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What Is Maker Studios? And Why Does Disney Think It's Worth $500 Million?

Rob Walker
Tech Columnist
Yahoo Tech

Photo by Reuters

If you mostly associate YouTube with amusing cat videos, repurposed late-night show skits, or vintage music clips, you may be puzzled by the news that the Walt Disney Company is buying a YouTube network called Maker Studios for $500 million.

Among other things: What does “YouTube network” even mean?

Let’s back up a second. Much media coverage of YouTube still treats the platform as essentially the home of zany viral one-offs — the enduring cliché summary would be “dogs on skateboards.” A couple of years ago, when YouTube itself announced a slew of new arrangements with high-profile content creators like Madonna and Ashton Kutcher, it was treated as a sort of coming-of-age moment: evolving beyond amateur content, “going pro,” and essentially being absorbed by mainstream Hollywood.

That strategy didn’t amount to much — and this was no surprise to anybody who was actually paying attention. The reality is that a bunch of YouTube “amateurs” had long ago “gone pro” without Hollywood’s help, building sizable audiences and in many cases earning a decent living from their share of YouTube AdSense revenue. A smaller (but still notable) number had also begun to develop successful business strategies and deals beyond YouTube, from marketing to merchandise.

Along the way, these YouTubers (as these creators sometimes refer to themselves) built a new entertainment ecosystem that wasn’t merely TV on a computer. A couple of years ago I had occasion to attend an annual event called Playlist Live that is a sort of combination trade show and fan convention for the YouTube scene, and learned firsthand that YouTube culture is a thing unto itself.

And this brings us to Maker Studios, which was founded in 2009, and styled itself as a sort of United Artists for the digital-video era. Just as that Hollywood studio’s founders included creators like Charlie Chaplin and Douglas Fairbanks, Maker’s founders included highly successful YouTubers such as Lisa Donovan (a maker of parody videos under the name LisaNova) and Shay Carl Butler (patriarch of a family whose amusing domestic adventures are documented on a reality-style YouTube show called The Shaytards).

Never heard of them? Well, millions have: Butler’s Shaytards channel has more than 2 million subscribers, and its videos (posted daily) routinely draw hundreds of thousands of views.

The idea for Maker involved pooling resources, and bringing more video-makers into a kind of talent network. Maker would provide resources like studio space, cross-promotion, potential deals with brands, and general expertise. YouTubers who signed on would fork over some of their channel revenue. Today this network claims about 55,000 YouTube channels.

These include Epic Rap Battles of History — example: actors playing Donald Trump and Ebenezer Scrooge face off — and PewDiePie — in which a young Swedish guy provides jokey and profane commentary to video games.

If that sounds a bit lowbrow and sophomoric, just try watching. (But maybe not at work — I’m not kidding about the profanity.)

Why would Disney want a piece of this action? The answer is that it’s wildly popular stuff — especially with young people. Both Epic Rap Battles and PewDiePie are among the most popular channels on YouTube, and Maker says its network racks up a combined 5.5 billion views a month.

Maker is not the only business built around this model: Warner Brothers recently made an $18 million investment in the game-focused network Machinima. And its brief history has not been terribly smooth. Prominent YouTuber Ray William Johnson broke with Maker in a messy monetary dispute, and co-founder Danny Zappin sued the company after he was replaced by a new CEO last year. More broadly, many YouTubers see the network model in general as exploitive, taking more from video makers than it provides.

Disney’s specific plans for Maker aren’t currently clear. Neither is Maker’s actual profitability — or, for that matter, the long-term viability of the YouTuber ecosystem that spawned the company in the first place.

But the deal is a genuine landmark just the same. For years, mainstream media companies fundamentally viewed YouTube culture as a sort of minor league phenomenon made up of creators who were really just auditioning for a “real” TV show.

Disney is essentially acknowledging that, instead, it’s a completely different sport, with its own set of rules. The behemoth that Walt built wants in on this curious new game, and it’s betting that, one way or another, Maker can make it a player.