YouTube,multichannel networks and the accelerated evolution of the new screen ecology

YouTube between ‘NoCal’ and ‘SoCal’

Our earlier framing of the new screen ecology (Cunningham and Silver, 2013) emphasized the evidence that firms that have long dominated the mass media may now face the most serious challenge in their history. Hollywood tried and, with the partial exception of Hulu, failed to establish viable online distribution businesses since the first attempts dating from 1997. Those which have instead succeeded are outsiders, most of which are much larger companies with far larger resources employing IT industry business models rather than Hollywood’s premium-content and -pricing models. We employ the distinction between NoCal (or NorCal) and SoCal, drawing from the ‘notorious rivalry’ ¹ in popular culture between Northern and Southern California as evinced in regional accent and degrees of (liberal) politics. But our focus is on the fact that this rivalry around cultural geography also maps remarkably to two very distinct, world-leading industrial cultures which are increasingly clashing and converging. The effects of such a clash of the Titans will largely determine the shape of connected viewing for years to come.

The fundamental difference between Google/YouTube, Apple’s iTunes, Netflix, Amazon, Yahoo!, Facebook (NoCal) and Hollywood’s incumbents (SoCal) – one which optimizes their chances of being able to formulate successful business models and better monetize screen content online – is that they have built the underlying platforms and affordances that largely enable connected viewing. They are Internet ‘pure-play’ companies that already had or have been able to develop a critical mass of online customers and possess extensive data on their past online search behaviour and purchasing habits. In addition, they have years of experience marketing directly to their customer base, targeting those most likely to be interested in a particular genre or program based on web analytics of each individual’s past behaviour and any product feedback that they may have provided. The fact they have been prepared to work around content blocking tactics of the Majors by commissioning new content has led to substantial change in the modes of presentation and distribution of content.

However, the closer the ecology is examined, the more it is apparent that it is better understood as an interdependent clash of cultures. Much of what is driving the corporate restructurings, readjustments, acquisitions and new businesses in this space – including the emergence of the MCNs – is the creative destruction wreaked by what we have called the ‘IT-innovation’ model on screen incumbents (Cunningham and Silver, 2013: 5). But just as significantly, the IT behemoths are having to come to terms with both the old and the new fundamentals of mass media entertainment. This includes the messy idiosyncrasies of taste on the consumer side that has given rise to established media’s ways of dealing with the radical uncertainty of demand (in economist Richard Caves (2002: 202) words, ‘it is not quite – but almost – appropriate to say that innovation in creative activities need involve nothing more than consumers changing their minds about what they like’). It also includes the wary conservatism about the digital harboured by brands and advertisers – which are the source of virtually all funding, as well as the new power and agency of content producers. On the one hand, the screen ecology is getting used to being in a state of what the software industry refers to as ‘permanent beta’ – a state of rapid prototyping, or ‘fail fast, learn, pivot’. On the other hand, Google’s engineering culture has to come to terms with branded content as the driver of the next stage of advertising revenue. This is the challenge of ‘monetisation after [Google’s] AdSense’, in the words of digital executive Jordan Levin (2015) – marketing and advertising that cannot be massively scaled-up through automation (or programmatics, as it is called in the industry).

The less than 10-year history of YouTube since Google’s takeover can be written as a history of Google seeking to come to terms with the SoCal fundamentals of entertainment, and content and talent development, from its NoCal base as an IT company dedicated to scale, automation, permanent beta, rapid prototyping and iteration. These efforts reflect both continuities and contestations with traditional media models, particularly business models. The results, especially for creators and MCNs, have been decidedly mixed.

YouTube’s monetization strategies have exposed the faltering codependency between media and advertising, reflecting the inefficiencies of traditional media advertising whilst highlighting the affordances and targeted efficacy of online analytics. In marked contrast to traditional film studios and television (TV) networks, YouTube elected to avoid the messy and legally cumbersome traditional media model of owned or shared IP. YouTube also avoided paying fees for content as well as offering backend residual or profit participation. Rather, YouTube entered into ‘partnership agreements’ with their content creators based on a split of advertising revenue from first dollar. This strategy has proven effective. In the 8 years since the partner plan launched, YouTube has secured over one million YouTube partners worldwide.

Following established practice in broadcast media, Google adopted the traditional advertising algorithm based on cost per thousand views (CPMs); however, Google was able to introduce targeted advertising based on the wealth of data provided by Google Analytics. Building on this NoCal twist, in 2007, Google introduced their AdSense technology to the YouTube platform, which allowed content creators to feature advertising on their YouTube pages, including semi-transparent banner ads overlaid on top of the videos. In 2008, Google’s purchase of DoubleClick introduced programmatic (automated) ad buying to YouTube’s platform. Combined, these technologies helped YouTube achieve virtually frictionless commerce on their platform on a scale previously unimaginable. In the wake of these initiatives, YouTube finally turned a profit in 2014 and is expected to top US$9 billion globally in 2015 (Hough, 2015). Although only 10% of Google’s total revenue – estimated at US$86 billion (Somaney, 2016) – as YouTube viewing keeps rising and ad dollars continue to shift to digital, these numbers are predicted to rise significantly. YouTube has become a viable competitor to traditional TV advertising, hoping to lure up to 24% of TV’s advertising revenue to the platform (O’Reilly, 2015).

Rather than suffer the fate of Napster, YouTube aggressively moved to mitigate the risk of litigation from the major rights holders, seeking rapprochement with traditional SoCal media rather than threatening it. In 2006, YouTube launched the revolutionary Content ID system that identifies professionally produced content and automatically flags potential copyright infringement. YouTube provides the option for the rights holder to either have the video removed or collect all the advertising revenue on the video. In addition, YouTube entered directly into negotiations with traditional media networks to create channels for their content. As a result of this strategy, YouTube managed to avoid most litigation with the major players, except for Viacom who would eventually settle their suite against YouTube for copyright infringement in 2014.

In addition, YouTube pursued new strategies to professionalize and program amateur, user-generated, vernacular content to secure greater advertising revenue. In 2011, YouTube bought Next New Networks (NNN), a web TV company that programmed multiple video channels featuring higher quality videos produced by original content providers. Shortly thereafter, YouTube launched their first of two Original Channel initiatives. These channels featured an eclectic mix of media brands and celebrities, including Madonna, Shaquille O’Neal and the Wall Street Journal. A year later, YouTube offered another US$200 million for a new set of 100 channels, which were a mix of the new and older channels.

In short order, YouTube had gone from a safe harbour for pirated Hollywood content to partnering with Hollywood media companies and professionalizing their own talent. Through their channel initiatives, YouTube seemed to be emulating TV, both in terms of the search for premium content and its codependence upon advertising revenue. As we have seen, for many industry pundits and academic scholars, YouTube seemed poised to become yet another media content industry. José van Dijckwas clear: ‘the distinctiveness of YouTube as an alternative to television was no longer defensible, particularly when we look at the site’s content’ (2013: 118).

However, the SoCal makeover was decidedly incomplete and has in many ways been abandoned. There remain stark differences in structural, organizational and material interests between traditional and online media, not least of which is the lack of distribution scarcity online leading to an abundance of content and low barriers of entry for content creators. The sheer, unprecedented scale of the ramp up of both content creators generating substantial subscriber/fan bases, and the engagement with advertisers to generate the revenue, has resulted in an overwhelming emphasis on volume, which is now coming into crisis.

This crisis is highlighted by the collapse of YouTube CPMs, even as the overall online advertising revenue has continued to grow. The ‘programmatic’ advertising model is an ‘extremely limited economic model’, according to one of the most successful online entrepreneurs, Hank Green (2014), becoming less and less viable as a sustaining revenue base for both creatives and intermediaries like MCNs. The content inventory has grown exponentially; as mentioned, there over a million YouTube Partners and 1500 channels with subscribers numbering one million or more. Partners are signed up to share AdSense revenue. AdSense income cannot in any way keep pace with the exponential growth of content seeking advertising support. Thus, according to Andrew Baron of Tubefilter:

YouTube has literally DESTROYED – with a capital DESTROYED – the video ad market. What started out as a standard and relatively reasonable benchmark of US$25CPM for both broadcast sales and online video sales just a few years ago, is down now to around a US$2 take home this year. (Winkler, 2015)

Meanwhile, a series of new online video platforms have emerged to begin to threaten YouTube’s incumbency, including SnapChat, Periscope, Vine, Instagram and Victorious. All of these platforms offer revenue sharing, although they differ in terms of the content and formats. For example, Vine offers only 6 s videos, SnapChat offers short form videos that disappear within 24 h and Periscope offers live broadcasting. Facebook represents the greatest threat to YouTube’s incumbency due to its comparable scale to YouTube. Over the first few months of 2015, Facebook launched their own proprietary video player and introduced a partnership program for their own content creators. In terms of monetization, according to Bakersense, Facebook has in 2015 eclipsed YouTube as the premiere video platform for branded content (James, 2015).

NoCal tech culture is comfortable with, and expects to, regularly ‘reboot’ (start again), ‘iterate’ (try again) or ‘pivot’ (change direction). Over the past few years, YouTube has repeatedly changed their partnership plan. Revenue splits have shifted from a high of 70/30 in favour of their premium creators to a standardized split of 55/45. In addition, in order to improve their analytics for advertisers, YouTube routinely changes their algorithms, which has resulted in the mysterious – mysterious, that is, to creators who depend on the constant connectedness to their viewers – disappearance of millions of subscribers overnight for some creators. These shifts in agreements and analytics have contributed to creator–partner disgruntlement, driving a great many creators to alternative platforms such as Facebook, Instagram and Vine. In response, YouTube has begun to fund film and TV ventures under the banner of YouTube Originals featuring their top content creators, for example, PewDiePie, Smosh, Fine Brothers, RoosterTeech, Lilly Singh and Joey Graceffa. These SoCal initiatives have helped YouTube thwart defections to other platforms.

YouTube’s latest pivots would appear to be less visionary or strategic and more reactive in response to new competitor platforms, organizations and services. YouTube cancelled their channel initiatives and launched their own in-house ad agency, The Zoo, designed to deal directly with advertisers and YouTube creators. In a major move that apes ‘mainstream’ platforms for professional entertainment content such as Netflix, YouTube Red, an ad-free subscription service claiming to enable access to 95% of existing platform content, was launched in late 2015. Red is designed to thwart the new windowing strategies offered by platforms like Vessel and Vimeo and to generate a much-needed additional revenue stream.

YouTube’s ability to iterate rapidly reflects their NoCal ethos of ‘pivot or die’, although their latest moves still borrow from SoCal business models. YouTube Red is less like a premium cable model, more like windowing, a traditional media licensing practice, in this instance offering subscribers a ‘sneak peek’ without advertising. After an unspecified amount of time, the content will be made available on their original platform with advertising. In addition, the service also offers Google Music, a bundling play comparable to cable TV packages. Furthermore, as described in the next section, YouTube has entered into direct competition to MCNs, the very organizations that YouTube helped fund and create.

MCNs in the vortex of the convergent innovation space between NoCal and SoCal

After almost a decade of accelerated evolution, YouTube’s platform has helped launch the potential and realized careers of hundreds of thousands of content creators, some of whom are building their brands across multiple platforms both on and offline. Core to assisting YouTube to come to terms with SoCal media culture was its facilitation of MCNs, most of which were formed in the wake of YouTube’s partnership program and channel initiatives. MCNs have helped YouTube manage, monetize and professionalize amateur content creation when its explosive growth could not be managed by YouTube alone.

The term ‘MCN’ is arguably a misnomer, a term that broadly and reductively describes an array of media organizations. All aggregate channels, but the strategy differs: horizontal aggregators are scale driven (Fullscreen, QuizGroup), vertical aggregators target niche markets with strong community bases (Machinima, Tastemade, StyleHaul, DanceOn) and some employ talent development agency strategies (AwesomenessTV, Big Frame, Maker Studios), whilst others seek to lead in technology (Zefr, BroadbandTV). MCNs feature diverse histories, some of which (Machinima, Maker) well predate YouTube’s channel initiatives. These organizations are comprised of both traditional and digital media managers, whether described as executives, producers, agents, social media marketers or even, in the case of analytics company Zefr, ‘fanthropologists’. In addition, these MCNs feature multiple, diverse and evolving value propositions including networks of digital creators producing content across multiple channels and platforms, digital studios and production companies designed to professionalize amateur content creators and digital talent agents and managers helping to monetize amateur content creators across traditional and digital platforms.

In the context of media production cultures studies (e.g. Caldwell, 2008; Mayer et al., 2010) and debates about the precarious status of creative labour (amongst a large literature, see Banks and Hesmondhalgh, 2009; Banks, 2007 and, for an evaluation, Cunningham, 2014), these organizations need to be examined as contemporary instances of precarious creative media management. Media management scholarship has described an array of media organizations and professionals, whether independent film and TV production companies, production and programming executives operating within film studios and TV networks or talent and management agencies and representatives, but it has rarely been posited as precarious as has so much below the line media work. Some scholars characterize media managers as ‘hidden talent’ (Kemper, 2009) or ‘invisible labor’ (Roussel, 2015), operating within a liminal position between media owners and creative labour, yet exercising considerable power and influence. Albarran (2010) and Küng-Shankelman (2008) have challenged the normative assumptions about media management, as distinct from other forms of business management, particularly when fostering collaboration, creativity and innovation. In addition, the value and practices of talent and literary agents and managers have been overlooked by all but a handful of scholars including Kemper (2009), Roussel and Bielby (2015) and Zafirau (2007). Havens and Lotz (2011) have developed this discourse further, considering how managers have ‘circumscribed agency’ within the structure of media organizations. Production scholars (represented in, e.g. Mayer et al., 2010) have only recently identified how TV production executives have operated at the intersection of creative labour and brand management.

Johnson et al. (2014) have proposed that ‘management should be framed not merely as a work category responsible for overseeing labor, but as a kind of labor – and a way of creating meanings and values from labor – that takes diverse forms within the media industries’ (p. 19). Lotz (2014) recognizes the presence and value media managers occupy across multiple industries, featuring a dizzying and opaque array of titles and operating with variable forms of agency. Havens (2014) refers to these media professionals as media intermediaries ‘operating as prime focalizing sites for the transaction between industrial and representational practices’ (p. 39).

Whilst scholarship on media management has been thus articulated, it has yet to be applied to MCNs and their management cultures (but see Mann, 2015). In this section, we stress their increasingly precarious nature, in contrast to traditional media management operating in the relatively more settled Hollywood media system, as well, for that matter, as inside Google/YouTube. This precariousness arises from the MCNs being creations of the volatile conditions within the new screen ecology; its accelerated evolution bears directly on their sustainability.

MCNs’ placement in the middle of the convergent innovation space between NoCal and SoCal sees them being ‘squeezed’ from above and below. ‘Above’ – more powerful than – them in the ecology is Google/YouTube, which, having invited in, nurtured and licensed MCNs, is now encroaching on their basic business model by developing its own branded content R&D through direct engagement with top brands in its in-house agency The Zoo. ‘Below’ them, successful, MCN mentored, YouTubers are poached by mainstream talent agencies, move to the numerous other platforms on offer, and/or negotiate much better terms of trade for themselves. To remain viable, MCNs are needing to innovate even more rapidly than YouTube and the other digital platforms, and certainly faster than established media, and with both NoCal and SoCal strategies.

On the NoCal side, these organizations have morphed beyond channel aggregators on YouTube to become MPNs. Borrowing from their own client’s creative practices, MPNs foster a rhizomatic content creation and distribution strategy that neither NoCal platforms nor SoCal networks can easily emulate. This strategy goes beyond cultivating spreadable media that can flow across platforms (Jenkins et al, 2013); rather content has to be reconfigured to appear natively on each platform according to their affordances (e.g. 15 s videos on Instagram, 6 s looping videos on Vine and so on). Whether the content is monetized or simply promotional, these posts all provide added value to creators incubated, nurtured and professionalized by the MPNs. In addition, these MPNs provide either proprietary cross-platform analytics or rely on a raft of new third party data companies (e.g. Zefr, Social Blade and Tubular Labs) that generate more comprehensive analytics than any single platform can. Multiplatforming represents an altogether unique strategy from either NoCal distribution or SoCal content and arguably represents another evolution in connected viewing.

On the SoCal side, they are managing a quite different class of entry- to mid-level talent to that managed typically by talent agencies. Online creators, by definition, bring successful audience development, and clear ideas about the roots of their success, with them. MCNs are under pressure to prove their value to successful creators. On both sides, the MCNs face Clayton Christensen’s (2000) ‘innovator’s dilemma’ – the dangers of first-in-line innovators.

This select history of MCNs highlights these dynamics. As previously mentioned, NNN was purchased by YouTube in 2011 and helped inspire the Original Channel initiatives and the funding of MCNs. However, NNN was actually launched years earlier in 2007 and run by a mix of veteran traditional and digital media executives. Furthermore, prior to its purchase by YouTube, NNN had been a multiplatform content company, having entered into partnership agreements with both AOL and Myspace. Since their acquisition, NNN became an incubator lab for YouTube’s channels and partners and no longer existed as a standalone organization. As for their hybrid traditional–digital management team, one of NNN’s partners, Herb Scannell, had been a Senior Nickelodeon executive and now runs BBC Worldwide productions. NNN partner Timothy Shey had worked within the emerging digital divisions of traditional media before helping to launch NNN and now runs YouTube’s scripted programming division. As a prototype MCN, what happened to NNN is indicative of precariousness: YouTube not only acquired NNN, but subsequently closed down its operations, borrowed its business model for aggregating creators and programming channels and then disbanded or subsumed their management.

In the case of Machinima, the business case impelled by YouTube’s investment bore little resemblance to its original identity. Launched in 2000, machinima.com became the hub for a highly innovative format that remixed videogame elements to create scripted entertainment. Relaunched in 2007 as a media company, Machinima became a YouTube-based site and, by 2011, became one of the earliest channels funded by YouTube. In a major NoCal makeover, Machinima morphed into one of the largest MCNs, operating as a mass aggregator of gameplay and fan boy channels of far less quality and distinction than their original format-specific site. Despite the massive scale of Machinima’s audience, the ongoing tensions between the earlier aspiration as a production studio and a mass aggregator of – at least from the point of view of advertisers – problematic content have inhibited growth of the company beyond AdSense revenue, thwarted its potential buyout except for modest investment by Warners and contributed to massive management upheaval.

Although originally launched as talent management agencies, in the wake of YouTube’s channel initiatives, Collective Digital Studios and Big Frame incorporated production and programming operations. Founded in 2005, The Collective had been a traditional talent agency servicing traditional film, TV and music talent before representing emerging digital talent (e.g. Fred Fugglestone, a pseudonym for a character created by online content creator Lucas Cruikshank). However, YouTube’s channel initiative required The Collective agency to launch Collective Digital Studios, providing production facilities for successful YouTube content creators. Later, CDS returned to its primary function as a talent management firm featuring digital content creators operating across multiplatforms, aware, as most MCNs have become, that being tied exclusively to one platform is unsustainable. In July 2015, the German media company, ProSieben, invested US$85 million to acquire a controlling interest in the company.

Like CDS, Big Frame was initially a talent agency, managing the careers of early digital content creators like Philip DeFranco, although the founders, Sarah Penna and Steve Raymond, were former TV executives, not talent agents. Like CDS, YouTube’s channel initiatives impelled Big Frame to become an MCN with programmed channels featuring a suite of ‘verticals’. (A vertical is a single themed set of channels (like a TV genre or format), with a focus on particular market segments which are at the same time potentially cohesive online communities.) These channels catered to women content creators (Wonderly), fashion-lifestyle (Polished), LGBT (Outlandish) and urban (Forefront). However, Big Frame was acquired by a larger MCN, AwesomenessTV, in 2011, which assumed management of these programming channels. Meanwhile, Big Frame returned to being a digital talent management firm, representing talent operating across multiplatforms, including content creators working for other MCNs.

But talent management – a core SoCal business activity – is radically different for MCNs. The head of the digital division of a leading Hollywood talent agency commented:

A traditional film or television artist – a writer, a director, a performer – has spent a certain amount of their life preparing to be ready for when opportunity knocks.… The mentality of a digital creator is the exact opposite. They’re not preparing for an opportunity; they’re creating it themselves. Everyone loves to knock this generation for being lazy and entitled and [say] they think that everything should just come to them […] these digital stars are more proactive and more aggressive about taking their careers into their own hands than any generation we’ve ever seen before in the video business. (Weinstein, 2015) ²

The typical YouTube creator has had no or little specific training, few qualifications, but comes into the orbit of the MCN with at least some degree of success already established and seemingly abundant clarity about their relationship with their ‘fan base’. As a consequence, these young, underdeveloped, but empowered, creators have the ability to come and go from the embrace of MCNs. Whilst MCNs contract for exclusivity, as talent grows in power and agency, the MCNs lose the ability to sustain these relationships. As a result, talent flight is common, whether a consequence of poor management, competition from other MCNs, or youthful whimsy. Most notably, disgruntled talents, like Ray William Johnson (2012), have publicly voiced their concerns over ‘exploitative’ MCNs.

MCNs also compete with each other, innovating with both NoCal and SoCal strategies. Under pressure of this competition, MCNs offer a diverse and ever-increasing suite of services, including advertising, production, audience, talent and brand management. MCNs are primarily involved in boosting advertising revenue, through both programmatic multiplatform ad sales, on the one hand, and brand integrations, on the other. For programmatic ad sales, numerous MCNs, like Maker and Fullscreen, have launched proprietary software that claims to provide superior analytics and royalty reporting. In addition, a number of data/tech companies have emerged, like Tubular Labs, ZEFR and SocialEdge, that offer their own proprietary technology to MCNs and creators as well as to brands. These services not only provide more meaningful data than YouTube’s own analytic service but they operate across multiple platforms.

In addition, MCNs help facilitate and manage advertising integrations, a non-programmatic set of practices that align brands with influencers. These services are non-scalable and labour intensive. This practice represents more than traditional media product placement or even sponsored media that harkens back to early 1950s TV; rather, the brands are featured organically within the representational and narrative strategies of the content creator. Brand integration is precarious. In our interviews, we heard accounts of content creators walking away from six figure offers out of belief that the brand was not aligned with their content; to go forward with a brand that contradicts their lifestyle would be a breach of trust and authenticity between creator and community. Whilst the communal values appear to trump commercial value, creators understand that sustaining their relationship with their fans represents the only long-term sustainable value. As Big Frame talent manager, Byron Austen Ashley (2015), confirmed, ‘At 19, a million dollars is great. It’s not great if it’s the last check you’ll ever cash’.

Only a handful of MCNs offers production and studio services, for example, access to better equipment, production resources and sophisticated editing practices. In part, this reflects the low barriers of entry for production and the low quality of the content demanded by their community. That said, they may offer their clients online tutorials for production, editing and social media engagement. Meanwhile, content creators continue to develop their skills on the job, acquiring best practices from other creators. However, one of the unique propositions that MCNs provide is collaborations with other content creators. These ‘collabs’ help introduce new content creators and/or aggregate fan communities for both creators. This further reflects NoCal, ideal social media, values, as distinct from the more competitive world of traditional media.

SoCal-style talent management services intent on moving clients from the farm to the big league are fraught with complication and viable for only a small subset of content creators. Traditional media has less value for these on-screen performers, who have never cultivated the core Hollywood skills of acting, screenwriting or directing. Only a small percentage of content creators recognize the value in working in Hollywood, whether for lack of adequate remuneration, control or time. For the more successful content creators, some of whom are earning six or seven figure sums from multiple revenue streams, traditional film and TV fees can be uncompetitive. Other content creators are less willing to give up the virtually absolute control they have over their own work. Meanwhile, the time required to write or perform in traditional media, including protracted periods of development or simply waiting around on set for the lighting to change, can cost the creators valuable time spent creating their own proprietary content and fostering further engagement with their fans.

MCNs are helping their talent pursue a mix of sales, distribution and windowing strategies. Sales and distribution may include repackaging content to be premiered on other platforms, for example, AwesomenessTV on Nickelodeon, or to international platforms and TV, even where YouTube is available. Windowing strategies mean offering SVOD platforms, for example, Vessel and Vimeo, first look or additional content. As an index of the pressure faced by MCNs, they are also aggressively pursuing other ancillary revenue streams, not least of which is the highly profitable fan conference business. Hank and John Green launched VidCon, a fan event, creator workshop and industrial trade show. At 2014’s VidCon, 18,000 fans met their favourite creators in an event routinely described as ‘something like Beatlemania’ (Levine, 2014). Of note, the sixth VidCon will expand beyond YouTube to other platform for the first time, including guest speakers from Vessel and Twitter.

In addition to the events such as VidCon, the live touring business is booming, featuring content creators from multiple platforms. A short list includes the Vans Warped Tour, Amity Fest, Digitour and the OMG music tour. In 2014, Fullscreen launched InTour as ‘a vehicle for our Fullscreen talent to be with fans, experiment and create’, according to Fullscreen SVP, Larry Shapiro (Bloom, 2014). Similarly, AwesomenessTV has their own live tour business, which includes the Fifth Harmony tour, by 2015 in its 5th year.

MCNs may also assist creators with developing a line of consumer products or merchandise lines, like the Fullscreen Shop or Maker Shop or the AwesomenessTV’s retail store in Los Angeles. Numerous YouTubers have secured book deals, particularly with Razorbill, an imprint that is a division of Penguin and Random House. A number of these have landed at or near the top of bestseller lists, leading the Los Angeles Times to inquire ‘Can YouTube stars save publishing?’ (Kellogg, 2015). In addition to their tour business, AwesomenessTV has been most aggressive in pursuing their owned and operated ancillary revenue, launching a retail store, young adult publishing line and music record label. Whilst all this ‘ancillaries’ development looks like standard SoCal strategy, very little of it has occurred through traditional media infrastructure.

As YouTube regularly pivots its platform, partner and channel strategies, MCNs have been forced to pursue alternative strategies for sustainability. Most notably, as noted initially in this section, many leading MCNs have transformed into multiplatform networks, pursuing revenue and engaging in marketing, content, distribution and audience strategies across an ever-increasing number of online video and social media platforms and offering creators platform integration strategies and analytics superior to YouTube’s. For some, this strategy is simply a reflection of their talent-centric management model, following their clients wherever they migrate. For others, this strategy helps thwart an untoward dependency on YouTube. As Amanda Taylor, CEO of DanceOn noted:

I think that if you were to launch a company strictly saying, ‘We’re just going to aggregate a bunch of channels and that’s going to be our business model on YouTube,’ you’re vulnerable.… YouTube has way too much power over you. When people say, ‘MCNs don’t work,’ that’s what they’re thinking, but really, with any of these companies, I think that you either have to be multiplatform or combine with a media giant to survive in some ways, but also to flourish. Every powerful media company is a combination of a variety of different companies. (Taylor, 2015)

Acquisition is considered an increasingly safe harbour for MCNs exposed at the vortex of the accelerated evolution of the new screen ecology. These multiple, iterative strategies by MCNs-turned-MPNs has resulted in over US$1.4 billion in acquisitions or investments by traditional media. In October 2013, DreamWorks Animation launched what has become a proverbial land grab by traditional media for MCNs. They spent US$33 million to buy and merge AwesomenessTV and Big Frame; a year later, Hearst paid US$81 million for a 25% stake in the company, now valued at US$325 million. DreamWorks Animation’s acquisition was followed by other traditional media players’ moves to acquire, partner or invest in MCNs. Most notably, Disney acquired Maker Studios for a staggering US$500 million (with an additional US$450 million on offer against performance targets). In addition, in moves up to late 2014, Fullscreen was acquired by Otter Media, a joint partnership between The Chernin Group and AT&T, for between US$200 and US$300 million. European media group, RTL, purchased beauty vertical Stylehaul for US$150 million and invested in Canadian-based BroadbandTV, which allowed them to launch RTL’s Digital Hub.

Conclusion

In attempting to break with a ‘fall from grace’ narrative that may structure analysis of the rapid professionalization and monetization of previously amateur online video content on the main global platform, YouTube, this article has constructed histories of key institutions in the new screen ecology as outcomes of the increased interpenetration of very different, often clashing industry cultures. Google/YouTube, Apple’s iTunes, Netflix, Amazon, Yahoo! and Facebook (NoCal) are largely Internet pure-play companies, whilst Hollywood’s incumbents (SoCal) practice time-honoured mass media and premium content strategies. The ‘history of the present’ of the new screen ecology is the history of the clash of these cultures.

The less than 10-year history of Google’s YouTube can be written as a history of Google seeking to come to terms with the conditions of possibility for entertainment, content and talent development from its base as an IT company dedicated to scale, automation, permanent beta, rapid prototyping and iteration. These efforts reflect both continuities and contestations with traditional media models, particularly business models. As emerging intermediaries in the middle of the convergent space between NoCal and SoCal, MCNs’ placement sees them needing to innovate on both the NoCal and SoCal side. On the former side, MCNs are attempting to provide value-added services superior to basic YouTube analytics, with programmatics and pioneering attempts at management of scale and volume. On the latter side, they are managing a quite different class of entry- to mid-level talent, who bring successful audience development and clear ideas about the roots of their success with them. The new screen ecology is a space of unimagined scale and scope of flourishing online creativity and culture, which is at the same time turbulent and precarious for creators and MCNs alike.