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Is YouTube Red paying off?

The new SVOD offers more data, more complications and more levels of complexity, but not necessarily more money for MCNs.
January 8, 2016

Since YouTube Red is still in early days, it’s understandable that the biggest MCN players are trying to wrap their heads around how to manage it.

And much like the early ad-revenue sharing days of a few years ago, one thing the new SVOD has introduced is even more information on payments, said Thomas Kramer, VP of product at Bent Pixels, a software company that helps MCNs manage their data flow from YouTube.

Despite the new income stream, more data and levels of complexity are leading to more complications – and not necessarily more money, especially for smaller and international MCNs.

Each MCN receives a monthly revenue report from Google for every video under its network. That’s not every creator. Every video.

Considering some creators have dozens of channels, that’s a lot of information to parse.

Red has introduced a new layer of complexity onto that data-set. Under the Red banner, creators are paid out based on watch time versus views, Kramer told StreamDaily.

YouTube aggregates all subscribers (of which they have yet to release any information on, number-wise), and then takes 45% off the top. The rest is split up among YouTubers based on how long subscribers actually watched the content itself.

To add a layer of difficulty, based on existing and legacy contracts with music labels, certain music videos are pulled out of that category and paid on a per-view basis, much the same way they were under the ad-supported YouTube model.

This results in hundreds of thousands of data rows in spreadsheets, said Kramer, “which can be very difficult for the everyday laptop to process.”

Companies like Bent Pixals offer software to help clients sort through and make sense of that information, and many of the really large MCNs have dedicated software teams to help create code to do the job.

However, all that data has put pressure on smaller MCNs that often don’t have the resources to effectively deal with the challenge. Meaning many risk being overwhelmed by data.

And with YouTube Red’s limited availabilty (it’s only in the U.S. at the moment), it’s also created issues for international MCNs that have a majority of creators outside the U.S. and who “make very little because they have comparatively fewer viewers in the United States,” said Kramer.

“So at this stage, it’s not generating a lot of money, but it’s costing a lot to solve manually – and these (small and international) MCNs are still contractually obligated to pay out their funds to their creators,” he said.

 

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