We covered a number of topics including:

• How Youtube’s relationship with creators has evolved
• The massive growth of the YouTube partner program
• YouTube’s relationship with MCN’s

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.

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A lot of people are confused about how hands-on YouTube does and does not want to be with creators. How hands on are they?

There were three critical moments in YouTube’s approach to creator relationships. Pre-2010, there weren’t too many interactions with creators.

2012 was a pivotal time. It’s when brands started to seriously invest into digital media, MCNs started to gain legitimacy, and YouTube made a million different bets and hundreds of millions of dollars. It was like, “We want to enable these YouTube-enabled businesses, we are fine with people intermediating.”

2014 and 2015 was the most material shift, where YouTube was like: “Holy shit, we are losing the thing that made us special and we will put humans as well as dollars behind getting that relationship back.”

So that’s where they are now. YouTube is on the defensive because a) they’re saying that because of MCNs, agents and managers have been further intermediated, and b) they’re nervous because of competing platforms like Facebook Video.

Going to the MCNs, what sparked you guys jumping in to address the affiliate and the managed?

The origin of direct and manage came from naturally the evolution of the MCNs.

MCNs were born out of feature arbitration. The partner program was important at the time because not only could you monetize, but you would also agree on certain features like custom thumbnails and custom banners. In the early days if you weren’t one of the YouTubers hand selected by YouTube to be a part of the partner program then you had to join MCNs to get these things.

This is the house that divided YouTube, where half of us were pro-creator. The other half was like: “No, we actually need to enable these MCNs to continue to thrive.” But if you look at the numbers it wouldn’t have mattered. Maker Studios would love to believe that they hold 10 percent of traffic for YouTube globally. They don’t, it’s less than two percent. If they left, they wouldn’t do shit.

Was there pressure within YouTube to kind of prop up the MCNs to a certain extent?

In a way. We got rid of their ability to feature arbitrage and were forced to create real value-added services. This is when you start to see them invest in real sales team, production houses and so forth. It’s because we forced their hand. Because we took their dependency on shit they should have never depended on.

Do you think they’ve done enough to provide value to creators?

It depends. For the larger ones that are highly scaled, do they provide the value they should? No. They never have. Talk to any creator and you will get that response.

My thoughts on MCNs are generally negative. It’s a questionable value they provide across the board, certainly on ongoing basis. In my opinion, all of them were saved by the big media companies who needed a digital play and just don’t understand shit. But, am I happy, in hindsight, that they did exist in some fashion and that we are validated…yeah. It was worth it. But do I think they are useful, in reality? No.

Could you talk at all about the growth of the partner program?

Initially the partner program was small – an ever growing group of hand selected creators. In 2011, we took it from 33 thousand people to 4 million. Now, when you fast forward to today, the partner program doesn’t really exist. And that’s by design. We made a super-conscious decision to move away from the notion of partner because it was brand inconsistent with YouTube, and we didn’t philosophically like the idea of a non-democratic platform.

We wanted to enable anyone to turn creativity into a career. And what that practically meant is anyone can use certain features and programs, anyone can have a deep relationship with YouTube, depending on performance. It wasn’t demarcated by the relationship you have with your MCN or otherwise.

We did this to scale monetization and as a result brought in 50 percent more revenue. Even though most of the channels we enabled monetization for were tiny, it mattered because of how big the platform is.

When YouTube opened up the partner program to the masses did CPM’s lower?

The CPM’s did start lowering. However, around that time another factor came into the picture that had a way bigger impact on the creator’s bottom lines.

In 2012 we launched Watch Time as guiding algorithm of YouTube. As a result, a lot of people who did click-baity stuff suffered. I remember overnight a lot of channels lost 50% of their viewership.

What was the impact of the Partner Program to YouTube’s bottom line?

By opening up monetization to more and more people YouTube has generated billions in revenue. In 2011, after we began scaling the partner program, we grew revenue 50%. This was in spite of the fact that most of the channels we enabled monetization for were tiny. That’s how big the platform was (and is today).

The addition of monetization of more of the long-tail helped us generate $400 million dollars, which that year, in 2011, was a third of all of YouTube’s revenue.

We covered a lot of ground and dove into some juicy topics, including:
-The process of working with brands and creators
-The role MCN’s currently play with his talent
-Media sales
-The future of MCN’s

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’s it like working with brands and creators?
I think that it’s fun because people are getting a bit more used to what a YouTube integration campaign looks like. There’s not as many questions as there used to be.

That being said, there is still is a lot of education that’s occurring on a daily basis and sometimes we as managers are educating the people who are bringing us the deals, because all they want are the impressions and the views and they don’t understand that it’s a fine line that needs to be walked. If they are too heavy-handed, they’re going to defeat the purpose that they’re trying to achieve.

Where are most of your brand deals being sourced from?
I get deals from all over- MCNS, PR companies, ad agencies, and brand direct. What role do the MCNs play in the ecosystem for you with your talent?

They’re just a sales agency at this point. They definitely don’t manage any talent, nor should they because there’s an obvious conflict of interest. MCNs will always do what’s best for them not what’s best for the talent. They’re not trying to nurture careers and look at long-term effects of what actions will have on creators, because their end game is squeezing out as much profit as possible.

The talent is a commodity to MCNs.

Do the MCN’s sell the media for any of for your talent?
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.

Why else would they be reluctant to notify the party that their contract’s up for renewal?
If you’re confident in the service you’re providing, you’re never hesitant to let the other party know that it’s up for renewal. Why would you be? It’s professional courtesy.

How does your talent feel about being in an MCN?
Most are indifferent. Some want out of their contracts and be independent.

So, where do you think the MCNs are headed?
MCNs are waging a propaganda campaign where they’re telling all these ad agencies that they have relationships with creators that are exclusive, when they’re not. They’re not even remotely exclusive.

They say that they alone know how to handle campaigns with creators, when they could just go directly to the talent handlers. If an MCN brings me a deal for my clients, I’ll definitely do it if it’s right. But I think it would just be better for everybody if they were more honest about the role they play.

What role is YouTube playing these days in terms of the relationships of talent?
They’re trying to increase their role. YouTube’s so big, YouTube’s so vast, and the fact that it’s so vast affects how it interacts with talent.

If you’re a network, a television network, and you’ve got basically half-hour slots, Monday through Sunday, 24 hours a day, there’s only so many people that can be on air. But if you’re a website, and anyone who can upload anything can be successful, anytime, it just creates this very unwieldy landscape. It’s hard to manage and have impactful relationships.

Why do you think they bother trying to cultivate real relationships?
Most likely because of YouTube Red. Google’s always thinking a few steps ahead.

YouTube Red is going to be a challenge for them. It’s a bit nebulous what it is at the moment and paywalls are so fucking weird. If you set one up you better give me a solid reason that I can remember as to why you did it. But if it’s just so I can download content, I’m not sure that it’s worth it.

What do you think I haven’t covered off on that people should know about? What’s the juicy topic you want to talk about?
I would say it’s really that MCNs are really exploitative and don’t deliver on their value promise. And that people should know that, creators should stop joining and stop renewing their contracts.

Why do you think they are joining?
The top ones are joining just 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.

Thanks you for your time!

My latest interviewee for The Confessional is a senior advertising agency executive who’s worked on the media and strategy side of the business for over a decade. In this extensive interview, we discussed how the ecosystem has evolved, how much advertisers have (and have not) adapted to working with digital influencers, as well as the newfronts and its role in influencing the flow of ad dollars.

Some of the major points we covered were:

• How the ecosystem has changed over the years
• The best ways to work with creators
• The role of Brandcast and the digital newfronts

How has the space changed since you got started nearly a decade ago?
The biggest change is probably the money.

I remember when I first got started it was hard to get clients onboard with the idea of even paying for YouTubers to create content around their brand. Everything was so siloed back then and, more often than, not they thought of YouTubers as PR and PR should be free.

It was really fucking dumb. Brands would pay millions of dollars in production and media for an agency to create content, but wouldn’t spend any money at all on a YouTuber who actually had a massive audience.

Do you feel like the process of working with YouTubers is more defined today?
It’s getting better. It’s certainly a lot more accepted to work with YouTubers, Viners, Instagrammers, etc. That said, I think a lot of the agencies, creatives in particular, real look down upon a lot of the influencers. There’s a certain arrogance that a lot of agencies have when it comes to anything involving creative.

Regarding, how to work with creators – it’s not really defined. Anyone can work with them any number of ways. The media agencies sometimes do buys and sell through branded content done by influencers as part of the package. Creative agencies and PR agencies sometimes carve out this space as being their domain. It’s not uncommon for brands to have direct relationships.

Also, the way to reach creators to work with them is a clusterfuck. You have MCN’s, talent managers, traditional talent agencies, and the creators themselves all negotiating deals. There’s a huge dogpile at times that creates a lot of confusion.

In your experience, what’s the best way to work with creators?
It depends, there are some great mediators out there who really add value – whether that be a talent manager, MCN account manager, or whatever. It really varies person to person.

However, it never hurts to have at least some access to the source – the creator. That allows you to have a better feel for who you’re working with and what they are and are not receptive to.

The NewFronts are coming up this week – as an advertiser, what’s your take on that?
The NewFronts is the ultimate industry circle jerk.

Upfronts was something created from the Mad Men era when there was limited ad inventory and you had to work with people face to face. None of that is relevant today.

I can buy media cheaper by NOT dealing with the publishers than I can by dealing with them directly. It’s insane. There’s more inventory than anyone knows what to deal with. Why are we, as advertisers, paying a premium? That premium goes to pay for salespeople, bloated organizations and events like those held at the NewFronts.

As a vendor, I totally understand why you’d do the NewFronts. However, brands and their media agencies should be smarter, but they’re not. Why should they be? They can go and be wined and dined by potential partners and then spend the brand’s money. There’s no real accountability to work harder and smarter within a lot of these organizations… in fact, if anything a lot of them are so rigid in their processes you’re better off (career wise) to play it safe and not stick your neck out.

What about YouTube’s Brandcast?
Brandcast is really more of the same. I’d say they do a better job than most in putting on a show and providing tangible insights to help convince advertisers to shift more dollars to YouTube, so in that sense it is good.

However, typically, YouTube is trying to dumb down their offerings for their audience. Once again, I’m not blaming them or the publishers. They’re all REALLY smart to continue to do these events. It’s the brands and media agencies that are dragging their feet that make these events necessary.

Want to get more brands to buy on YouTube? Sell it like TV, like they did with Google Preferred. How fucking insane is that? You need to make things more inefficient to help pull these decision makers into the 21st century. Fucking drives me nuts.

What’s your take on all the attention and ad dollars that have gone into promoting the creators over the years?
Once again – it’s taking an old school approach and applying it to this new medium.

Want to get advertisers to invest in branded content with YouTube stars? Put them on a billboard.

That’s kind of crazy when you think about it. The fact that they were reaching 10 million people wasn’t enough? Fuck. Do you not do any research whatsoever about the media habits of your target?

Any parting thoughts?
Everyone follows the money. If brands evolved and really changed their processes and how they chose work with creators and agencies this could be a much more exciting industry than it is today.

Today, it’s hard to push innovative work through. I don’t think it should be easy, but I don’t think it should be this hard.

So much of this industry is based on legacy relationships and ways of working. These major brands are going to disappear in a few years if they can’t adapt. I genuinely believe that Fortune 500 companies will disappear if they can’t change the way they spend their ad dollars. TV isn’t impactful enough. You’ve got upstarts spending pennies on the dollar in digital to get way more impact.

Brands need to stay hungry and adapt if they want to survive the next few decades.

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.