This article was originally written for Canada Media Fund’s blog. It can be found here
HOW DO MCNS WORK?
On YouTube, multi-channel networks (or MCNs) are organizations set up to manage multiple video content creators, primarily YouTubers and YouTube channels.
There’s a certain similarity to digital advertising display networks that represent websites and sell banner advertising. The difference resides in the fact that MCNs often participate and work with channels to help create and improve their content; they are also actively involved in the development of channels within their network.
MCNs work directly with YouTube and are given access to a content management system (CMS)—a system that enables a MCN to manage multiple partner channels and, in a case by case basis, they are given tools to implement Content ID. Content ID is a tool that allows copyright owners to identify and manage their content on YouTube. Every video that is uploaded is scanned against reference files that content owners have uploaded into the CMS. If a match is found, YouTube takes action in accordance with the rules or instructions that the content owner programmed in Content ID.
When a channel joins a MCN, some additional tools within the channel dashboard are unlocked to optimize and claim content. Networks offer various types of support such as production and editing tools, funding, monetization assistance, cross-promotion with other channels as well as digital rights management.
In addition to the abovementioned services, MCNs can provide other advantages like production support and training as well as studio spaces complete with cameras, sets, wardrobes and green screens. They can provide creators with channel growth strategies, website support and the opportunity to collaborate with other YouTubers within the network.
WHAT ARE THE BIGGEST MCNS?
MCN rankings can differ depending on the metric used: number of channel partners, number of monthly views or revenues. The largest MCN in terms of views is Maker Studios, with over 4,5 billion monthly views across thousands of channels. AwesomenessTV has the largest number of channels, i.e., more than 86,000. (Source: Multi-Channel Networks, a white paper by Vast Media for MIPTV)
Some of the older and most well-known MCNs are Machinima and Revision3. More recently, we’ve been increasingly hearing about Maker Studios and AwesomenessTV, which were both acquired by major Hollywood studios (Disney and DreamWorks Animation respectively).
Strictly speaking, there is nothing new about studios buying MCNs (in 2012, Discovery Channel bought Revision3). However, with DreamWorks’ and Disney’s recent acquisitions, it has become clear that Hollywood has taken notice of YouTube’s talent and sizeable audience.
Canada is also in the MCN game with Vancouver-based BroadbandTV, WatchMoJo, Blue Ant Media and Boat Rocker Studios with over 1,2 billion views monthly and representing over 12,000 channels. Although MCNs are fewer in number in Canada, they operate in much the same way as their American counterparts.
HOW DO MCNS RECRUIT TALENT?
MCNs recruit creators and channels through various ways. It can be just as simple as making a “cold call”, i.e., networks employ dozens of full time recruiters whose sole job is to comb through thousands of channels and send direct generic messages. Other recruitment tactics include targeted marketing campaigns as well as incentives with existing partners that take the form of commissions paid on every channel they help bring in via links hosted on their own channels.
Most of the major YouTube channels are part of MCNs, with a few exceptions that tend to hire agents to help them grow their brand.
HOW DO MCNS GENERATE REVENUE?
Content monetization on YouTube can be very confusing for creators since the CPM fluctuates constantly with demand and seasonality. CPM stands for Cost Per Mille (also referred to as cost per thousand), which is the amount of money generated per 1,000 impressions (ad views). For example, if your channel gets an average CPM of $5 and you generate 1,000,000 ad views, you will earn $5,000.
To help with this, networks offer creators deals by which they guarantee them a flat CPM rate based on video and banner ads that appear with the content. Some networks offer slightly higher fixed CPMs to channel partners; that can be a good or a bad thing, depending on the channel and contract term.
When a channel is part of a MCN, it relinquishes part of its revenue to the network. Payout is often as simple as the network taking a percentage from the channel’s revenue—anywhere between 1% and 50% depending on agreements and the MCN’s involvement.
Another example of a revenue stream is the facilitation of content integration the network; the latter works directly with brands and marketing agencies. For example, ASAPScience created videos for the CBC during the 2014 Olympic Games.
MCNs also partner with smaller video platforms or websites and enter into licensing agreements with them to redistribute their content.
Content ID can also provide significant revenue for content owners with large libraries. A MCN has the ability to use YouTube’s Content ID system to generate revenue from videos it owns but that are uploaded by other YouTube users. For example, Just for Laughs Gags has just over 3,000 prank clips on its YouTube channel but claims and monetizes over 100,000 videos uploaded by users.
WHAT DOES THE FUTURE HOLD FOR MCNS?
Until last year, the largest MCNs were basically considered as tech start-ups. This perception changed after the abovementioned major acquisitions, changing the way the screen-based industry sees MCNs, i.e., as media companies with high growth potential.
The number of MCNs will likely increase and MCNs will specialize vertically—such as fashion (StyleHaul), music (Vevo) and food (MiTú). It wouldn’t be surprising to see TV, film, music or print media majors join the MCN bandwagon.
The Mickey Mouse Club era seems to be over. Kids are now spending more and more time on YouTube, and they idolize YouTubers. Hollywood (and “traditional” entertainment in general) is now turning to online video in search of new ways to engage with younger audiences.