The Confessional #7: MCN Executive

In my latest interview as part of The Confessional series, my interviewee is the VP at a well-known MCN. This was one of my favorite interviews as the interviewee is a long time friend with a great deal of experience in the industry – he’s worked on the agency side and has worked in senior roles at two major MCN’s.

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.