The Innovators

Spinning Viral Stars Into One-Man Empires: The Rise of YouTube's Multi-Channel Networks

The Innovators


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Innovators push the boundaries of the known world. They're change agents who are relentless in making things happen and bringing ideas to execution.

Spinning Viral Stars Into One-Man Empires: The Rise of YouTube's Multi-Channel Networks
Big Frame's co-founder and chief creative officer, Sarah Penna.

If YouTubers are tomorrow’s movie stars, then a budding faction of multi-channel YouTube networks could very well be the film studios of the future. And most intriguing of all, perhaps, is the circuitous way in which Hollywood itself increasingly wants a slice of the YouTube pie.

Just last week, Big Frame, a boutique YouTube multi-channel network (MCN) based in Los Angeles, was acquired by DreamWorks Studios for $15 million. That deal comes fresh off the heels of Disney’s purchase of Maker Studios -- a competing MCN -- for a staggering $500 million in late March.

In an exclusive interview with Entrepreneur.com, Big Frame's co-founder and chief creative officer Sarah Penna called the consolidation of the space “exciting and validating in equal measure," but said it's only the beginning.

“There’s no precedence for any of this. Every day feels like you’re sewing the parachute as you’re jumping out of the plane.”

Related: Rumored: Yahoo Might Launch Its Own YouTube, Allegedly Snatching Up Viral YouTube Talent

Just as nobody anticipated that making videos could spawn full-fledged careers for thousands of content creators across the globe, a sizable gap still exists between viral celebrities who boast massive fan bases on social media but remain largely unrecognizable beyond YouTube’s insular confines.

And it’s precisely this gap that Big Frame is seeking to bridge. But what exactly does a YouTube MCN do?

Industry Savvy And Packed Rolodexes

With viral notoriety, YouTubers are thrust into an unfamiliar and high-stakes corporate arena. Many have no prior business experience, Penna said, nor the time to respond to an influx of daily offers from companies seeking to integrate their products into popularly viewed videos.

And so MCNs, possessing industry savvy and packed rolodexes, negotiate the deals. For instance, an MCN might help a YouTuber land sponsored videos, merchandising, product lines, personal appearances or book contracts.

Related: Your Customers Are Likely More Engaged on YouTube Than on Facebook or Twitter

In exchange, MCNs -- which are not affiliated with or endorsed by YouTube -- pocket a cut of each deal they help broker, as well as a percentage of each channel's YouTube ad revenues.

And the kinds of financial opportunities for YouTube’s so-called “beauty gurus,” who traffic in the highly commercial realms of beauty, fashion and lifestyle products, are seemingly boundless.

Ingrid Nilsen, for instance, who goes by the moniker Missglamorazzi on YouTube and signed with Penna in 2010, recently realized an unforeseen dream: she teamed with e-tailer startup BaubleBar to design her own jewelry collection.

But with increasing opportunity, YouTubers must strike a tricky balance so as not to come off as peddlers or self-promoters. In the beginning, in fact, Nilsen says she shied away from sponsored content and paid partnerships in order to build credibility with her viewers.

Eventually, in realizing that authenticity and commerce were not mutually exclusive, she allowed herself to dream bigger.

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