“In the music industry, there’s a common belief that the majority of YouTube stars’ money comes from YouTube. The reality is it just doesn’t.”
Lewis Silkin’s Cliff Fluet was speaking at The Great Escape on a panel titled ‘The Emerging YouTube Industry’, drawing on his experience acting for YouTubers and other social talent.
“Seven years ago, yes, it did. But now some of these people are amongst the biggest authors in the country. Some are the biggest sellers of merchandise. Some are the biggest partners with brands. And those deals are being done direct.”
If the aim of the panel – moderated by Songdrop co-founder Brittney Bean – was to educate the music industry about shifting trends in the YouTube world, it succeeded: scotching several myths while offering insight into the way YouTubers and other digital stars conduct their business.
Starting with multi-channel networks (MCNs). “The role of an MCN has changed quite significantly over the last five years. Their role originally was to aggregate channels, audiences and content, and sell advertising over that network,” said Fluet.
He noted that since YouTube has allowed its creators to sign up for ‘partner’ status and enable its various ad formats for their channels, this role has been disrupted, forcing MCNs to pivot in various ways.
Some are focusing on specific niches – music included. Others are becoming production studios, creating shows for their stars. Others have become ‘multi-platform networks’, diversifying beyond YouTube to other online-video services and social apps.
Fluet’s fellow panelists agreed, including Conrad Withey of artist development platform Instrumental. “The early MCNs’ model was aggregation: they literally rolled up as many creators as they could to get a large number of views and attract advertisers,” he said.
Tahir Basheer of Sheridans said that savvy YouTubers (and their lawyers) had been sceptical of the value being provided by MCNs, keeping their contracts short so they could identify whether their MCN was really boosting their revenue, and exit swiftly if not.
The less savvy YouTubers? “Some of the documents people are still signing are frankly shocking,” said Fluet, with relish. “They get exclusive rights to represent you for brand deals. They get exclusive rights to make your shows, and even to shwo them in peak-time on American television. For three years! It really is something Abraham Lincoln would have had an issue with.”
The panel weren’t completely down on MCNs: Basheer said that many YouTubers “use them for what7 they’re good at” while holding back rights to work with other companies “who add value and can do things better than an MCN in their fields of activity”.
Mark Walker of promoter Kilimanjaro and management firm Free Focus drew a line between good MCNs and those who don’t deliver value for their creator clients.
“With many MCNs there’s been a lack of transparency and it’s come back to bite them,” he said. “YouTubers all talk to one another, and they realise that they [the MCNs] are taking a cut off the top, without really helping them.”
Alex Bewley of talent agency WME talked about the kinds of direct deals that YouTubers are signing, from brand partnerships and live tours to book publishing or film production deals, often brokered by their agency.
There can be pitfalls, however. Some YouTubers have received a slap on the wrist from regulators when their branded videos fell foul of advertising regulations. “The regulation is very clear: it wants people to know exactly when something is an advertising message and when it isn’t,” said Fluet.
Basheer added that many YouTubers’ currency is their authenticity, meaning that an advertising-standards complaint against them for not making it clear enough that a brand was paying them to make a video could make their fans melt away.
The flipside, as Walker put it, was that “if a YouTuber is being honest about the work being branded, their fans respond to that” positively.
On the live side, a YouTuber with hundreds of thousands – or millions – of subscribers can sell out venues for live appearances, but that’s no guarantee they can deliver a good show on the night.
“Many are not classically talented. They may be very good in terms of doing skits and funny stuff on YouTube, but they haven’t had the opportunity to learn stagecraft. If you shove them on stage with a broom, they can just look startled, and the audience doesn’t like it,” said Fluet. “There are far too many events like that in the YouTube world.”
That said, some are making it work: British YouTube stars Dan & Phil have sold out the London Palladium, while conventions like VidCon in the US, Videodays in Germany and Summer In The City in London draw tens of thousanda of fans to meet their online idols.
Withey said that even YouTuber musicians – several of which are represented by his company – can struggle to match their online success in live venues.
“We’ve put live shows on where we’ll sell the meet-and-greet tickets in about five minutes, but then we can’t sell the general admission tickets,” he said.
“What the live show is is an important consideration. Even with musicians, it’s not necessarily the case that the fans want to come to what we think of as ‘a live show’. The music is important, but it’s the access that they really want to pay for.”
The panel warned about the dangers of judging the popularity of a YouTuber purely on their subscriber numbers: half a million subscribers does not mean half a million people will be clamouring to buy tickets to a tour.
“Certain YouTube talent have huge subscriber numbers but very low levels of engagement – even some superstars,” said Fluet. “Subscriber numbers don’t disappear when the audience does,” added Withey.
Some music festivals are catching on to the YouTube world, and approaching managers and MCNs to get their stars to come along – either just to attend and record some vlogs, or to perform on a stage.
Fluet was wary. “At the moment, everyone is – in a very unsophisticated, unsubtle way – trying to crowbar people into the wrong places,” he said. “There needs to be the right context at the right time. Simply stapling a vlogger to a music festival will look shit. It won’t stop people doing it, and it won’t stop for a while, but hopefully this nonsense can evolve into something helpful for both sides.”
Instrumental is one of the companies trying to work with musicians who have built their audience on YouTube. Withey talked about the company’s origins “thinking we’d be a music MCN” before it focused more on development.
The company built software that scrapes YouTube’s API for data on new creators uploading music content, which has so far collected a database of more than 45,000 musicians. The system also identifies those whose audiences and engagement are growing fastest, with Instrumental then trying to sign those artists to development deals.
Warner Music has invested in the company, seeing it as a potential pipeline of new signings – although Withey stressed that this is not an exclusive arrangement: one of Instrumental’s creators is about to sign a deal with Universal Music, for example.
“We’re open to who we go on and partner with. It might be a label, or we might look at doing a book, live shows or merchandising. It’s about how we help that talent build their audience,” he said.
“I left Warner Music to do this because the only deals we could do [with new artists] were six-album deals. This talent just doesn’t fit that. If we see the subscriber growth and engagement, it’s a great indicator of their potential. It’s auto-A&R. Most music people will say ‘that’s just wrong’, but for us it’s a great indicator of future success.”
Withey estimated that out of 500 musicians on his company’s books, only around four or five will go on to do traditional record deals, while the vast majority will stay independent.
“We just had our first artist get in the top 40, but we didn’t spend any money on marketing or promotion. We got that track onto the right playlists, and it was streaming that took him into the top 40,” he said. “Playlists drove discovery.”
Basheer pointed to YouTuber KSI’s recent deal with Universal Music, but warned that for many musical YouTubers, “baby-step deals” may be a better way to go. “Development-deal type formats, so that you get good at your music and understand that environment well,” as he put it.
“With some majors, you can structure a deal that preserves all the right value [for the YouTuber],” said Fluet. “As long as they’ve got the copyright on the master sound recording, they’re quite happy to let all the other value fly out of the window! Which I’m quite happy to exploit to the full on every occasion…”
Asked to declare the biggest upcoming opportunities around the area of online video and digital influencers, both Basheer and Fluet chose Facebook’s burgeoning video ambitions, while Bewley picked Snapchat.
Walker, however, chose to focus on a challenge, saying that some of the most successful digital-talent agencies are “closed off and want to keep everything to themselves” rather than work with promoters and other partners in the ecosystem on new projects.
“Opportunities are getting missed. They won’t talk to a promoter who could get them a better deal on the venue they want to use, for example. Even getting a meeting with some of these people is really frustrating,” he said.
“It’s about seeing it as a team. There’s no reason why you can’t have a manager, an agent, an MCN, a lawyer all working together,” said Bewley, although Basheer pointed to caution from the YouTubers about “how many slices are coming off the top” with so many cooks involved in their business. “How much of the pie is there to spread around?” he said.
The panel were united in praise for the work ethic and ambition of popular YouTubers, while warning that even the most committed could be derailed by age and/or burnout.
“These guys are entrepreneurs, prepared to bet on themselves. Most of the influencers I know would say no to an advance in a heartbeat if they had ownership [of their rights],” said Fluet. “In music, very few unless they are uber-superstars – and even then the cheque can be big enough – would be able to say no in the same way.”
Bewley stressed again that the digital talent need to figure out what they’re comfortable with. “Some people are great in front of a camera in their bedrooms, but put them in a meet-and-greet at a table with 1,000 fans and they struggle, or in a meeting with a book publisher they freeze,” he said. “Then again, they may absolutely love it, and come away with a multi-book deal.”
Basheer sounded a note of caution for the long-term sustainability of some digital stars. “For a lot of the vloggers, their audience is young, and over time they get older. If you’re 35, is it appropriate if you’ve got 14 year-olds watching you every day?” he said. “Will they grow up with you, or will they get tired of you?”
Withey said that the demands being placed on YouTubers may lead some to burn out before they have to tackle that challenge.
“It’s really hard work to sustain what these guys are doing. Music artists could have six months off while they went and made another album, but that doesn’t work in this world. If you have six months off, it’s all disappeared,” he said.
“For some of them, it ends: they decide ‘I can’t keep this up any more’. They seem to be working harder than they were a couple of years ago, when they were starting to become properly mainstream.”
The session ended where it began, though, with a discussion about the role of MCNs in this space.
“The classic MCN model is over. In many ways, YouTube allowing you to upload and monetise directly is the death knell for that business. In simple terms, merely aggregating views is not going to work for you,” he said.
YouTube itself could be under threat, though. “Is YouTube the future? I think the next decade belongs to Facebook. WhatsApp, Instagram, Messenger, their ephemeral messaging platform, their rights platform,” said Fluet.
“They’ve just unleashed their next generation of intra-app bots too. If that sounds like crazy science fiction, that’s because it is. The ecosystem they have built makes YouTube and Google look positively one-dimensional.”