Before I watched Machinima’s cinematic new series, Halo 4: Forward Unto Dawn, I had to look it up on Wikipedia. Halo ranks among the most successful game franchises in history, and Forward Unto Dawn among the most expensive web series to date, but I’m not a gamer. Unless you are, you might not even know about YouTube-based Machinima.com and the popular niche show, which aired last month. Both are critical to YouTube’s present and future as a next-generation television network.
I’ve written a lot on YouTube’s slow progression to a full-fledged network. It’s been a long journey, from the site’s start as a place for pirated mainstream media content to its present-day pitch as an alternative to television itself.
YouTube has long sought original, exclusive video. Over the years initiatives like the Partner and NextUp programs have enriched and empowered independent producers while giving the site much-needed buzz, a steady stream of cheap marketable videos and a virtual halo. Unlike TV, YouTube could claim to be helping the little guy.
Now a growing chorus of critics are starting to speak up about torrent of cash flooding the site and the shifting balance of power in favor of large distribution networks and corporate producers.
What Forward Unto Dawn Says About the New YouTube
Even for a non-gamer, Forward Unto Dawn is entertaining, at times bracing. From cinematography and editing to acting, the production has the confidence of on-air dramas. It could be on Syfy — some might argue it’s better than a lot of Syfy series.
How did Machinima orchestrate such an ambitious project? Simply, it has a large, marketable audience film and television studios find difficult to target. Gaming is a mass medium, and growing stronger, yet no real television network exists for them (G4 is close, but scripted dramas it has not). It makes sense, then, that some of YouTube’s best original dramas come from Machinima’s Prime channel. The network is skilled at convincing brands to spend millions to reach an audience increasingly disenchanted with television. Increasingly it’s beating out television: the week after Forward Unto Dawn concluded, Battlestar Galactica‘s antcipated prequel, Blood and Chrome, premiered on Machinima Prime.
Machinima has also proven adept at attracting investors. So YouTube watchers were not surprised when AllThingsD reported this summer that YouTube chose Machinima as the recipient of its largest direct investment, to the tune of $35 million. That valued Machinima at over $200 million.
Isn’t that a conflict of interest? In a world where Comcast owns NBC, no. But it should raise an eyebrow. Google sees YouTube as a hub for premium advertising, something it needs desperately as Facebook threatens its search business. YouTube has been shifting focus from “performance” (views) to “engagement” (time spent watching videos). The goal is to feature high-end, “professional” programs that can command more attention and thus higher ad rates. The effect is to privilege premium channels, which get hundreds of millions in marketing support from Google.
The former-amateurs who built YouTube into the web’s leading video network are clearly not a priority for Google going forward. Take for example this statement from the company’s Q1 conference call in advance of Newfront and the release of the premium channels:
…[W]e’re also rolling out our 100 new original channels on YouTube featuring top talents like Jay-Z, Madonna, Tony Hawk, as well as innovative new media companies, and YouTube’s old successful partners. We think YouTube is fast becoming the platform for the next generation of channels, which is great because we’re also seeing initial success selling the sponsorships for these channels to large advertisers such as Toyota, Unilever, GM. This is all in anticipation of the big up-front event coming up in May.
Google’s priorities are, in order, mainstream celebrities, new media companies (Machinima chief among them) and, lastly, “old successful partners.” Google took the best of the best of its original creators — at the top, indie-advocate Philip DeFranco — but focused on corporations who could work comfortably with other corporations like Toyota and GM.
After spending big bucks to bring in big brands, YouTube logically wants to give those networks special treatment. Now those networks are growing stronger and flexing their muscles.
Networks Outmatch Creators
In recent weeks, independent producers have started to get vocal about how YouTube’s shifting priorities are causing massive drops revenue for some creators. Thousands of YouTube partners spent years building profitable channels, uploading hours and hours of short videos for pennies-on-the-view. Those partners learned to attract audiences by tagging videos and encouraging subscribers to find them on the homepage. Now YouTube’s focus on engagement privileges longer — read: expensive — videos like those of Machinima.
The rise of YouTube networks or studios has increased competition and raised standards for marketing tactics like tagging. There are about a dozen networks operating on YouTube, including Machinima and companies like Maker, Revision3, Fullscreen and Big Frame. The companies have a number of responsibilities. They sign new talent (creators), help producers find sponsorship and assist with analytics. They’re founded on a simple theory that has dominated American broadcasting since the 1920s: strength in numbers. Bundling groups of talent makes it easier to sell programs to advertisers and other financiers. This is how most of American media works today. The biggest video networks log billions of views each month.
A year ago studios were greeted optimistically by the press. The New York Times compared studios like Maker to United Artists and MTV. But these days, the studios have birthed a welter of cautionary tales. Critics say networks and studios sign stars with restrictive contracts that split revenue unevenly and make it hard for the dissatisfied to break free.
Leading the critical wave are people like Kevin Nalty, a YouTube veteran who has been arguing that studios don’t benefit most creators.
“Young artists imagine a team of network specialists supporting them, and collaborating with other artists in the network… dreams that don’t come true,” Nalty recently wrote.
Machinima was among the first networks to be the recipient of creator complaints. Machinima’s network consists of thousands of artists who make machinima (narrative video of games). Producers griped that their contract with the network was virtually endless, keeping them locked in without hope of independence.
Concerns about how studios are operating escalated this fall when YouTube star Ray William Johnson, who built one of YouTube’s largest subscriber bases (recently surpassing six million), said he would leave Maker Studios and produce his show on his own, though according to a Maker spokesperson, he is still under contract. Maker rightly claimed Johnson’s views were declining, but Johnson accused Maker of cutting into his earnings and attempting to take ownership of his channel.
Since studios don’t release detailed financials, we may never know for sure who betrayed whom, but history tells us networks have little incentive to be fair. Our advertising-based and lightly regulated media system has been designed in their favor.
Our broadcasting system has evolved to favor corporations who control content and distribution. In 1920s as radio started to take off, NBC pioneered chain broadcasting, using a network of affiliated stations across the country to increase its reach. Federal regulators, aware of the tyranny of monopoly, were still slow to catch on to chain broadcasting. Local stations slowly discovered that being part of a network meant accepting sponsored programs from New York and cutting back on independent local shows. NBC paid stations to carry corporate broadcasts. What was in it for the affiliates? Along with money came increased media attention for its programs and, hence, larger audiences. The same reason YouTubers have joined YouTube’s large networks, studios and premium channels.
Television grew from radio, and thanks to lobbying from leading companies, our broadcast system was set up to favor centralized control over distribution. For most of American media history, three or four channels greatly outmatched their local affiliates and dominated the market. Today we have more channels, but the same small number of corporations who package those channels to take large cuts of hundreds of billions brands spend on TV advertising.
YouTube and the major networks have learned from history. By organizing a wide variety of shows and producers under a smaller number of networks and channels, web video distributors can command better rates from advertisers and make programs easier for audiences to find.
What’s lost is the diversity and experimentation that made YouTube a transformative media property.
Regulation — or lack thereof — still favors centralized control. It’s hard for the government to take issue with YouTube’s behavior when Comcast, the nation’s largest cable distributor, owns both NBC, the nation’s oldest broadcasting network, and Hulu, among the web’s largest channels.
The course is set for YouTube going the way of radio, broadcast and cable before it: a small fleet of companies sailing comfortably on a sea of talented producers eager to be plucked from obscurity onto profitable ships. A few will get rich, the rest will keep swimming, hoping for a break.