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My latest: Was Randy Cassingham the first member of the Creator Economy?

Before there was Substack, before there was Ben Thompson's Stratechery, before there were even email service providers, there was...Randy Cassingham's newsletter. Launched in 1994, it was generating a full-time income for him within two years.

MrBeast is changing the economics of YouTube

If you want a snapshot of how much the YouTuber ecosystem has matured in recent years, look no further than MrBeast’s latest video: “$456,000 Squid Game In Real Life!”

Posted on November 24, it’s the fastest non-music video to reach 100 million views, but that’s not what makes it remarkable.

Let’s first consider what went into making the video. As MrBeast explains in the beginning, “I recreated every single set from [Netflix’s] Squid Game in real life, and whichever one of these 456 people survives the longest wins $456,000.”

And these weren’t hastily thrown together props. From watching the video, it’s clear that his team built elaborate sets that spanned tens of thousands of square feet. They also fabricated hundreds of costumes and pulled together a sophisticated tech infrastructure that allowed them to track who had been eliminated. Their devotion to the original source material is extraordinary.

Then there’s the prize money. We’re not just talking about the $456,000 grand prize. After the second elimination round, he informs the 90 people who were eliminated that they will each leave with $2,000. A few minutes later, in an effort to thin out the herd, he offers up $4,000 to anyone who will voluntarily leave. Several dozen take him up on his offer. At some point in the video, he reveals that he spent $3.5 million to produce it. According to some estimates, that’s more than what it costs to produce an average episode of a cable drama.

While this may be MrBeast’s most expensive video to date, it’s by no means an anomaly. In a recent episode of the Colin and Samir Show, he detailed all the expenses that goes into each video, from the full-time production crews to the custom-built sets to the money he gives away to contestants. Oh, and he also bought two huge warehouses for $10 million.

Five years ago, it would have been difficult to imagine such an operation sprouting up on YouTube. The early generations of YouTube stars utilized little more than a camera and a laptop to create content. In cases where they produced something more elaborate — like when Casey Neistat rented out an entire mall and built a winter wonderland — it was usually a one-off affair. The economics of YouTube simply didn’t allow for anything more elaborate.

Flash forward to today, and it’s clear that’s no longer the case. MrBeast is probably the most extreme example, but it’s pretty common to visit the YouTube trending tab and see David Dobrik giving away Lamborghinis, Johnny Harris shooting four-part documentaries in far-off locales, and Captain Disillusion creating Hollywood-quality special effects. The biggest YouTube channels are now spending millions of dollars a year on production costs.

The top echelons of the creator ecosystem now have the scale and diversified revenue streams that allow them to constantly push the limits of the YouTube economy. Does this mean we’ll ever see a Game-of-Thrones-level show debut on YouTube? It’s hard to say. But if a YouTuber can now drop $3.5 million on a single video, then a prestige drama doesn’t seem too far out of grasp.

I didn’t spend $3.5 million on this newsletter…

…but it still takes a lot of time and effort to produce. The article I linked to above about Randy Cassingham is 4,000 words long. It took me nearly 20 hours to interview him, conduct the additional research, write the piece, and edit it. It’s one of hundreds of in-depth case studies I’ve published over the years.

If you find value from these case studies, please consider becoming a paid subscriber. It’s pretty inexpensive, and by subscribing you can help support the work I do for the newsletter and podcast. Use the link below and get 10% off for your first year.

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Quick hits

Amazon is trying to convince publishers to create live shopping content on its platform, but the response so far has been tepid. [Digiday]

A sales account manager managed to get a gig blogging at Forbes, and through that he accidentally stumbled into a YouTube career of interviewing the world’s most popular influencers. [Business Insider]

Overtime started as a media company that licensed video clips from high school sports games. It's since evolved into a full-fledged pro basketball league. [NYT]

A new comic book platform is luring writers with the promise that they can more directly benefit from their IP. [NYT] There are so many startups launching with the core value proposition of shifting power away from media conglomerates and toward content creators.

Vice Media will be profitable any day now. As we all know, the company never over promises... [Business Insider]

A fashion blogger struggled to monetize her content, so she teamed up with her husband to build an ecommerce platform targeted toward creators. It now generates billions of dollars in transactions. [Forbes]

In 2019, The Salt Lake Tribune became a nonprofit, and in 2020 it ended its daily print edition. The strategy seems to be paying off. [Nieman Lab]

"One high-level industry professional ... said that good [ghostwriters] can make anywhere between $100,000 and $300,000 per year. Morel said the average ghostwriting project for her clients pays $75,000–$100,000 and usually takes about six months" [Publishers Weekly]

Want to get your screenplay produced in Hollywood? You might have better odds if you publish a book adaptation of it first. [Marie Claire]

A look back at The Saturday Evening Post, one of the most influential magazines of the early 20th century. [CJR]

The New York Times just hired another full-time writer for its morning newsletter. [NYT] It’s more evidence that The New York Times doesn't just view its morning newsletter as another marketing vehicle; it's its own media property.

An entire cottage industry has popped up of freelance photographers who specialize in photographing Instagram influencers. [BuzzFeed]

ICYMI: The strategic brilliance of Slate's pivot to podcasts

It avoided the "pivot to video" and instead doubled down on audio.

Want to chat with me directly?

I have a private Facebook group that I only promote within this newsletter. Because I keep it pretty exclusive, we’re able to get up to some high quality discussion on industry trends. I jump into it several times a day to respond to member comments. You can join here: [Facebook]