Why big media is buying YouTube stars — and who could be next

Gigaom

It’s been clear for a while now that big media brands are taking web video seriously, but how to get organic traction within the space has proven to be a bit of a pickle. The clearest example of this? The way in which YouTube’s funded originals program has evolved — while the first round was full of big-media brands making stabs at content for the web video audience, the second round has seen YouTube scale back, and focus largely on YouTube-grown talent.

But major networks and studios are now taking a new tact. The latest strategy: Instead of invading YouTube, major companies are acquiring those who built their understanding of YouTube from the ground up — people who have proven their ability to grow and engage with audiences on the platform. Earlier in May, for example, DreamWorks Animation picked up AwesomenessTV for a reported $33 million. And last week, Phil DeFranco, who’s been working with Revision3 since 2012, was acquired by the Discovery-owned company.

What Revision3 has paid for (it’s still unclear how much they paid) are the thriving channels that DeFranco has created, including Streamy-winning Sourcefed and his own Philip DeFranco Show. But Phil DeFranco comes with the deal — he’s joining Rev3 as a programming exec.

Why make a partnership like this? In an interview with New Media Rockstars, DeFranco’s financial advisor Mike Bienstock said this:

The reality is that the sales machine that everybody loves through the AdSense mechanism can’t keep up with inventory. What’s going to happen is that customization is important in terms of brand deals, and custom ad deals are going to be more important. People aren’t going to throw ads on X thousand or X million impressions — they’re going to want to say, ‘Hey, I want my ad against SourceFed Nerd.’ Because I have excellent demo data on audience — I don’t care what CPMs are — I’m going to pay much greater than the CPM scenario because we have a full-blown, interactive engagement with the audience.

In short: While AdSense is great, what Discovery/Revision3 offer DeFranco and his team is an advanced approach to putting advertising on their content. It’s the next evolution of building the business, and one other YouTubers are considering.

Because in general, one signpost of this industry’s maturation is the fact that so many known creators have made similar sorts of moves. Ze Frank is, after a similar aqui-hire, executive vice-president of video at Buzzfeed. My Damn Channel is home base for Grace Helbig. And even theoretically independent creators work closely with MCNs and management companies.

Of course, the obvious question now is: who’s next? Here are just a couple of examples of creators who might be poised for bigger deals:

Anyone else you think might benefit from such a deal (or any companies that should consider a similar aqui-hire)? Let us know in the comments!

Photo via Phil DeFranco on Instagram.




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