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YouTube-Funded Channels Are Under Fire For Mistreatment of Content Producers

Well, that didn’t take long. The entertainment companies that took millions of dollars from YouTube to operate content channels are coming under fire for their mistreatment of content producers, including exploitative business practices and overreaching contracts. Last week, the LA Weekly published a lengthy piece detailing some of the abuses by these YouTube-funded networks.

The article focuses specifically on two of the largest networks today: Machinima and Maker Studios. Machinima, as you may recall, originally began as an animation movement, but today the name has been co-opted by an entertainment brand that celebrates video game culture in a more general fashion.

Machinima, which represents over 6,000 content creators as part of its channel, has come under fire for contracts that take lifetime ownership rights of everything a content creator posts on YouTube. A skeptic might say the contracts were specifically designed to take advantage of the young creators who make up the largest portion of their content-production network. The LA Weekly states that Machinima is in the process of revising their contracts, but it’s fairly evident that creator exploitation is a big part of their business model, and access to cheap content could also be partly why Machinima is so immensely attractive to investors. Last May, Machinima raised $35 million in a venture capital funding round led by Google, which also owns YouTube.

The LA Weekly draws an interesting analogy between the current situation faced by content creators on YouTube and the old-school contract system for actors during the Golden Age of Hollywood:

It’s tempting to write off each contract dispute as just that — an individual incident. But taken together, these fights constitute a bigger issue, one not unlike those that developed when the film industry was first finding its feet.

Like Maker Studios and Machinima, the film studios of the ’30s and ’40s didn’t just produce content, they distributed it, says Tino Balio, professor emeritus of communication arts at the University of Wisconsin at Madison and an expert on the history of the American film industry.

At the time, studios produced shorter, lower-budget films on a tight schedule because theatrical runs were much shorter — only about a week. Studios churned out one major movie every week, plus a few B films, to meet the demand.

“The studios were run on a factory basis. They had to have total control of their talent in order to assign them to projects, in order to make all of these films to keep their theaters filled,” Balio says. “They could not negotiate with talent each time they decided to make a motion picture.”

They met this challenge by adopting the “option” contract. A new star might be signed for a fixed term (typically seven years). Each year, the studio had the option to renew the contract — but the actors were unable to break it during its duration.

“It was bondage,” Balio says. “It changed over time, but basically, when a performer signed an option contract, he or she was bound to the studio because no other major studio would hire that performer if he or she broke their option contract.”

While the channels discussed in the LA Weekly piece don’t create much in the way of original animation, there are other YouTube-funded channels that do, notably Mondo Media, Shut Up! Cartoons and Cartoon Hangover. Thankfully, none of those channels have been accused of similar mistreatment of creators, but the demand for large amounts of content by these networks means that the potential for abuse exists. As always, animation content creators should exercise caution and have a lawyer review and explain any contract before signing it.

(Thanks, Chris Webb)

  • As an indie animator who just launched a YouTube series, it’s incredibly disappointing to read this.

    It’s nearly impossible to build an audience without being attached to one of the big networks but….with those risks?

    Very very disturbing.

  • Anonymous Animator

    I had some animator friends who had some not-so-good experiences with Machinima within the last year or two. Took advantage of them completely. Took them months and months just to end/break their contracts so they could even work on personal stuff. Machinima kept delaying it.

  • I think that is part of the problem is this market does not generate enough money so more of the pie is taken up by middlemen like Maker Studios and Machinima. You Tube would be better off going directly to content creators rather than content gatherers like Maker Studios and Machinima when setting up these channels. That means a lot more work for You Tube, because they would need to deal with directly with a lot of smaller content creators but it would give them more control and individual negotiating power and it would be better for the content holder as well. Both they and YouTube could simply eliminate the these middle men like Maker Studios and Machinima and leave more money in the hands of the content creators and with that better content (hopefully).

    • secret goldfish

      In all likelihood, Youtube may be deliberately using “middle men” such as Maker Studios and Machinima PRECISELY to protect themselves and AVOID any sort of legal responsibility to the original creators.

      There is every chance tthese Middlemen companies are essentially like the shell production companies major studios set up to act as a buffer for the studio. With some simple but “clever” accounting they can very easily run at a loss, go bankrupt/disappear and “legally” pay little or no residuals to the original creator, all while the parent company continues to make large profits from the content.

      I’ve also wondered in the past, why these companies like Machinima even exist/would appeal to content creators who already have the ability to post and build their own audience with Youtube.

      The quote from above –

      “Last May, Machinima raised $35 million in a venture capital funding round led by Google, which also owns YouTube”

      – is probably a good indication of how “independent” [sic] these middlemen companies REALLY are to the Youtube > Google equation.

      These middlemen companies are most likely exactly what I originally and cynically thought they might be……..simply another level of unnecessary bureaucracy designed to further separate content creators from their audience and income.

  • Remember kids, like Freakazoid says: “Always take a percentage of the gross, NOT the net.”

  • I read this article and it does suck for the creators, BUT no one is forcing them to sign the contract and anyone in show biz should learn to read legalese-or hire a lawyer to look over the contract–in other words READ WHAT YOU SIGN. There’s alway room for negotiation if you have something a producer wants. The other point is that with YouTube original content creators don’t really need companies like Machinima, look at Annoying Orange or TOMSKA–those guys got millions of views doing it Guerilla style by themselves.

  • Matt Sullivan

    Animators gotta eat!

  • ShouldBeWorkin’

    I can understand the lure of Youtube with its access to viewers but if I were able to (time and talent-wise) to produce any content daily, or even weekly, I’d go for my own blog. Sure it’s a slow build-up of viewers but the rewards are greater and more devoted if one succeeds. The key is constant and consistent updates.
    We’ve seen that sort of success before.
    We have the power in each of homes to do so. I don’t know why artists need “the man”.

  • SKent.

    Distributors and creators. Isn’t it always the same story? One has to be the pimp, and the other the whore.

  • Taco Wiz

    I think it’s disgusting that this is what has happened to YouTube. The entire point of the site is for everyone to have an equal playing ground. What happened to the YouTube I used to know; the anarchist’s wet dream?

  • Julian

    Despite the progress the internet has made. It’s still as tough as hell for indie animators who produce original content to have stability without having some sort of “middle man” throwing it to the masses. That’s originally what TV did. When something’s on TV, that’s almost always at least 100,000 people right there. No one has to go and find anything and even if it kind of sucks, people still watch it because there’s not much else to do when one’s watching TV. Now in the stormy sea of the internet, there’s no execs to get by, but good luck building a loyal, sizable audience! Let alone making any money. So these established online content distributors come along and offer what seems like the best of both worlds. “We’ll throw what you got to our big audience and let you keep your creative freedom.” Sounds too good to be true and it is. Viral success still isn’t guaranteed and even if it’s achieved, people claim it doesn’t seem to be paying off financially, for creators are usually only getting a sliver of the profits for even though they have creative freedom, they don’t “own” it as they’ve sold the rights. And be it a hit or not, there’s not much they can do to get their property back, because unless they were forced beyond legal means or drugged into it, they willingly signed the contract to give it away. Not to say TV is or ever was perfect and free from unfairness. But the internet is just a little more in it’s wild west early stages and one really has to watch their back when dealing with “contracts” and “deals”.

  • Hank

    Thank goodness for Olivia de Havilland!

    “De Havilland mounted a lawsuit in the 1940s, supported by the Screen Actors Guild and was successful, thereby reducing the power of the studios and extending greater creative freedom to the performers. The California Court of Appeal’s decision was one of the most significant and far-reaching legal rulings in Hollywood[10] and the statute on which it is based is still known as the De Havilland Law. Her victory won her the respect and admiration of her peers, among them her own sister Joan Fontaine, who later commented, “Hollywood owes Olivia a great deal”.[11] The studio, however, vowed never to hire her again. The ruling interpreted the already existing California Labor Code Section 2855.[12] That code section imposes a 7-year limit on contracts for service unless the employee agrees to an extension beyond that term.”

  • There seems to be a lot of confusion in the comments about “what is the point of the networks? they are pointless middlemen”

    I don’t think people fully understand how youtube works. I’ve been quite involved in the youtube community so maybe I can shed some light.

    When I first started seeing networks popping up I was also confused as to why youtube was shoehorning in a middleman between content creators and their audience. I thought, why don’t channels just exist on their own like these hand full of successful youtube channels.

    The more I learned about what the networks offered the better I understood their purpose. While I don’t think networks are 100% necessary, they do have their place and can be helpful to content creators.

    The power of a network is advertising. A network can gather a group of content creators and create a much larger audience base. This larger audience base means the network suddenly has a stronger attraction for people wishing to pay for advertising to their demographic.

    With this sort of bargaining chip they can ask for MORE money from advertisers which equates to MORE money for content creators. What youtube pays for default ads on channels is pretty low compared to what a network can pay you since the network has an ads sales team that can sell ad space to companies and have a demographic to sell to the companies.

    Basically a network takes care of the business side of things for creating content on the web. Stuff that most creators aren’t interested in doing, going business to business, doing cold calls, trying to get people interested in advertising on their channel. As a collective they also have much more bargaining power to get more money then if a content creator was on their own.

    Some networks also help with legal issues, protecting the creators from copyright attacks and obtaining licencing for certain content (gaming networks for example are very important because if you’re not a part of a gaming network that has the licences to broadcast content from games, you can’t post any gaming content at all on youtube)

    Granted a content creator is completely in their power to do all this stuff their selves, they won’t have the bargaining power that a network could have so it could be very very difficult. You can point at success stories and say “Well they aren’t with a network but they are doing just fine!”, while this is true, those that are successful enough to survive without a network are very much in the minority, there are maybe a small handful that have achieved this success.

    When you’re a content creator, what are you more interested in spending your time on, running around doing business, or creating content, Most people prefer the latter and thus goto networks to handle the business side of things.

    I would actually love to see more networks, but not in the traditional sense. A lot of the cartoon networks are working towards a more positive idea of what a network can provide. I would love to see an animation network that is more like a creative collective, a group of artists working together for mutual benefit, and I think something like that has potential to be successful in the long run.

    I’m curious to see where things go, and I would love to have bigger discussions on youtube or better yet a discussion on successfully funding and creating content for a web audience. First however, people need to be more educated on what is happening right now, since things are changing so fast you end up arguing about points that became irrelevant 5 years ago.

    sorry for the novel, but since I’ve seen stories about online creators more and more on this blog, I thought I would help shed some light on what this world involves instead of speculation.

    • AC

      Thank you for a more accurate account, I too have been deep into YouTube for years and am part of a network (Fullscreen) and was about to argue some of the points said in comments myself. One of the biggest reasons I joined was to avoid the troubles with getting videos monetized/false copyright strikes-there’s a certain “safety net” to a network sometimes (albeit at the expense of the necessary revenue sharing).

    • PB

      Maybe you guys could start a network. The information you guys gave is so valuable to us who are creators and maybe not more business minded. I think that’s an awesome idea.

  • Scott

    you guys should check out all the new animation that MAKER is doing:

  • Chris Webb

    The idea of artists forming a cooperative has been floated in independent film making too. A group of film makers would band under one common name. But no one film maker is the boss. Money is not split up – it is paid based on whose work sold. That way no one film maker is carrying the load for the whole group, no one film maker loses money if the co-op releases a flop.

    But combining the efforts of the film makers results in increased exposure for the entire group. “You liked other ACME Movies, this is is good, too.”

    Another example of a successful co-op is the blog you are reading right now. Before Cartoon Brew, both Amid and Jerry had individual blogs, but by teaming up, they were able to build th Brew into a bigger brand name than either could have built themselves.

    If you are an animator, and make work on a regular basis, it makes sense to contact other animators and start a co-op, and start your own You Tube channel. You could possibly make more money, be your own boss, and best of all, YOU WILL OWN YOUR OWN WORK.

  • Lisa

    Maker Studios should be reprimanded and/or sued. One of their production coordinators named Ricky Mammone e-mailed an 82 year old actress (signed with L.A. Casting) @ 4:30am to ask this woman if she’d be available to drive from Burbank to Paramount to work in a park all day with temps exceeding 100 degrees for $50.00 that did not include gas mileage pay. They do not even have a medic on set.