Los Angeles Business Journal

YouTube’s Methods Channel Unrest

INTERNET: Content producers question promotion, revenue split. By Tom Dotan Monday, July 8, 2013

No competition

Among the gravest scenarios the aggrieved pose to YouTube is the idea of a mass exodus; that fed-up networks will continue to leave videos on YouTube – it’s free, after all – but will work out lucrative sponsorship deals on other platforms.

That has already played out on a small scale, though without enmity. YouTube star Freddie Wong has been posting videos on Blip.tv. Smosh, the most subscribed-to channel on YouTube, has also hosted content on its site, Smosh.com, for more than five years.

But the reason there hasn’t been greater movement away from YouTube to a competitor is because, right now, there isn’t one.

“I don’t know who’d want to compete with YouTube at this point,” said Sameet Sinha, an analyst at the San Francisco office of B. Riley & Co. “It’s being featured more and more in search results. Google is sending so much traffic to YouTube it’s become a search behemoth in its own right.”

There has been speculation that another powerful Internet company, such as Facebook Inc. or Amazon.com Inc. could play this role. Even Hulu, a video-streaming site currently up for sale by its big media owners, might become a home for more online content creators.

George Strompolos, co-founder of multichannel network Fullscreen, expects there to be an eventual distancing between You Tube and its content creators. His company, which just raised a reported $30 million in a round led by media investor Chernin Group, is exploring the possibility of building its own media player. Chernin has also been one of the parties circling Hulu.

But the move isn’t driven by animus, only the need to diversify revenue streams, he said.

“I don’t think anyone looks at YouTube as the end-all, be-all platform,” Strompolos said. “We’re building a next-generation media company, and most media companies own some distribution, channels and programming.”

Oh also believes in the gradual move to other platforms. Half of the overall revenue for Young Turks already comes from non-YouTube sources; the channel has a deal to produce content for news network Al Jazeera and has a PBS-like donation system in place.

But he sees the logic behind abandoning YouTube entirely as fuzzy.

“I don’t think anyone who has achieved success will ever leave. If they do, it’s a stupid business move,” Oh said. “Some may also look elsewhere where the revenue is stronger and deemphasize YouTube. In that sense, YouTube will be a launching pad for careers.”

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