Trouble in MCN Land: Jason Calacanis Tears YouTube Wide Open - VideoInk

Trouble in MCN Land: Jason Calacanis Tears YouTube Wide Open

/ Jun 3, 2013

VIS-CalacanisYT

Over the weekend, Twitter went a-buzz at the hand of serial angel investor and internet entrepreneur Jason Calacanis’ lastest rant against YouTube.

In a blog post titled “I ain’t gonna work on YouTube’s farm no more” Calacanis tears a hole in YouTube’s business model and how it affects publishers and content creators. Essentially, Calacanis discusses how media companies “have no chance of breaking even” because YouTube collects a 45% tax on all ad-related revenue. Combine that with pretty much no marketing support, an in-house sales operation that isn’t even entirely devoted to YouTube (which Calacanis believes is a way for YouTube to control the relationship with advertisers by distancing them from the publishers), and massive individual overhead, the potential for real business revenue on YouTube is nearly impossible. Ultimately, these reasons are why Calacanis claims he turned down YouTube’s funding renewal.

“Since YouTube doesn’t have to create any content, just aggregate it, they don’t need to worry about the individual profitability of any one brand. Things can be dying and soaring and going sideways throughout their ecosystem, but as long as they have a ton of traffic and control the relationships with advertisers, they win,” Calacanis notes.

While the post is certainly a knife to the YouTube jugular, the points Calacanis raises actually signal a tipping point for YouTube and a massive opportunity for the other platforms gaining strength like Blip (which just acquired Ray William Johnson’s production co.), Revision3 (which just acquired Phil DeFranco’s production co. + IP), Yahoo!, Hulu, and even Dailymotion (which was recently close to netting a pretty nice acquisition by Yahoo! if not for the French government).

His points also unearth a significant problem for the “MCN’s” who are building their businesses essentially on, around, in, and on top of YouTube.

“Sure, it can *feel* like you’re making money, but when you look across the landscape of YouTube businesses — and we won’t call anyone out here — it’s very, very clear they are losing millions and millions of dollars a year,” he adds, which makes the deals that Revision3 and Blip have made with top creators like Phil DeFranco and Ray William Johnson all the more important for the future models.

At a dinner series published by PandoDaily, Jason Hirschorn makes an excellent point regarding VC apprehensions about the media businesses that are reliant on YouTube. According to Hirschorn, VCs are telling the MCNs that are looking to raise money that “[they] need to have a fragmentation strategy, [they] need start thinking about maybe not how you’re moving off YouTube but how you’re not dependent on them.”

“In summary, if you are a content company trying to build a ‘YouTube business,’ you are investing in your own demise. You must stop and think, ‘How can I reduce my YouTube footprint to 1/3rd of my mix of revenue and views?’” says Calacanis. ”Every time you invest $1 in YouTube, you’re building their power base and leverage over you. How can you invest that $0.66 of that dollar in an asset you control? At least then you might have a fighting chance over Goliath.”

Which is why in the last year or so, top creators like DeFranco and Ray William Johnson have started siphoning their audiences off of YouTube. Big Frame has launched multiple verticals (geeky girl brand, Wonderly, and urban-centric Forefront), starting to migrate their businesses to platforms where they control the ad revenue, the consumer, and the content creators — three categories Calacanis marks as the most important for any business to control as well as the same three categories that YouTube seems to be going after with its business strategy.

There will be a day when some of these MCNs band together and create a worthy competitor to YouTube; we’ve already heard rumors that a coalition of MCN’s is forming to fund and co-produce content.

And who knows, YouTube co-founder Chad Hurley’s new online video project, MixBit could end up being a YouTube competitor, regardless of what he said at SXSW.

YouTube needs to realize it’s no longer at the center of the online video universe. The other premium video sites — the Blips, Hulus, Yahoo!s, and AOLs — have the chance to grab a significant market share in online video if the right acquisitions happen and creators are wising up to the stranglehold YouTube has over them within the current system.

Do you think Calacanis made the right call in turning down YouTube’s $$? Any predictions on who will win the platform race?  Share in the comments below! 

 

 

 

Tags: , ,


vimeo high maintenance

More Episodes of ‘High Maintenance’ Coming to Vimeo...

Luke Cage Marvel Netflix

Marvel Finds Its Luke Cage for Netflix

john_mccarus01

John McCarus Named Chief Strategy Officer of Media General

hispanics online video

DirecTV Starts OTT Plans with Spanish-Language Video Service Yaveo

joebereta

Joe Bereta to Leave ‘SourceFed’ for Defy Media

Zealot Networks

ITV Invests in Ex-Maker Studios CEO Danny Zappin’s Zealot...

NewsToKnow

Monday 12.22.2014: News to Know

interlude

Interlude Teams with Warner Music to Make Interactive Music Videos

Sony The Interview

Sony’s ‘The Interview’ Could Go to Crackle,...

Top5_Music

5 Emerging Music Channels on YouTube

Tv_cordless

FCC Makes Proposal to Expand Definition of MVPDs to Include...

US_OnlineVideo

The US Online Video Market Is Getting Competitive —...

MysteryGuitarMan  Beyond

‘MysteryGuitarMan’ Joe Penna to Take Viewers...

NewsToKnow

Friday 12.19.2014: News to Know

fargo hulu

Hulu Gets Another FX Show (The Big One)

MeandHer

CNE Brings The New Yorker to The Scene

Zealot Networks

Danny Zappin’s Zealot Networks Takes Majority Stake in...

tumblr_480x400

VHX Now Has a Video ‘Library’ and Mobile App

hulu4

Hulu Nabs Exclusive SVOD Rights to a Lot of FX Shows

Vevo01

Vevo Arrives on Xbox One as Its App Viewership Spikes in 2014

Cameron Dallas Expelled

Cameron Dallas Movie ‘Expelled’ Tops iTunes

Johnny Dynamo

WATCH THIS: Indie Series ‘Johnny Dynamo’ Is Back on...

AllTime10s

Diagonal View Teams with BuzzMyVideos to Bring Popular YouTube...

TheCreatorShow

YouTube Has a New Show to Spotlight Creators and New Features

YouTubeMusical_DD

YouTube Music Night: Meet Your 2015 Musical Obsessions

DIY_Selfie

YouTubers Dispense Music-Video Style Tips in New Vevo Series

netflixTV

Netflix Scores Huge Pay-TV Deal with Dish Network

Legendary 2

Legendary Names Carlos Sanchez VP of Distribution for Latin America

NATPE

NATPE Promotes Jordan Ryder to Oversee All Event Programming

21st Century Fox

21st Century Fox to Buy Interactive Video-Ad Startup True[x]

Channel Frederator Network

Channel Frederator Network Continues to Grow

Marriott International

Marriott Inks More YouTube Talent Deals, Casts First Short Film

TerryCrews

Terry Crews to Host Jukin Media’s ‘World’s...

OITNB_Alist

Seen Any Good Movies Lately? Netflix on Android Has

bryant_hernandez

Esquire to Release New Golf Series on Digital Before TV Premiere

NBCDigital

NBC to Stream Live on Digital, but Don’t Celebrate Just Yet