spending any meaningful amount of money on production, there’s not yet a business model that’s totally supported by the platforms,” I agree with that. Ad revenue on YouTube isn’t as reliable as it used to be and even with ad integrations and sponsorships the ad model is very difficult.

That said, Brat is building massive audiences with their content, and doesn’t have to wait for advertisers to generate revenue. They’re vertically integrated, and are building up their own brand and selling their own products. If you visit the Brat website you’ll be able to by Brat branded merch, makeup, and jewelry. In looking at their site it looks as though their products must be selling well – several items are sold out.

Brat also seems to be laser focused on developing their own IP – I think that’s going to help them stay focused and not overextend themselves. Furthermore, it will allow them to be less solely reliant upon specific talent. Brat isn’t reliant upon one influencer to make or break their business. Now that they’ve created this brand and this audience they can test different stories and talent without it all hinging upon big influencers to make it a success.

It will be interesting to see how the company evolves and what role advertisers play in their business. At a glance, I certainly see more of an opportunity in selling products, paid subscriptions, and being more reliant upon their own IP vs outside advertisers.

One traditional media company in particular stands out – Viacom. Viacom has a long, storied history with the space; they’d been suing Google over alleged copyright violations on YouTube from 2007-2014. As part of that suit Viacom had been seeking $1 billion dollars in damages, but was awarded no money as part of a settlement in 2014.

Now, four years later, Viacom seems to have done a 180 and fully embraces the digital video space (and YouTube in particular).

In the case of Viacom – waiting to make serious investments in the social video ecosystem seems to have allowed them to scoop up some serious deals.

Viacom acquired AwesomenessTV for a reported $50 million, a fraction of the company’s $650 million valuation back in 2016. This comes on the heels of Viacom having bought VidCon, the largest digital video conference/major influencer gathering.

And, at the very start of the year it was announced that Viacom had acquired WhoSay an influencer-marketing company that had raised $30 million and was incubated by CAA.

With these three acquisitions Viacom turned itself into a major player in the digital video ecosystem virtually overnight. They’ve got experiential, content, and marketing.

With VidCon they have the largest YouTube gathering. With Awesomeness they’ve got one of the largest MCN’s and production companies focused on the space, and with WhoSay they’ve got an established influencer marketing arm.

The timing of all this is interesting – YouTube is well over ten years old now, but I supposed it just goes to show that sometimes patience is a virtue.

It’s often easy to criticize the old guard for being slow, and lacking innovation (its something I’ve done constantly), but oftentimes methodical and deliberate can be mistaken for slow and out of touch.

Where did things go wrong?

The role of MCN’s within the YouTube ecosystem has diminished, and many of them have disappeared altogether. Maker Studios, which was acquired by Disney for nearly a billion dollars has been shuttered. AwesomenessTV was sold for a fraction of its peak valuation and far less than the amount of money they raised.

While I’m not privy to the specifics of what happened at Defy, there are a few key factors that I think have contributed to MCN’s diminished role today.

LACK OF COMPETITIVE MOAT

MCN’s didn’t really have a huge competitive moat. At the end of the day MCN’s are basically ad networks rolled up into a central CMS. This allows the MCN’s to sell ads directly across channels. The issue here is that you can buy ads direct from YouTube in upfronts, and/or on auction. So, what’s the incentive to buy from a third party when you can go straight to the source for the same inventory? The reality is few MCN’s were able to sell their ad inventory to brands directly.

In a previous blog post, one talent manager was candid in saying that MCN’s didn’t really sell much ad inventory directly.

They rarely sell media, and there’s really no reason for a buyer to buy media from an MCN. Why should they when they can buy from Google directly. 

I feel like the MCNs are delivering value to a very, very small number of people in their network. And it doesn’t justify their business model. It would be a lot more honest if MCNs just called themselves what they were, which is a sales agency. The fact that MCNs have contracts that auto-renew without notifying the creative party is an indication of their awareness that they’re not delivering on their promise to creators.

In addition to selling ad inventory across channels most MCN’s also sold brand integrations within influencer content. The challenge here is that, for the most part, talent wasn’t exclusive to MCN’s on the branded content side of the business. Most top tier YouTube talent had managers, agents, and/or were signed with agencies (ie WME, UTA, or CAA) and countless others managed deals themselves.

OVERHEAD

A lot of MCN’s raised a lot of money. Awesomeness raised $162.5 million, Maker raised $65 million… the list goes on.

Although these companies were referred to as MCN’s in the marketplace many of them were expanding to countless other businesses and took on massive overhead in the process. Fullscreen launched a short-lived OTT platform. Awesomeness diversified beyond YouTube and expanded into music, movies, and even book publishing – they spread themselves very thin trying to do a lot of things that never panned out.

In addition to expanding beyond their core competency numerous MCN’s invested in signing the ‘top tier’ YouTube talent in upfront deals, which were not cheap. Then to recoup costs these MCN’s had to hire teams of sales people to sell brand deals for that talent (which oftentimes never came to fruition).

According to one talent manager the only reason top YouTubers join MCN’s is “because of minimum guarantee deals. That’s it… it’s free money. The MCN’s guarantees that the creator will make X amount in integration deals over the course of the term. And, if the MCN doesn’t deliver that amount in brand deals, then the MCN writes a check.”

Doling out ‘free money’ to talent that does nothing in return is hardly a sustainable business model.

RESENTMENT

Over the years there has been a lot of public backlash against MCN’s and this could not have helped when MCN’s go to sign on new creators. Also, smaller creators who were handing over a percentage of their revenue to MCN’s often felt taken advantage of. As a result, this new generation of creators seems far more cautious when it comes to joining MCN’s and are increasingly choosing to go it alone.

YouTube drama is commonplace these days, but in the early days of YouTube it was rare for YouTubers to air their grievances to the public. That all changed when in 2012 Ray William Johnson slammed Maker Studios claiming they were withholding money from him and holding his adsense account hostage. The drama went on for months between he and then Maker CEO Danny Diamond. Just over a year later when Maker was sold to Disney Danny ended up suing Disney as well as his former business partners. The whole ordeal painted MCN’s in a negative light and MCN’s were always looked at much more skeptically.

In the early days joining an MCN was a badge of having ‘made it’ in the YouTube world. Initially MCN’s where small and catered to the top talent. Over time this exclusivity gave way for a desire to scale and it was a landgrab to acquire talent. As a result you saw companies like Maker have 500 employees, but tens of thousands of channels, Awesomeness averaged 200+ channels for every employee. As a result, talent was largely left underserviced and many felt taken advantage of.

In one interview with an MCN executive, he confirmed that many YouTubers who joined MCN’s felt underwhelmed by their services, stating that:

“You see that same kind of conversations happening around MCNs. You have creators who say, “Hey, I’m giving you anywhere from 0-30% of my ad revenue, are you giving me that value in return?” A lot of creators don’t feel like they’re getting that value in return.”

As a result of so many creators complaining about wanting to get out of their MCN contracts YouTube rolled out a policy in 2013 making it much easier for YouTube Creators to get out of their MCN contracts.

To be clear, I’m not saying that all MCN’s don’t have viable business or that they’re all ripping off their talent. There are a lot of smart, talented, and moral people within the space. However, it does seem as though the heyday of MCN’s is largely passed.

So what does this mean for MCN’s?

As I outlined in a previous post, I think if MCN’s are to survive – the ones that will thrive and be successful are those that cater to specific niches and can actually sign enough of a small group of talent to own key verticals as well as properly service their talent.

How much money an influencer makes is not a simple question to answer. There are some influencers who make tens of millions of dollars each year, and while they capture the headlines, they are in the minority.

In this post I hope to shed some light on how influencer generate revenue, and what avenues they use to make money.

WHY INFLUENCERS ARE ABLE TO MAKE MONEY
Jake Paul has gone on record that he is going to be a billionaire. I doubt he’ll be a billionaire, although he’s already extremely wealthy; however I have no doubt that some influencer at some point will become a billionaire.

8 of the top 10 most recognizable celebrities amongst teens are youtube stars. These influencers are building (and selling massive businesses). Many are NYTimes best sellers, they’re dominating the box offices. We live in an era where the most engaged athlete in the world (on social media) is a gamer on Twitch.

The scale at which these creators are building audiences is incredible – on Youtube alone there are well over five thousand YouTube channels with at least a million subscribers.

Despite the assumption that being an ‘influencer’ is easy – its not, and even influencers who build large followings can make missteps leading to drastically reduced profits.

There has been a great deal of negative press geared toward YouTube as a result of ads running against content that no brand would want to be associated with – including terrorist videos. As a result, a number of Fortune 500 brands have boycotted the site which has lead to more bad publicity and, undoubtedly, impacted YouTube’s bottom line.

Due to these concerns around brand safety YouTube has clamped down what videos they monetize, and as a result a number of influencers on YouTube have seen their revenue decline dramatically. As part of a number of initiatives to ensure brand safety YouTube has stopped running ads across channels with less than ten thousand subscribers. YouTube has also begun automatically (via an algorithm) demonetizing videos it deems may not be brand safe, and has hired tens of thousands of people to review and vet content. As a result of these measures a number of channels have seen their ad revenue decrease (and in some cases virtually dry up) – resulting in the nickname, ‘The Adpocolypse’.

WHAT PLATFORMS ARE INFLUENCERS MAKING MONEY FROM?
The platforms influencers invest in building an audience on will impact how much money they can make (and where that revenue will come from).

Currently, Instagram is huge for brand placement/brand deals. However, the platform itself doesn’t actually pay influencers a portion of the ad revenue generated by the site. Many influencers, even those with only a few thousand followers, are generating revenue via brands looking product placement integrations. A recent study estimated that there was over $570 million spent globally by marketers for influencer marketing on Instagram last year.

A number of platforms such as Famebit, Reelio, etc have created marketplaces where the long tail of influencers can promote brands in exchange for product or money.

YouTube has consistently been one of the more in demand social networks for influencer marketing. The platform is unique, with ads are run automatically and creators getting a percentage of the ad revenue they generate off their viewers (for channels with over ten thousand subscribers).

The way YouTube ads work is something like this:

• Ad revenue is split 45/55 in favor of the creator
• Most creators generates $2-3 CPM’s
• Generally around half of those views are monetizable
• If part of an MCN, then a percentage is paid to the MCN

It is worth noting that select creators are pulled into ‘Google Preferred’ and their inventory is sold direct by YouTube at a much higher CPM.

I personally have noticed that YouTube lends itself to creating deeper connections between viewer and content creators (something I’ve written about extensively here). As a result, YouTube influencers tend to be able to build up their own brands much easier than other platforms – the connection they have with their audience tends to be much stronger, which allows creators on the platform to better convert viewers to sales.

Twitch is also quickly growing as a profitable platform for influencers. The platform also pays influencers a portion of the ad revenue they generate from viewers, and Twitch streamers can generate brand deals. However, I think Twitch is potentially one of the most ‘creator friendly’ platforms because it has a built in subscription model where they can collect monthly dues from their most dedicated viewers. As a result Twitch is providing a lot more steady income for influencers.

There are other platforms influencers cultivate audiences upon and are monetizable. Blogging was really the first ‘digital influencer’ platform and is still a popular one. There are pinterest influencers who are paid to pin content by the top brands, and recently Musically has grown in popularity – creating a Vine Like resurgence of short form content influencers. Other platforms include Snapchat, YouNow, Tumblr, etc. With the exception of YouNow influencers are not being paid a portion of the ad revenue they’re audiences generate.

YouNow is worth noting because influencers can monetize through a newly launched cryptocurrency, as well as viewers buying digital gifts, of which the influencer gets a portion of the sale price.

Overall, I feel as though YouTube and Twitch are probably the most powerful and sustainable influencer marketing platforms for two reasons:

1) Creators are able to generate revenue from ads and/or subscriptions
2) Content tends to be longer form which leads to deeper connections between viewer and creator. Viewers feel as though they’re much more than ‘just a fan’, that the relationship is akin to a friendship.

Many YouTubers regularly ‘vlog’ and share personal details about their lives – viewers see their friends, family, pets, homes, and even the creator’s ups and downs. Much of the same information is commonly shared on Twitch as a result of so many hours streamed.

AVENUES FOR INFLUENCERS TO GENERATE REVENUE
Regardless of platform, or platforms, influencers build a following upon – once they have an audience there are a number of avenues available to them to monetize their fan base. I’ve written about influencer monetization a bit in the past, and while the assumption tends to be influencers only generate money through brand deals, in actuality there are a number of options out there. Notably, display ad revenue and brand sponsorships are quickly becoming a smaller piece of the revenue pie for most creators.

Outside of direct platform ad revenue, here’s some common ways influencers generate money:
-Appearances and tours
-Building companies
-Merchandise
-Patreon
-Affiliate links/sales
-Writing books
-Making movies (Direct to consumer & studio films)
-Developing apps

APPEARANCES AND TOURS
Much like bands go on the road and sell tickets to concerts to generate revenue, more and more influencers are touring (whether
or not they’re musically inclined) and charge fans to come join them. Most recently YouTuber power couple Trisha Paytas and ason Nash will headline a show dubbed Trisha & Jason Are In Love – according to Tubefilter, “tickets begin at $20, though all-access VIP seats are available for $250 — including a pre-show pizza mukbang (or binge-eating session) with Paytas and Nash, exclusive merch, a photo, and autographs. $60 and $150 ticket options are also available.”

Trish and Nash are hardly alone – vlogger Tyler Oakley launched they wildly popular  “Tyler Oakley’s Slumber Party” tour featured Tyler entertaining audiences in various skits and interactive audience segments. The Digitour has been ongoing for nearly a decade and featured a number of musician influencers touring together and performing. Influencers with older demographics have even been celebrity guests at nightclubs – for example Dom Mazzetti of BroScience fame hosted ‘Girls Night’ at a nightclub in Orlando.

BUILDING COMPANIES
Some influencers have tapped into their vast, and highly engaged, audiences to help launch major companies. Michelle Phan, a well known makeup and beauty YouTuber built a beauty subscription service to launch iPsy which has raised $100M. Director/Vlogger Casey Neistat went so far as to build his own Snapchat like social network, Beme, which he sold to CNN in a deal reportedly worth $25 million.

MERCHANDISE
Virtually every major influencers is selling T-shirts, hats, hoodies, etc. Merchandise has become so big many influencers have begun to expand their product lines beyond simply promoting their channels and built out full fashion lines. Tubefilter did a great post covering influencer clothing lines here.

It is worth noting merchandise can expand well beyond clothing, with many influencers have expanded to a variety of products. For example fitness influencers are selling supplements, workout gear, and even fitness program. YouTuber/surfer Ben Gravy even collaborated with Catch Surf to create his own signature surfboard. Whatever and influencer is interested in, odds are they’re productizing it somehow.

PATREON
Patreon has quickly become an alternative platform for influencers to generate revenue. Patreon is a platform that empowers creators to run a subscription content service – It allows artists to receive funding directly from their fans, or patrons, on a recurring basis or per work of art. A number of creators are using the platform to ensure a steady stream of income and enticing fans to subscribe (and donate) but providing exclusives only for Patreon users.

AFFILIATE LINKS
Amazon has an affiliate program for influencers to promote any products posted to Amazon. They generate a percentage of sales revenue with any referral resulting from the traffic they drive.

BOOKS
From Lilly Singh to iJustine, Tyler Oakley and countless others influencers have been flooding the book market – over the last five years, over a dozen major YouTubers have hit the NYTimes best sellers list. Influencer book deals have become so common that the publisher at Atria launched Keywords Press, a partnership with United Talent Agency to showcase digital influencers.

MOVIES
Influencers developing movies really kicked off with Camp Takota in 2014, starring the ‘holy trinity’ of Hannah Hart, Mamrie Hart, and Grace Helbig – the straight to digital movie kicked off a wave of influencer driven movies. Today, with the advent of YouTube Red, influencers starring in movies has become commonplace. A few other examples include The Vlogumentary, Smosh: The Movie, and The Thinning.

Perhaps, most notably John Green, one half of the VlogBrothers, co-founder of Vidcon, and YA author has had several of his books optioned and produced into major motion pictures. One book of his – ‘The Fault in Our Stars’ which was made for just $12 million and opened number one in the box office with a $48.2 million opening weekend. TFIOS went head to head with Tom Cruise’s Edge of Tomorrow, the same weekend, and beat out the sci-fi thriller that cost 15 times as much to produce.

THE ROLE OF FTC AND DISCLOSURE GUIDELINES
Regardless of who an influencer may work with it is incredibly important for them to know that they must disclose any relationship they have with a brand – this is the law.

According to the FTC:

An endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer couldn’t legally make. In addition, the Guides say, if there’s a connection between an endorser and the marketer that consumers would not expect and it would affect how consumers evaluate the endorsement, that connection should be disclosed. For example, if an ad features an endorser who’s a relative or employee of the marketer, the ad is misleading unless the connection is made clear. The same is usually true if the endorser has been paid or given something of value to tout the product. The reason is obvious: Knowing about the connection is important information for anyone evaluating the endorsement.

Transparency between an influencer and their audience is critical. If an influencer is being paid or given free product they must make their viewers aware of this relationship. Historically, what qualified as disclosure was a bit murky – influencers didn’t know whether simply saying that a brand provided them with free product, if it had to be written, etc.

Luckily, platforms have since stepped in to help standardize things. Facebook, Instagram, and YouTube have all developed tools to simply automate disclosure.

WHAT’S NEXT FOR INFLUENCERS?
Like I said at the top of this post – I think we’re not far off from seeing the first influencer billionaire. Digital influencers have a direct line of communication to fans and their rapidly exploring monetization models. With their lean, startup-like approach, where they are acting as talent, distributors, and producers they’re able to move swiftly and potentially outpace much larger corporations. Furthermore, with the rise of ecommerce and a multitude of monetization opportunities they’re able to launch brands quickly, generate revenue, and apply learnings to get better and better at making money.

Some of the major points we covered were:

• Subscription video on demand (SVOD) and YouTube competitors
• YouTubers “making it” on television
• YouTuber revenue streams
• How much money his top creators are making in a year
• How creators can better work with brands, and vice versa

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies, and MCN executives to get honest, no-bullshit opinions on working in the space — the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

You’ve been on YouTube for a very long time. How did you first get started?

I got started back in 2009, and I got started because I actually went to high school with another YouTuber. He’s still got pretty large following to this day.

I saw what he was doing and how we was building a community around himself. It seemed like a huge opportunity. So I started working with him a bit, and I was introduced to other creators and collaborate with them. I was able to turn YouTube into a career in about three months.

How has the community evolved since those early days?

What was really interesting about the early days is that once you hit a certain number of subscribers you were immediately part of the community. People had a sense of respect for you and vice versa. Once you hit that level, you could really approach just about anyone and do collaborations, or just strike up conversations and friendships.

As this community of a few thousand people exploded into the millions of creators you now have today, a bunch of micro-communities developed. Now, it’s like everybody sticks to their own clique. It’s almost like high school. So if you’re a beauty guru, you collaborate with other beauty gurus and you don’t really step outside that.

There’s just not as much cross-pollination as there once was.

I think a lot of the playfulness has disappeared as well. Now, we jump onto each new platform – push our audiences to them (the platforms), and then immediately we ask, “How do we monetize this?”

Speaking of fans, you’ve got a sizable following. What’s it like having fans?

It’s actually really interesting. I rarely use the word “fans,” I’ve allowed myself to use it as of late. This is something that I and a lot of my other YouTube friends struggle with.

We want to be humble, but also want to be respected in the same way that Hollywood celebrities are respected and perceived.  

Do you want to be put on the same pedestal as “traditional” celebrities?

Being labeled as a “celebrity” pigeonholes YouTubers because you can be recognizable without being a “celebrity.” I think it goes beyond celebrity. I think it’s about being a public figure.

There’s a new generation of influence sprouting up as a result of social media. You have people that may be an entertainer-creator or maybe they’re a body-positive influencer. There’s people with influence across spheres — politics, entertainment — you can be an influencer around anything now.

Whatever name we end up giving this new type of public figure, I think they are definitely going to be held to a higher esteem and value than they are today.

How has the perception and attitude towards YouTubers changed among brands and agencies?

The marketers have done a lot to catch up these last few years and they value what we do a lot more.

They’re beginning to recognize that we influencers are not a simple plug-and-play, where they can just say “Let’s put our bag of chips in this,” or “Let’s give them a bottle of water.”

They’re starting to take a step back and invite us in as collaborators. They’re asking what excites us and what ideas we have. It’s becoming a bit more of a conversation than it used to be.

Also, it’s interesting — as demand has increased, you see influencers being represented by four or five different managers and talent agencies. You don’t quite see that in the traditional talent world.

The fact that an influencer can be so freely represented and not be limited to one representative shows me that in some ways the influencer has more negotiating power than traditional celebrities.

I hear from a lot of the creators that “brands don’t get it.” To your point, and in my own experience, it seems as though brands are “getting it” more and more. Do you feel like creators are doing more to adapt and empathize with the brand’s perspective?

Yes and no. You and I have known each other over the years, we’ve seen people come and go.

For the most part, the ones that we’ve seen go are the ones that didn’t develop much business etiquette, or, even just the willingness to put aside some of their stubbornness to be open to some of those brand conversations and feedback.

The ones that have stayed around have been able to have conversations. They don’t just say no to an idea, they offer up solutions.

You have to be able to adapt and work towards a solution where everyone is happy with what they’re getting. It’s only a success if the creator is happy, the audience is happy, AND the brand is happy.

Some creators not willing to put forth the effort, and aren’t open to ideas or build off of ideas that are not their own.

Are you still with an MCN or are you independent?

All my channels are within different MCNs.

The deals I’ve structured are different than what most creators get. They’re in my favor more so than most of the contracts that these MCNs have with the 40,000 other people who signed with them.

What advice would you give to an up and coming creator? What kind of things would you advise them to keep an eye out for?

The first thing to keep in mind is that you’ve got a lot more negotiating power and leverage than you think.

In some cases I get 100% of my revenue. Oftentimes the MCNs will try to offer a revenue split over a certain amount of views. They say, “Hey, look, we did our math and over the last 12 months you averaged out this amount of views. We’ll do a rev-share split of this amount of views over your average amount of views.”

I say no to that because the last 12 months doesn’t mean anything to me. The last three months are going to be the most important numbers to me. And when you go down that math, you’re not going to come to an agreement.

I would also say if you’re going in with an MCN or any other company, you should do it with the idea of getting them to invest in you and your content (whether with upfronts or production support). By having them support you in creating more content, they’ll be invested in your success.

Also, limit your deal to no more than a year in length. Lastly, make sure you’re not just joining

for brand deals. Brand deals are great but you can get multiple managers and agents to represent you to get you those deals.

Where do you see the future of YouTube going? How do you juggle all these different platforms, and does YouTube have staying power?

I feel that YouTube is going to have staying power because of its massive library of content.

Facebook doesn’t have that much content, and I’m not sure if they are ever going to have it.

I think Facebook is similar to what YouTube was back in 2005-2009 — there are a lot more amateur videos and far fewer professional creator videos. YouTube on the other hand has really matured, and is closer to Netflix in the sense that the content has really developed and become more professional.

I feel that YouTube Red is a step in the right direction. And honestly, I think video platforms are going to evolve across the board between Twitter and Snapchat and everything else. We’re going to see different platforms cater to different types of content. I may go to Facebook one day to find a new viral video, but I’ll got to YouTube Red to watch something from a premier independent creator.

How do you as a content creator juggle all of these new platforms? How do you decide where to invest your time and develop an audience?  

It’s actually really natural.

I produce my content with the idea of being able to repurpose it for different platforms. So if it goes up on YouTube, it’s going to go up on Facebook. If it’s going to go up on Instagram it can go up on Vine.

Getting that content distributed across each platform isn’t really hard. I play around with each for a bit and figure out what works.

I took a great deal of interest in Facebook over a year ago and I played around with my content there and it did pretty well. Now I’m playing around with Instagram and it’s doing well there too.

I think people are thinking of their audience as being on every platform. The reality is that if it’s on YouTube, put it up on Facebook too. Put it up on Instagram. Put it up on everything you can. Do a quick edit and cut it down a little bit. Do whatever it takes. The amount of time that you’re going to put into repurposing and customizing content for each platform is going to show a return.

What’s the formula for success on YouTube? What does it take to build a successful channel?

It’s a combination of having fun and being logical. Everything I’ve ever done had to excite me and that doesn’t necessarily mean I didn’t get frustrated with it or I wanted to not do it at some point. You’re going to have speed bumps. But I was very excited to start. Very inspired. And I was very logical. I asked myself, “Okay, how much time am I putting into this? How much money am I putting into this? If this was money, how much money is this of my time? And how quick of a return can I get off of this?”

So when you go from being a personality on camera to investing into content and putting a team behind it, the decisions you make are all about ROI.

So I would say, if you want to be successful, do what you love but put some logic behind it. Put some business sense behind it.

Anything else to add?

The one thing that I will say that I’ve noticed over the years within this industry is that publicly we all say, “Yeah, everything’s all great and dandy.” But, privately you turn to your friend and you’re like, “F this. This does not make sense. This is so stupid. This is terrible. This is horrible.”

We’re all having these private conversations with each other, but we’re afraid to have them openly because we think we’re going to make people feel bad or it’s going to turn into some sort of World War III.

He helped demystified a lot my preconceived notions on the state of MCN’s, their businesses, intents and roles. Some of the big takeaways/highlights of our conversation include:

•       The difference between working with agencies versus brands
•       Why MCN’s Are Like Record Labels
•       Common misconceptions around MCN’s
•       The perception of MCN’s as gatekeepers

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies and MCN executives to get honest, no-bullshit opinions on working in the space – the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

In your experience, you being on the MCN inside, what’s it like working with brands, creators, and agencies?

Oddly enough, brands out of that group are the easiest to work with. I feel like if you’re in a position where you’re lucky enough to work with someone at a brand directly, that’s usually a pretty intelligent person at the brand.

In most cases, the brand people trust a little more. Maybe that’s because, unlike an agency, they’re not a middle man and they don’t have people pressuring them from both sides. So the brand sometimes is better about trusting the process.

Agencies, because of the fact they’re in this proxy position, are generally more concerned about the financials of everything. They care about the eCPM, they care about building up the media plan. And, more than anything they care about positioning the influencer marketing campaign within the narrative of the campaign direction they sold through to the brand.

As a result, you have agencies that really put the screws to the publishers and to the talent. I think this is because agencies pitch themselves to brands as the experts. They want to always be the strategic engine behind a campaign.

I worked at an agency before. It’s a pretty entitled position to be in. You have the checkbook, so you think that you can boss these publishers around, and in a big way, you can.

You’ve mostly been talking about media agencies. What is the distinction you would make between creative and media agencies?

When working with creative agencies, it can potentially be more combative and there can be more friction.

The logical conclusion of working with influencers is that they’re creating the content. That is what the creative agencies have been doing for years and years. Now obviously, the content that a YouTuber is creating doesn’t necessarily have the same production value of something produced by a big agency, but as technology gets better, the equipment that creators are using as they are maturing is getting better, their storytelling is maturing, that delta is closing.

The MCNs are saying that brands should be using influencers for their branded content, as opposed to the well-produced content that’s historically been created. So I could see why creative agencies would be a little scared or protective of their role.

Can you talk a bit about the layers involved in deals? What’s the role of the MCN’s and where you see them fitting in?

To be clear, I don’t think all the layers are unnecessary. I think managers offer a real value to creators. A lot of these creators, they are creative. They are filmmakers. they’re not business people, they’re not salespeople. They’re not super organized.

They need the support of accounting, and legal, and all that managers and lawyers and agents can offer. I think MCNs can offer a valuable layer in acting as a middle-man between the creators and brands.

In an ideal world, brands would know who they want to work with. They would go to the creator or creator’s management directly. The creator would get their shit done on time and to the brand’s specifications and timelines, but you and I have worked in this business long enough to know that that almost never happens.

The MCNs are a nice operational layer in the middle to help facilitate work. Maybe, as the industries get more mature, the need for that operational layer will be diminished, as creators start thinking more like business people and they understand that if they continually miss deadlines, brands aren’t going to want to work with them anymore. A lot of them understand that, but a lot of them don’t.

As more creators start thinking like businesses, and maybe even building teams around themselves, they’ll realize that an MCN might not be necessary. On the other hand, as brands and agencies start knowing more about the industry and who they want to work with, they have a better understanding of the nuances.

I’ve always liked the comparison that MCNs are a lot like record companies, or at least what record companies used to be.

You may get to a point where you have some MCNs who have such a strong or specific point of view and taste to be able to have the caché of something like a Sub Pop Records or Matador– these labels that have done such a good job curating stuff that fans trust them. It’s like, “Yo, I’ve never heard of this new band, but they’re on Sub Pop, and I love everything that Sub Pop does, therefore I’m gonna explore and experiment with this band.”

I think Tastemade and Whistle Sports are like that because they’re just so specific and have a defined point of view.

I see companies like Fullscreen and Maker almost like the EMI or the Universal Music Group of the world, where nobody really knows or cares who’s on Atlantic versus Elektra versus Columbia. These are like big, faceless, holding companies.

You said MCNs are currently acting like a middleman between creators and brands, but oftentimes creators work with brands directly or their managers do the deals. In those scenarios, what role is the MCN playing?

I imagine more of that is going to happen, as I said, as the two sides of the equation — brands and creators — start maturing and learning more about each other. To go along with the record label analogy, I think you’re going to see a lot more creators hiring their own small teams run their businesses instead of going with a label. You saw the same thing with the music business.

PewDiePie doesn’t need an MCN. He’s got enough money to hire his own social media person, his own licensing person, his own distribution person. Obviously not everyone can do that. It goes to the idea like when Radiohead put out their album for free, people were like, “Yeah, that’s great for Radiohead,” but there’s some things that an MCN still can do that individual creators don’t have the power or connections or money to do.

But, I bet PewDiePie can get a much better social media person by hiring them directly than by paying his MCN providing one. So, really, the top-tier creators are going to be more laser-focused in hiring their own staff.

Creators don’t need an MCN when they have smart people working for them.

There’s a lot of misconceptions around what people perceive the MCNs do and what they actually do. What do you think is the biggest misperception?

I think it’s a lot like record labels again, where you have the creators, who are similar to bands, and they’re like, “This label is doing nothing for me. They’re taking my money. They’re not giving me an advance and then I’m never going to recoup the costs. I’m never going to see a dime.”

You see that same kind of conversations happening around MCNs. You have creators who say, “Hey, I’m giving you anywhere from 0-30% of my ad revenue, are you giving me that value in return?” A lot of creators don’t feel like they’re getting that value in return,

But I also think that creators often don’t understand the challenges that MCNs go through. When you’re a creator of 5,000 subscribers, it’s not realistic to expect that you’re going to get a two hundred thousand dollar Ford deal.

In my experience working at two MCNs, everyone that I run into generally wants to do right by creators and make that value proposition worth it to the creators. I think when creators don’t feel like they’re getting enough value, it’s a result of a lack of execution, not necessarily a lack of empathy or a lack of interest.

So we’ve talked about the perceived misconceptions between creators and MCN’s. What about the perceived misconceptions of MCN’s buy brands and agencies?

As I alluded to earlier, I think brands sometimes see MCNs as a necessary evil, a one-stop-shop for building a large program with multiple pieces of talent. You get media thrown in, you get social support thrown in, and I think that makes a lot of sense for brands and agencies that don’t necessarily understand the space very well. They want to just write one check and have the MCN take care of the rest.

Maybe the brand or agency doesn’t have the appetite — sort of going back again to risk tolerance — they don’t have the appetite or the desire to go to three or four different managers and negotiate with each one and do all of that.

But, for really savvy brands and agencies, I don’t really see a need to go to an MCN if you know exactly what you want and you understand that working with talent can be a laborious process and you’re a cool hip brand that gets the space. Because, if a brand knows exactly who they want to work with, they understand what it’s like to work with that creator, there’s no need to pay the MCN Margins.

On the creator side of things, they have come to think MCN’s are the way to get brand deals. Not many creators have sales teams and they aren’t doing outbound outreach to brands and agencies.

The only people that the agencies generally hear from are MCNs. You can sort of understand on both sides (brands and agencies) why they would think they need MCN’s. They’re both getting pitched by the MCNs.

I’d imagine that some brands or agencies think that MCNs are a necessary evil to work with creators – that they wish they could work with creators directly, either to get a better deal or to push the creators to do more work. MCNs often act as a gatekeeper in a sense, where it’s like, “You sign this IO, we’re delivering to the IO, and you’re not getting anything more than that,” and maybe brands and agencies think that if they went to the creators directly, they’d have more leverage or negotiating power. At the end of the day, a lot of brands and agencies aren’t yet sophisticated enough to work with creators or their management teams directly.

My latest interviewee for The Confessional is a manager of top YouTube talent. Several of the creator’s in this individuals roster regularly receive tens of millions of YouTube views per month and hundreds of millions per year. In this extensive interview, we discussed the business of YouTube, the goals of this individual’s talent (both on and off YouTube), and the how much money top online video creators are really making. Some of the major points we covered include:

• SVOD and YouTube competitors
• YouTubers ‘making it’ on televisions
• YouTuber revenue streams
• How much money his top creators are making in a year
• How creators can better work with brands and vice versa

(Editor’s Note: The following interview has been edited and condensed for clarity.)

All the big platforms are going to continue to grow as marketplaces, both for integrations and for original content. I foresee Facebook developing its own YouTube Red, and Facebook developing content that they own. Netflix is going to open its doors to YouTube creators because these people are proven at driving digital audiences. People with a track record of driving digital audiences are going to have more and more opportunities, on platforms such as Amazon, Hulu, Go90, and Netflix. That’s where I see big opportunities in the near future.

You’re in a unique position in that you’re seeing both brand deals and entertainment deals. Do you want to talk a little bit about the SVOD deals that you’re seeing?

YouTube Red budgets are very legitimate. And they’re going to be producing really great content. They’re enabling people with creative visions who started out on YouTube to do what they want to do. I think they’ve got a strong chance of succeeding. However, Google is a search company at its core, not an entertainment company, and they’ve stumbled so many times when they’ve tried to dabble in content and entertainment. Like when they gave $100 million out to all those different players, they told them to create YouTube channels and they all kind of fizzled. I feel like that might happen again. If they really want to spend the money then they might as well do it right and buy a proven player like Netflix to be their equivalent of YouTube red. Then they could integrate Netflix into the Google ecosystem.

We got offers from Vessel, but I brought those offers to YouTube and got YouTube to pay us to keep uploading on YouTube first. Facebook has been reaching out and having soft conversations – but they’re not shelling out money for content the way Vessel and YouTube are. At least not yet.

Is the talent you manage interested in making the leap from digital to traditional media? Do they want a TV deal?

Yeah, several of the talent I work with want a TV show. They came out here to be in traditional entertainment and that’s their end game. However, that’s really not the case for everyone I work with. Some of them want to focus exclusively on YouTube. Several of them think YouTube is the holy grail. It’s a platform that’s internationally accessible and free and reaches a massive audience, and you can shop on it. You can talk about a product, put the link in the description, and somebody can click on that link and buy it. There is so little friction between consumer and the product via YouTube.

How are the conversations with TV networks being received so far?

We haven’t sold a show yet, but there are a lot of conversations. The fact that these creators have this loyal and engaged audience, that’s very appealing to the network executives. Broad City started as a YouTube show, Justin Bieber started on YouTube, Workaholics started on YouTube, and Garfunkel and Oates started on YouTube. There are enough case studies at this point of individuals and shows that have moved from the web to TV. But even people who’ve been in the TV game a long time and are really great at it, it’s still like a tough game.

Kurt Sutter, who Sons of Anarchy, just got his show cancelled. He worked on The Sopranos, then The Shield, then Sons of Anarchy. He just started a new show. It was called The Executioner’s Son and it was cancelled after a few months. TV is a tough, tough business. And so, yes my creators have big audiences, but like it’s still a business that you have to try your ass off to get into.

Do your talent want to maintain a YouTube presence even if they get a TV show?

Definitely. They never want to totally abandon YouTube. That is like the kiss of death, if you just abandon your YouTube channel. You’ve got to nourish that audience.

What do you think went wrong with Grace Helbig’s show? That was so short-lived.

If you’re taking somebody from YouTube, where a big portion of the audience may be international or not even have a cable subscription, and then you’re expecting all that audience to magically appear on an antiquated delivery system, then you might be left disappointed.

What kind of revenue are your creators generating in a year?

Maybe like $500,000 to $1 million per creator. My top 5 are generating that much revenue. Of the ten talent I work closely with, I’d say the average is probably $400,000 per year.

Where are your creators generating their revenue? Are there any revenue streams that are working well that you think most people don’t know about?

Merchandise. If you broke down most of my talent’s revenue it’s probably a third adsense, a third brand integrations, and a third merchandise.

What you do think about people who hate on the YouTube stars and say they don’t deserve all the money they’re making?

I look at television at something like Real Housewives. To buy airtime on Real Housewives you’re going to be spending $300,000 for 30 seconds. Is that highly crafted, premium content? Did those people go to acting school or do they have years of theater experience before they were on camera? No. They’re just shows where you just have random people doing their thing. Duck Dynasty has probably one of the most expensive ad blocks on television for years, and this is a random hillbilly family in Louisiana. What do they do that’s so special? So, all of a sudden because somebody’s on a smaller screen and not backed by a TV network they’re not worth those same financial and brand opportunities?

One of the things I’ve heard a lot from creators is “Brands don’t get it!” Often times I agree, but not always. But, on the flipside, do the YouTube creators “Get it”?

Creators have to understand that the moment they take money from somebody you’re going to have to make some compromises. They have to be respectful of what the objectives of the campaign are and how they’re going to achieve them. If you want to play at a higher level, then you have to elevate your game entirely. And that means how you listen to people. You have to be mindful of how you speak to people, how you execute on things. You’ve gotten to a certain point, but if you want to continue then you’re going to need to adapt. A perspective shift is healthy. If you are comfortable with complacency, then you’re not the creator you think you are and you’re not going to be the creator you want to be.

This conversation was a lot of fun – we discussed the early days of YouTube, the impact of sharing one’s life online, digital fame, and the role of emerging video platforms.

Some specific highlights from our conversation include:

•    What the early Youtube community was like
•    The Future of YouTube and Digital Celebrity
•    The importance of diversifying and building communities beyond YouTube
•    The challenge of both living your life and documenting it for the camera
•    Advice to brands looking to work in the space

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies and MCN executives to get honest, no-bullshit opinions on working in the space – the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

What brought you to YouTube, how did you get started?

I used to be in a rock band in high school, but ended up cutting my finger open, so I couldn’t play guitar anymore. Then, in multimedia class, I was seeing all these people on YouTube, like Phil DeFranco and Smosh, and was like, “This is awesome. They’re just doing what they want to do. It’s funny. It’s really cool. It’s a new avenue for me to be able to perform (since I couldn’t play in the band anymore).”

Then I saw this article come out that said, “YouTubers are making six-figure salaries” and I’m like, “Holy shit! They’re making this much money doing this from their living room? I want to do that.” And so I just started making videos, posting them to YouTube.

What were the early days like for you?

YouTube has now become a thing where there’s this expectation that you can make money off of it. In the beginning, it was more like, this isn’t something that everyone’s doing for money. It was something that people were doing for just the fun of it. In the early days, the community was much smaller. It wasn’t oversaturated yet.

I moved to New York City in 2009, doing YouTube as a hobby while I started doing internships. While I was there, I saw the rise of YouTube and the community start to flourish. I could see what YouTube was going to be today back then. I knew it was the wild west which was the perfect opportunity to excel and make a name for myself. That’s when I made some of the best relationships and friendships in my life.

When I went to a YouTube gathering in NYC, that’s when I really started to realize just how unique and powerful this was. That was the selling point for me – getting to know the community, becoming friends with people I had only seen or communicated with online, and experiencing the joy of collaborating on videos with them.

I met people back then that were so talented, you just knew they were going to be big. Many of them went on to become extremely well-known. There was an energy of everybody wanting to be something greater than themselves… All of us became very successful in our own ways.

Back then we were striving to do something that, until that point, was completely unheard of. It was the wild west.

That was a time when I made some of the best relationships of my life; relationships I look back on that make me ask myself why there isn’t as much happening in the community like this these days? I don’t know if it’s because we’re older, why nobody’s organizing community events and gatherings like this anymore. Well there’s VidCon, but VidCon’s more for fans.

It felt a little more special then. I’m not saying it’s not special now. It’s definitely still very special.

And why do you think that sense of community has dissipated? Is it the introduction of YouTube becoming big business and a lot of companies getting involved?

All of these influencers are the new celebrities. They’re going to continue to be celebrities. There’s a market for it, whether an MCN does it or someone else does it, people are going to create a business model around it.

It’s something that’s just naturally going to happen. This is a market. There’s a market here.

You’ve seen a lot of change in the space. What do you think is next?

What’s going to happen is that MCNs are going to fizzle out, in their current form anyway. It’s not sustainable for MCNs to take 30% of creator’s revenue just to provide a dashboard.

We’ll also see more, unique platforms emerge that people will build audiences around and make money off of. So there will always be ways to continue being yourself, enhancing what makes you special, and following your passions. There’s just so many more avenues today for people to reach their goals and make a living doing social media then there were before, so there’s just going to continue to be more. And each year there’s more money being poured into the space to sustain it all.

Do you think it’s realistic for someone today to think they can build an audience, or do you think it’s much harder now?

It depends on the type of person you are. If you want to be something and you’re committed to it, you’ll do it. If you can do that you can succeed anywhere, not just YouTube.

What made it easier in the beginning was that YouTube was less saturated, it was easier to hit the front page and reach everybody on the platform. Today, everyone in the world is using YouTube. It’s good and bad because you can reach more people than ever now, but it’s also harder for people to find you.

The only person that’s going to hold you back is yourself. If you believe you can, stay committed and focused, you’ll make it happen for yourself.

And how has the introduction of all of these platforms beyond YouTube (Vine, Instagram, Periscope, Snapchat) impacted you?

These new platforms have been amazing for diversifying revenue streams.

YouTube isn’t the only platform where you can make money anymore. Also, YouTube videos are more permanent, while the other platforms offer unique approaches with added benefits. You can upload Facebook videos more than once, the lifespan of a Snap is short, and producing a Vine takes way less time than a YouTube video. This makes it easier to do brand deals and pursue other ways of monetizing your audience so you can take your craft to the next level.

Is it challenging to keep up with the introduction of all these new platforms and places to build audiences?

I’m always looking for new ways to grow, diversify, and understand the space better so I can make it work for me.

I never expected YouTube to be the only platform that ever existed, and I never put all my eggs in one basket. I saw YouTube as something that… was simply a platform. I never really intended for it to be anything else.

It came naturally to me. It’s only natural that I would try to diversify and use the platform as a way to jump to the next thing I’m most excited about. I’m quick about staying up-to-date, spotting trends, and jumping on things early.

How do you balance living your life and creating content for all these platforms? Do you feel pressure to always share what’s happening to you publicly?

It’s definitely a balancing act. It’s tough when you’re really trying to grind it out on social media, but also trying to live in the moment too. Like when you’re in a great moment and your first thought is “Let me Instagram this”, vs. “Let me enjoy this for what it is and appreciate it”. It’s hard, but it’s fun.

It’s also hard to completely be yourself while performing in front of a camera to an audience. You’re always doing it with a sense of catering to what the audience wants, not what you want, and you have to be careful with that.

There was a time in my life when I decided that I only wanted to be true to myself. I took a step back from being in front of the camera, and stopped doing the character, the performer, the actor. I was just myself, and it worked out really well for me. I’m a lot happier now.

Do you love the fans and that kind of attention, or do you just wish it was digital and in the real world you were more anonymous?

I’ve always found a good balance. Even at the peak of my public presence, when I was getting recognized fairly often, I thought it was awesome. I had fun with it.

I enjoyed meeting fans in person and listening to them. It felt cool that people were watching me, and realizing that I brought joy to so many people’s lives. I’ve met fans that tell me “You always brighten my day”, or “You helped me get out of my depression”. It’s rewarding to hear, that really touched my heart and gave me a sense of purpose.

I never got attached to it though. It wasn’t something that became a need. Now, I get more enjoyment being out of the spotlight, focusing on what I want my role to be in the bigger picture of what’s happening in the world and how I can use my gifts to push us forward in positive ways.

What do you think is the biggest piece of advice you’d give to brands who want to be successful in this space?

If you’re trying to work with an influencer that fits the audience you’re trying to target – let them do what they do best. Loosen the reins and give them some extra freedom to explore their creativity and what works for them. These people know their audience better than anyone else.

Also, be willing to pay as much if not more than you’d be willing to pay mainstream celebrities. There’s more and more articles these days coming out confirming social media celebrities are more popular than mainstream celebrities, because of the high-level connection and loyalty with their audience.

The brands that are going to survive in the end are going to be the ones that do social media the best, and the ones that do social media the best are going to be the ones that fully understand the space, know how to work with it, not against it, and pay influencers what they’re worth. If a brand can stay ahead of the game, be innovative, they will not only reap the rewards and see greater success, but will become an integral part of the most important movement in our planet’s history.

The major points of our interview transcript include:

•           – Why YouTube created MCN’s and how they’ve evolved
•           – Why creators often sign with MCN’s
•           – How brands should work with creators

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies and MCN executives to get honest, no-bullshit opinions on working in the space – the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

Coming from the MCN side of the equation – what was it like working with the brands, the creators, the agencies? What worked and what didn’t?

My understanding of the MCN industry is that Google created it as a way to help produce better quality content and help support creators. It’s largely populated with people who are coming from the talent side of the equation versus the advertising agency side or the technology side.

The biggest challenge is that the industry is new, so the norms have not been defined clearly. You have the MCNs, you have the agencies, and I’m saying “talent agencies,” like WME and CAA. You have the advertising agencies. You have managers. You have creators.

You have a lot more inputs to that equation than what you had back in the old television days. All those inputs and all these people who think that they have a role in the equation make it complicated to establish any real norms, or rules of engagement, metrics, and ways of doing business.

The players have not clearly defined their roles, and because of this everybody is running towards every opportunity. And that causes murkiness. That causes aggravation. It causes the true value of influencer to be masked because of the immense amount of waste of people’s time to get to the bottom line.

So, depending on your entry point you could end up with a very different deal?

Right, and just to focus on the MCN part of it, one of the big problems with MCNs is that they don’t harken back to their mission. Basically their mission was not defined by themselves.

Their mission was defined by Google and it is to add value. That’s ambiguous, but you could say there’s three places that MCNs could add value.Very few are doing this. You could say ad agencies and talent agencies could do two out of three of these easily. 

•       – By growing views & subscribers
•       – Providing business and/or production support
•       – Growing revenue

So, it’s important for MCN’s to be doing something different – creating technology, interesting integrations with available APIs etc.  Because you want to differentiate yourself and if you want an acquisition it’s good to own IP or unique processes .

Even if a creator is signed to an agreement, then at some point that creator’s going to want to get out of that agreement or that agreement’s going to expire. That’s not something other companies really want to invest in because you can go and hire talent.  This is the secret many in Hollywood do not want you to know, talent will “go” with almost anyone who is creating interesting stories, product, services.  The challenge is managing the workflow.  A lot of brands have success working directly with talent.

Anybody can hire your talent. That’s something people forget.

So, what’s the future of MCN’s?

It’s hard to build a product in technology that is actually going to be used by creators, but that’s the need.

We should be more focused on technology to help channels grow.

My classic example is Brendan’s Omelet Channel and my Crêpe Channel, and your handler at the MCN says, “Hey, Brendan. There’s this guy who’s making omelets and you’re making crêpes and you basically have the same audience and you’re both releasing videos on Tuesday. Why don’t you switch to Wednesday and point people there to Interviewee’s channel on Tuesday? And he’ll reciprocate and then down the line, let’s see if there’s a collaboration we could do.”

So, that is a perfect example of not only adding value, but growing the network because traffic goes back and forth.  A couple of MCNs have automated this process again points to the power of making great product and/or using technology to add value. More monetization opportunities. That’s an example of a great way an MCN could add value.

What actually happens is that everybody goes running into the space and the investors who put money in go, “Hey, wait a minute. You guys aren’t making any money. You’ve got lots of expenses, but you’re not selling enough.”

So, the MCN’s try and sell more media (not just brand integrations). The problem with that is that that media is already being sold by a person who has a Google business card OR it’s being sold in real time via an exchange.

The largest ad exchange called ADEX, which is part of DoubleClick, which is owned by Google.

By definition, if you have a seat on the exchange, you can buy and sell YouTube inventory. So, you can just go bid on channels in the exchange because there’s not an exclusive. You can get that inventory if you want it and probably pay less than what the Google salesperson is selling it for if you buy it via the exchange.

So that’s a challenge for MCN’s. Any savvy media agency is going to know that they can buy inventory via an exchange. They have a trading desk.

That is a perfect example of how an MCN fails because an MCN goes to try and sell more media, which isn’t really working because of the exchanges. And, as a result, helping to grow their audiences is falling by the wayside.

Why would the MCN’s sell media? Forget about that the exchange even exists – there are hundreds of Google salespeople crawling over every agency with piles of data. You can’t compete with that nor should you.

They [MCN’s] are just not going to sell the media. They’re not going to get the price that they want. And, the customers don’t want to buy their media because they’re able to get it already and from a cheaper source.

So, how were you guys actually adding value to creators?

Every channel, as part of our agreement would get optimized. We were trying to create technology to solve this, so that it wouldn’t become such a manual process.

You really need a technical understanding of what the Internet and in particular YouTube is…how it works. If you don’t understand the technical intricacies or the map of how to navigate this web, you basically won’t get the views that you need for free via SEO. And that is, once again, a point where MCNs have failed, where they don’t offer leadership. They don’t offer enough of those services.

I’m proud that we offered that. I think most MCN’s just made a lot of promises, and were just casting a wide net and pulling channels in as fast as they could without actually delivering much value.

There’s a lot of name dropping and that’s like heroine to a lot of young creators. They want to work with the big names or go to Hollywood and that’s what sucks them in. They have a little success and they think they’re going to be on CSI. That’s it. They’re just like, “Oh, my God, Hollywood. I’m doing this. Yeah.”

Let’s transition to the advertising side of things. Do you feel brands are doing enough to capitalize on this space?

What’s happening now is that MCNs, advertising agencies, talent agencies, and creators themselves are making it very difficult for a brand to figure out how to get from A to B.

I think that brands over a certain size…let’s say, if you have over $50 million in gross sales per year, they should be interacting with influencers and creating content directly.

And when I say “directly,” I meant they shouldn’t be going down the chain, the digital agency goes to MCN, who goes to the manager, who goes to so and so and then finally goes to the creator who comes up with the idea. That needs to stop.

There’s no reason to have that kind of expense. The whole thing about the Internet is that it removes layers, so you can have more direct control and access and that usually means you save money and you can do things quicker. And that’s what should be happening in 2015.

It should be, “Decide, create, deploy, measure.” And then you just keep doing it.

In terms of execution, there’s always tension between the creator and the brand. What do you think is the best way to navigate that?

Well, that’s called “creative tension” and that’s something that has existed since day one. And it exists in the writers’ room. It exists on the set.

When Martin Scorsese or Francis Ford Coppola is yelling at you and Marlon Brando in “Apocalypse Now” to act a certain way.  It exists everywhere. So, I think people are just basically fucking idiots if they don’t understand that.

But you have to set and control expectations. My rule is early, loud and often. You over-communicate to ensure everyone’s on the same page throughout the process.

What advice do you have for those working in the space?

I don’t care what anybody says. This is goddamn 2016.

There is so much talent, out there.  If someone’s an asshole and difficult to work with.  Guess what. You can find somebody else just as good. I’m not saying it’s going to be easy, but you can find somebody.