Peter Kafka

Recent Posts by Peter Kafka

YouTube’s Payouts to “Channel” Partners Come With Strings

YouTube is trying to convince professional content makers to create stuff for the video site. And it’s offering some of them millions of dollars to make it happen.

But even though Google has plenty of money, it’s not giving it away. That cash comes with strings.

Here’s the way one potential YouTube partner has described the company’s offer.

  • YouTube will give the company $5 million to create a branded “channel” for the site, which it will feature prominently.
  • YouTube will keep selling ads against the channel, and will keep all revenue up until it recoups its $5 million outlay. After that, YouTube and the channel partner will split ad revenue, roughly 50/50.
  • Content on the channel will initially be exclusive to YouTube. But after the first year of a three-year deal, the channel partner can distribute their stuff wherever else they want.
  • The channel creator will retain full ownership of all of their stuff.

For obvious reasons, I can’t name YouTube’s potential partner. It’s also not surprising that YouTube hasn’t responded to my request for comment on the deal points.

So I don’t know definitively that this is YouTube’s standard deal for its channel strategy, which is being championed by former Netflix executive Robert Kyncl.

That said, I wouldn’t be surprised if the rough outlines remain the same for all 20 channels the company is trying to put together.

And from the outside, the deal makes sense for both sides. The content guys don’t have to wait to get paid. And YouTube gets a steady stream of stuff that could be easier to sell than dogs on skateboards. Not that there’s anything wrong with dogs on skateboards.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work