Peter Kafka

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Maker Studios Buys Blip, and a Home Outside of YouTube (Update)

pewdiepieMaker Studios, one of the biggest YouTube networks, is buying Blip, a video maker and distributor.

Blip officials informed their staff of the deal this morning, and it is expected to close in early September.

I don’t have terms for the deal, but I would be surprised if Maker is paying a huge premium for Blip, which has struggled to find its footing in the last few years.

(Update: Maker will pay for Blip with stock and cash.)

The most important takeaway, for now, is that the deal gives Maker a home outside of YouTube for its content. Maker commands billions of views a month, and represents YouTube stars like Felix “PewDiePie” Kjellberg. But, like many big YouTube programmers, Maker has been trying to figure out how to make money with its videos beyond the ad dollars it generates on Google’s website.

In addition to a destination outside of YouTube, the acquisition will give Maker a proprietary video player it can put to use. Just as important, it will help the company bolster its sales efforts, as long as Blip’s sales team stays on board.

Some immediate consequences of the deal, according to people briefed on the discussions: Blip CEO Kelly Day, brought in from Discovery in March 2012, will leave. (Update: Day has been offered a job at Maker, says a source familiar with the transaction.) But Maker intends to keep a majority of Blip’s staff, and intends to keep the Blip brand active, as well — one person familiar with the transaction described it as a “complementary” acquisition.

The deal will also reunite Maker, at least for now, with one of its former stars. Ray William Johnson split with Maker in an acrimonious dispute last year, and signed on with Blip this spring, as part of a push Day had made to grab video talent. It will be interesting to see if Johnson sticks around now.

Meanwhile, Maker, which has raised $44 million to date, including a $36 million round led by Time Warner last year, may get another cash infusion from investors in the coming months. Blip had raised a reported $24 million since 2006, but I’m pretty sure that number doesn’t include a recent bridge round from existing investor Canaan Partners.

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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