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A YouTuber will absolutely direct a future Best Picture winner

Business Insider’s Lucia Moses recently published a great piece with a provocative title: “Why Hollywood should be terrified of YouTube, not Netflix.”

Her argument largely rests on a few eye-popping metrics released by the company:

• It’s now generating over $9.2 billion in ad revenue every quarter.

• It’s surpassed 100 million paid subscribers to services like YouTube Premium and YouTube Music.

• It’s beating every other streamer on total view time.

• YouTube paid out $70 billion to content creators over the past three years.

On just about every available metric — from viewership to revenue — YouTube is beating every Hollywood company other than maybe Disney. But as accurate as her thesis is, I actually think Moses is underestimating YouTube’s potential to disrupt Hollywood, as evidenced by this quote (emphasis mine):

"They aren't a significant player in premium entertainment content, where Hollywood has traditionally lived and Netflix is the runaway streaming leader," New Street Research analyst Dan Salmon said of YouTube. "And they haven't competed for in-market/nationally televised sports like Amazon Prime. Those are content areas that are losing share of young audiences' viewing time. Netflix's long-term risk is kids watch MrBeast on YouTube instead of 'The Crown' on Netflix."

In the eyes of most people over the age of 40, YouTube has barely progressed beyond its dog-on-a-skateboard roots. Most would dismiss it as low-budget, gimmicky content — at best a rough facsimile of cheap reality TV. Sure, lots of kids watch YouTube, their thinking goes, but the world still needs Hollywood for prestige storytelling. Nobody on the platform is producing anything with the same cultural relevance of a Game of Thrones or an Avengers movie.

But that belief is already beginning to be proved wrong, and its wrongness will become more and more apparent over the next few years. In fact, I think it’s only a matter of time before the top YouTubers are competing for the most prestigious awards — eg, the Oscars, Golden Globes, and Emmys — alongside the best Hollywood showrunners and filmmakers. 

Let’s start with a thought experiment: try to picture YouTube as it was a decade ago, specifically in terms of its most popular videos. In February 2014, we were still a year away from Casey Neistat launching his daily vlog, which went on to become so influential that it increased the production quality of the average YouTube video. 

Even the largest channels back then were run, at most, by a few people and relied predominantly on small, handheld cameras and cheap editing software. That’s not to say that creators weren’t doing wildly creative things with their limited resources, but there were very few videos back then that could have been mistaken for even low-budget TV shows.

Flash forward to today, and that’s certainly not the case. There are now hundreds of YouTube channels with annual production budgets in the millions of dollars, and they’re now competing even with Hollywood studios for the top production talent. To get a sense of how quickly these channels have scaled, consider this list of the top-earning creators of 2020 to this one listing the top-earning creators of 2023. In 2020, the top creator earned $29.5 million. Last year it was $82 million.

Now take that rate of growth and multiply it over the next 10 years: it’s not inconceivable that creator-led studios will be generating upwards of $250 million a year.

Right now, the barrier to producing Hollywood-level films and TV shows is money. The average sale price for Sundance films seems to be hovering around $15 million. For big budget Hollywood films, the cost is above $100 million. As for prestige narrative TV, most streamers can expect to pay between $3 million and $10 million per episode.

Currently, the economics of YouTube just don’t support this level of investment for a single video. As yet, no amount of YouTube Adsense or Patreon subscriptions can produce the unit economics necessary to pop out the next Iron Man.

But that’s not to say those unit economics aren’t quickly heading in the right direction. It’s now increasingly common for top YouTubers like MrBeast to spend over $1 million per video, and if you watch studio tours for some of the largest channels you’ll quickly see that their production capabilities are on par with many mid-level TV and film studios.

We’re already starting to see clear signs that YouTubers can create premium-quality video. For instance, watch this short film from the channel Almost Friday TV and try to tell me that it couldn’t go toe-to-toe — in terms of writing, editing, and cinematography — with any film at Sundance. Or compare your average Johnny Harris video with the top docuseries you’ll find on Netflix. 

If you’ve gotten this far and still remain unconvinced, let me run you through one final thought experiment: imagine you got in a time machine and traveled back to 2007 to meet up with your former self. Would that younger version of you believe you when you tell them that not only will Netflix soon be producing Hollywood-level movies and TV shows exclusively for online streaming, but it’ll arguably become the largest production company in the world?

I doubt your prior self would believe you. After all, internet economics simply didn’t support that level of streaming video at that time, just as YouTube economics don’t support it today. As is often the case, our predictions rarely deviate from the status quo, and it’s precisely that myopia that’s allowed history’s biggest disruptors to upend entire industries. YouTube has already proven itself as a disruptive force; now it’s just a matter of seeing how far it can go.

What do you think?

How Jack Kramer and Nick Martell sold their media company to Robinhood and then bought it back

When Jack Kramer and Nick Martell launched their daily newsletter Market Snacks in 2011, they kept their names off the publication so that it wouldn’t jeopardize their finance day jobs. But once the newsletter started to attract readers and sponsorship revenue, they decided to come clean. Luckily, their bosses let them continue on with their side hustle.

Flash forward about a half decade, and Market Snacks had gained enough traction that they both decided to go to business school so they could learn to scale the company. Around that same time, they teamed up with a large podcast network to launch a daily companion show, and almost immediately it was featured on the Apple Podcast app.

This success didn’t go unnoticed. Robinhood, which at the time was a fast-growing stock trading app, came on at first as a sponsor, but a few months later decided to outright buy Market Snacks to leverage it as a marketing channel for the app.

Jack and Nick continued to host the podcast while managing the rest of the Market Snacks team, and then in 2022 they went to the Robinhood executive team with a radical proposition: they wanted to spin off the daily podcast and acquire it from Robinhood. Amazingly, their bosses went for it, and that year they renamed the podcast to The Best One Yet.

In my interview with Jack and Nick, we discussed how they came up with the idea for the newsletter, why Robinhood allowed them to take the podcast back, and what they’ve done with the company ever since they became full owners.

Watch our discussion in the video embedded below:

If video embeds don’t work in your inbox, go here.

If you want to listen to an audio version of this interview, subscribe to The Business of Content wherever you get your podcasts: [Apple] [Spotify] [Amazon Music]

I’m looking for more media entrepreneurs to feature on my newsletter and podcast

One of the things I really pride myself on is that I don’t just focus this newsletter on covering the handful of mainstream media companies that every other industry outlet features. Instead, I go the extra mile to find and interview media entrepreneurs who have been quietly killing it behind the scenes. In most cases, the operators I feature have completely bootstrapped their outlets.

In that vein, I’m looking for even more entrepreneurs to feature. Specifically, I’m looking for people succeeding in these areas:

• Niche news sites

• Video channels like YouTube, TikTok, and Instagram Reels

• Podcasts

• Newsletters

• Affiliate/ecommerce

Interested in speaking to me? You can find my contact info over here. (please don’t simply hit reply to this newsletter because that’ll go to a different email address. )

Quick hits

This is an interesting trend: local nonprofit news outlets in rural areas are banding together so they can secure funding from the foundations that typically only donate to larger, city-based outlets. [Nieman Lab]

“There’s something quite anachronistic about a show like mine still trying to create old fashioned TV for a pre-scheduled time slot each night for a relatively small audience — when we’re getting such gigantic audiences digitally" [Semafor]

It's extremely weird that tech platforms insist on forcing algorithmic recommendations on us, justifying it by saying that the algorithm is determining what we truly want to consume, but then just arbitrarily decide that they'll exclude certain types of content from the algorithm because they don't want to deal with it. [Axios]

I just don't see how this mashup of ESPN, Fox, and WBD doesn't trigger an immediate antitrust investigation. They're basically cornering the sports broadcast market so they don't have to compete with each other for rights or customers. [Puck]

The New York Times isn't the only news publisher that's succeeding with subscriptions. Dow Jones grew its paid subscribers from 2.43 million in 2019 and 4.86 million today. Just the WSJ alone grew from 1.93 million to 3.17 million in the same time period. [Axios]

Want to pick my brain on your content strategy?

Are you contemplating a new content strategy and want someone to give you feedback? I’ve had more and more of my readers reach out and request consulting calls so they can pick my brain on a variety of issues, including platform optimization, content strategy, and monetization.

You can now book a call with me directly through Substack. Use the link below to grab a time on my calendar:

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More quick hits

This is a great profile of a media company that grew out of an anonymous meme account focused on the finance industry. [Business Insider]

I love it that Mark Thompson couldn't give two shits about linear TV ratings. This is a clear sign that he's actually serious about ushering CNN into a digital future. [Puck]

As the guy who wrote a semi-viral article titled "Why Medium failed," let me be among the first to congratulate the company for getting close to profitability (supposedly it's projected to reach profitability in 2024). [Semafor]

Everybody likes to debate what the future of media will look like, but I think it's clear that every successful media company 10 years from now will be owned and operated by a roofing company. [Semafor]

Across most of the media industry, paywalls have done an underwhelming job at converting readers into subscribers, so lots of publishers are starting to rethink their subscription strategies. [Axios]

You know how brands are increasingly using adtech keyword blocking to ensure their ads don't appear next to news content? Well, the New York Times conveniently has a massively popular vertical that has no news! [Adweek]

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