YouTube defines multi-channel networks as entities that affiliate with multiple YouTube channels, often to offer content creators assistance in areas including product, programming, funding, cross-promotion, partner management, digital rights management, monetization/sales, and/or audience development.
YouTube defines multi-channel networks as entities that affiliate with multiple YouTube channels, often to offer content creators assistance in areas including product, programming, funding, cross-promotion, partner management, digital rights management, monetization/sales, and/or audience development.

Why YouTube stars love to hate multi-channel networks

For talented artists eager to make it big on the popular video platform, multi-channel networks promise to be the springboard to stardom. But behind the scenes, it's a complicated relationship

Mumbai: It happens in a flash.

The bald, fair dude in front of us arches his shoulders. Bending slightly. Cocking his head a little, his face squirming. Then, his hands spring into action. Both palms open up in perfect synchronization, as all his fingers roll back. All, except two middle fingers—two middle fingers, pointed right in our face.

“Ghanta," says Karan Talwar, gesticulating.

(A Hindi word, ghanta means a bell. It is also used as slang, to mean bull or bullshit.)

Talwar is an Indian comic, who has had his fair share of fame thanks to his two comedy channels on YouTube—SnG Comedy and Bollywood Gandu (a Hindi expletive).

But, now Talwar is upset. Why?

Well, this: Are multi-channel networks (MCNs) like Culture Machine (CM) genuinely out there to discover talented artists and make them famous? Hold on a second. What’s an MCN? Well, YouTube defines MCNs as entities that affiliate with multiple YouTube channels, often to offer content creators assistance in areas including product, programming, funding, cross-promotion, partner management, digital rights management, monetization/sales, and/or audience development.

Talwar: Two middle fingers.

And with that, he launches into a monologue.

“MCNs are like shady business," he says. “You get like a spam mail a day. I had two channels; one is the SnG Comedy, which was with CM and then there is Bollywood Gandu, which has never been with any MCN ever. The reason why Bollywood Gandu exists is because of CM. I told them to fuck off. I am going to do my content on my own."

“I did about 26 episodes of The Dope with CM and I got paid zero. Not a single penny after 26 episodes, which cumulatively got over 2 million views. Why? Because CM doesn’t disclose financials. You just get this ledger, that too after asking for three months and they say, oh you owe us money. We can’t pay you. It is really messed up man. There is no control whatsoever. It’s like, hey Karan, Pepsi wants to make a video. You will get 50,000? But what’s the whole deal? You will get 50,000. I have no idea. I’m writing the episode, my face is on the video and I have no clue. When it comes to meeting people from Google, they don’t want to let you do it. When it comes to advertisements, they always want to sit in the meeting. They won’t even let me meet another creator without them being present; just in case that we wouldn’t collude… the amount of distrust was immense. Every year, Sameer Pitalwalla (CM’s co-founder) would be like I want to meet you, I want a right of refusal on the contract… like he would start panicking. ‘I’m investing so much and you guys will leave me.’ And I am like, dude, you are acting like a weirdo man."

“CM was trying to squeeze us. So, they have this channel called Being Indian. That channel is built on SnG Comedy channel’s back. That channel did not exist when we already had 10,000 subscribers. And then suddenly, we started seeing, that you go to our video and Being Indian littered all over. What has CM done? What they have done is hire a group of writers and do videos. So, today is Mother’s Day. Chalo, Mother’s Day pe kuch banao (let’s do something on Mother’s Day). We’ve done nothing on doctors. Let’s do how Indian doctors behave. It is like a conveyor belt."

“For two years, we got nothing. We did one ad for Lawman jeans. We had agreed for three product placements. A billboard, a bus stop and a deodorant; the special thing about it is that it attracts rickshawallahs. So, you spray it and a rickshaw comes to you. That was the joke. On the morning of the shoot, an ugly belt with a big buckle which says Lawman Pg3 (jeans) shows up. We are like, what is this? They are like; no, you have to focus on the buckle. Not agreed to, nothing. We call the guy from CM and he is like, do it na, we have agreed to it.

“Let me give you another example. This was at the time of the elections where BJP (Bharatiya Janata Party) was doing a lot of social media. So, CM comes to me and says, Karan let’s do a video for BJP. I’m like I am not political in any way, I’m not gonna do it. CM is like, listen I’ll give you 1 lakh for it. No. Not going to do it. And then I heard someone in the corner yelling, ‘Kyun nahi karega, paise mil rahe hai usko’. (Why won’t he do it? He is getting paid for it.)

“When you go to your creator studio on YouTube, you can see the total estimated earnings. Under CM, we couldn’t see how much our channel had earned. This was removed. When we would ask, we would get an Excel sheet which would always be in the negative.

“The wows don’t stop here man. It is this dark, little dungeon of shit that they have created and these people think that somehow they are doing something good."

Talwar pauses for a few seconds. He’s been talking real fast. As perhaps only Talwar can; with a fair mix of seriousness and spontaneous hilarity thrown in. But now, he is composed.

“I think, I’ve already told you everything."

Well, not quite. After this monologue, Talwar painstakingly answered several questions. On his experience of working with CM, for about 18 months. The sum of everything—he had a harrowing time. That is, till his exit in July 2015, when he moved to Only Much Louder, a talent and event management firm in Mumbai.

There is really no other way to say this. But this is not the first time an artist has alleged being screwed over by CM.

In September 2014, CM sued Shraddha Sharma, the YouTube star singer, over breach of contract. The issue was simple. Sharma became famous on YouTube, in 2011, when she was 15 years old, thanks to her channel ShraddhaRockin. Initially, it was just her singing in front of a camera. Enter CM to increase her popularity, produce videos. Over the next couple of years, Sharma’s subscribers on YouTube and Facebook grew by almost four times. Enter Universal Music with a contract. But CM won’t let go. Neither Sharma, nor her YouTube channel, claiming that the content belonged to CM. But Sharma didn’t want to stay, nor give ownership of her channel to CM.

Hence, the suit.

How did that go? CM lost the case. The Bombay city civil court dismissed CM’s contention that it had the rights over Sharma’s channel. Or that, CM could force her to stay. That’s because her contract had ended and Sharma had made it amply clear that she didn’t want to continue.

Needless to say, CM received a lot of flak. Word spread—there was one story of a bully, another of a David vs Goliath fight and then another, of a big, bad corporate entity trying to bulldoze its way through. Almost overnight, CM’s name became synonymous with evil.

This is that story. A story set inside the complicated world of YouTube stars and their relationship with MCNs like Culture Machine.

A story of an industry that’s just a couple of years old in India but is introspecting on a whole host of existential questions—what does an MCN bring to the table? Does it really care about promoting creators? What is good content? What role does technology play in creating content which will go viral? How do you make something go viral? Can an artist make money from YouTube? Is there any value in churning out assembly line content? Screw this whole charade; haven’t we as artists sold out to brands already?

These are important questions. In light of the fact, that in the past few years, the number of MCNs in India has grown. There is CM. Then there’s Pepper Media, Qyuki Digital Media, PING Network, One Digital Entertainment and Whacked Out Media, and a few others.

Of course, there’s a precedent for the gold rush. In May 2014, Disney acquired Maker Studios, an MCN that then generated more than 5.5 billion views a month, with a subscriber base of 380 million. At the time, Disney agreed to pay $500 million for Maker, plus another $450 million if the company met aggressive growth targets. That’s a lot of money and the Maker-Disney marriage is still playing out. No surprise then, that almost everyone agrees, MCNs are just about taking off in India. Comedy is the first one to have been discovered. Next up is music, food, beauty and fashion, technology, children’s content and gaming.

This is the story of that next big digital video opportunity.

But above all, this is a story of expectations and distrust. Where the age-old truism still rings true—at the gates of stardom, there is an abundance of snake oil peddlers.

Sameer Pitalwalla is 32 years old. The co-founder of CM. Dressed in a casual shirt and jeans, his demeanour is mostly casual. But Pitalwalla is prone to sudden bursts of anxiety and deep reflection. Right now, at CM’s start-up cool meets snazzy café meets wooden, open office at Goregaon, in the western suburbs of Mumbai, Pitalwalla is in the brooding zone, reflecting on the whole Shraddha Sharma episode.

“The moment shit hit the fan, I knew I could have handled it better," he says. “Back then, although we were also a young company, we still came across as the Goliath. In hindsight, see, we had known her for so long; she would hang out with us. I paid for her birthday party with my credit card. My wife went and styled her for that, the first time she did her meet and greet. So, there was little bit of ‘oh fuuuuuck… you got fucked over.’ So, I just took a stronger gut. You know, you are going to invest in people, there will be times when they will be like, ‘so what, it was three months ago, I have moved on’. It is my first business as well. So, the fact of the matter is, we all learn in hindsight.

“And I realized, instead of becoming like, how did you do this through CM, we treated you like this and that. But in the public court, you will always look like this fucking corporate fucking an artist over. There is no way you are going to win in the law of public opinion. And I thought we were trying to make a point saying ‘no, you can’t screw us over.’ We lost money on her because we had produced all her videos. We had done it with the whole intention of building it out. So, that’s the thing that came to me."

And Karan Talwar and SnG Comedy?

“Did he really say that?"

Yes.

“So, Dope for example is a property we built out for them. He took that and spun it off and built Bollywood Gandu (BG). So, when it became successful and he knew he had an audience, he started BG, which again we helped set up. He shouldn’t be angry at all because he has got a 130,000 subscriber channel and there is some intellectual property he owns which he can scale.

“He never saw any money because the deal was this. If I am producing content and I have put 100 in production, all the 100 has a line-by-line description of where the money has gone. How do I make money as a business is when I recover the 100 back, right? After that, you do a revenue share. Now, we never recovered anything on the 100. When we began to do brand deals, they said they no longer want to work with us.

“He had signed a five-year contract. Why would I sign a deal for five years? Because if I have put money in, I would like to recover it. You also know that I will deduct the 100 I spent. So, if I make 200, I will deduct my 100 and split the balance with you."

And what of the intellectual property (IP)? Pitalwalla is fairly clear that the IP lies with the person putting in the money. And there, Talwar has no reason to be pissed because he signed on the dotted line. With his eyes open. Dude has an MBA degree. He must or should know finance.

“If you put half the money in, then you co-own the IP," he says. “The guy who is producing has to see his money back. So, that’s the easy way to cut it. You put some money, I put some money and we share the IP and also cut the profits in that ratio. There are many ways to do it. So, in the case of Shruti Anand, I don’t put a single fucking penny, so she owns the IP. (Anand is a beauty blogger and has her own beauty channel on YouTube, which has 319,005 subscribers.)

“In case of SnG, we were putting all the cash. We had built a whole lot of programming around it. I was on a loss. The whole idea was that they will grow bigger, bigger, bigger and then more brands would be attracted to them. So, if he has a differing opinion, well I am happy to hear it. But as long as it is on the back of facts. Fact is, he got a clean cut. His agency paid us 5 lakh because we were in the hole and he had signed a five-year contract. So, we let go of the channel. And the IP of all the content that was produced, I own. He had signed on… wherever I put the money, I own."

“What was his opinion? What else did he say?" This is Pitalwalla too, the anxious part of him.

Aditi Mittal is a stand-up comedian. She’s been at it since 2010, perhaps as she would like to call it, generally making mischief. She’s come a long way, from doing standalone gigs to writing sketches, to collaborating with other comics, doing gigs in the UK and the US, teaching, getting shortlisted for awards and in general cracking jokes.

But, right now, she’s thinking through her answer. Taking her time.

“I think it makes no sense for an artist to sign up with an MCN right now," she says. (Mittal was with CM for a few years and left earlier this year.) “If content is your focus, then you literally don’t need anything else. But having said that, if it isn’t, then going with an MCN is probably the way to go. They will provide you with contacts; they are closely connected with YouTube, other YouTubers which you can cash in on.

“I do miss the days when it was much simpler than this. I am not a marketer of any sort, for lack of a less creepy word, I write stories and tell jokes. For someone like that, the market is far too competitive. You are competing with the very same people who have an ad on fucking TV. I feel like that the Internet has become a slightly hidden version of television with the attempt to talk about things that TV won’t talk about. They will appropriate serious issues like feminism and racism to a convenient commercial message. You are just a fucking cog for an MCN. What was wonderful about YouTube and the Internet in general was the democracy of it all. You could be in your tiny corner and fucking rule that shit. But once you’ve signed up with an MCN, you are back to being a cog in the wheel."

Mittal’s stint with an MCN didn’t exactly lead her to prosperity. She says her follower count remains pretty much the same. And with self-deprecating humour, she adds: “So, either I am an epic failure or I was an epic fucking victory from the beginning." She does believe though that the content ecosystem has changed. There’s a lot more corporatization, a lot more formula to create something that will go viral. This means there is a lot more money going into creating videos which have high production values. And it’s the bandwagon.

“So, a video where a person is talking to a camera doesn’t go viral anymore. For a person who just does vlogs (video blogs), the budget for an average YouTube video these days is unaffordable," she says. “MCNs pump in their money to produce these fancy videos and then to push them on the Internet, which for an individual content producer is too expensive. It has become sort of a necessary evil. It has also changed the way that a consumer has started viewing content on social media. I’ve had a production company call me and ask to write them a viral video. All I’m saying is, why? You can’t ask someone to write them a viral video, you just ask someone to write you a script. The people watching it will decide if it is viral or not."

There’s another little thing. Mittal is embarrassed to talk about how rich she is. From making videos on YouTube. “I haven’t made money off the Internet in a while," she says. “If you know someone who does, please text me their number. To me, whatever I do on the Internet is to drive a certain audience to the live shows, where I will make money."

It will be fair to say, that the digital economics of making money from a YouTube video are pretty tough right now. YouTube pays anywhere between 10-15 paisa per view. How does that translate into a viral video’s earnings, something which has done, let’s say, a million views? 1.5 lakh. Thumb rule—only 60% of the views are monetized. So, the actual revenue is about 6-7 paisa per view. Needless to say, not enough to cover even the bare minimum production cost.

Of course, in an alternate universe, Pitalwalla believes he has got all the building blocks in place to create a successful MCN. One that will constantly keep churning viral videos, across Culture Machine’s 32 channels, with more than 500 content creators, making videos across genres such as comedy, music and fashion.

This part of the story is called, watch me, I’ve figured out this digital animal.

Pitalwalla’s point is simple. If you are talented and resourceful enough to build an entire media empire around your content, like an All India Bakchod, please go down that route. By all means. But if you aren’t, then may be it is a good idea to cooperate with partners and work amicably. “If it was just content, wouldn’t SnG be much bigger than what it is today?" he asks. “It’s been over a year since they left us. The proof of the pudding is in the eating."

As an MCN which puts up the money to produce videos, CM believes it is bad business to be entirely dependent on star content creators and their popularity. They will have their moods, preferences, live shows and they aren’t sticky to the brand that the MCN is trying to build. The money is in building out the channel. “When you first invest in something, you do it for the long term," says Pitalwalla. “If they own the brand, they can pull the plug whenever they feel like it. How do you ensure that you can scale the brand further?"

The answer, he believes, is to own the content. Create enough line checks to ensure that it becomes a mechanical process with creative inputs, rather than a purely creative venture. More efficient. More sticky. In a way, that’s how CM has built its channel Being Indian. The channel has some 809,000 subscribers and has put out 286 videos since it joined YouTube on 23 August 2013. That’s about a run rate of eight videos a month. Two videos a week. No star creators behind it. Just the brand—Being Indian.

As Pitalwalla puts it: “I can go to a brand and maybe negotiate on reducing the integration in a creator’s video, but that guy is paying money for this, so he will ask me to do more. (Remember Lawman jeans.) There has to be a balance between the creator, the brand and me. But you live with that. That is also the reason why today it is far easier for me with a channel where I have control."

CM’s office is a good example of this collaboration. There’s a coffee shop, right in the middle, segregating the creative and the business side. A Chinese wall of sorts. But the coffee shop also becomes a place for the two sides to sit and discuss issues where brand demands and creative inputs are vetted out. But all of this is the content piece. The culture so as to speak in Culture Machine.

Significantly important is the other part. The Machine. The proprietary technology.

There, CM can play a critical role to determine the quality of content that needs to be produced, the style and the kind of audiences which can be targeted to ensure maximum reach. For instance, CM’s tech allows the company to map out locations where a certain kind of content works. “We found out that there was a lot of demand from Latin America for Barbie-related content," says Pitalwalla. “So, the content which has been typically North American so far can easily be dubbed for a Latin American audience."

In simple terms, there are three things which can make a video on the Internet successful. The first is identity. Content that address problems or traits of a certain community or group of people. It articulates the viewers’ identity to them and the rest of the world in a better way than they could themselves. The second is emotion. Whenever a video connects with you on an emotional level, either through laughter, sadness, nostalgia or disgust, then the chances of it being shared by people increases manifold. Information is third. Whenever a video educates its viewers, on something they have not seen or heard before, it stands a good chance of becoming popular.

Needless to say, a creator can arrive at a similar understanding. But that’s not all to CM’s tech piece. There is identification of formats. What works? Short, long, weekly feed, stuff like that. Formats can then become sub-categories in themselves. Like unboxing a product. Or a piece to camera. Or what every Delhi guy says. Or every bachelor in the world thinks.

Let’s take another example. Of a luxury soap or a cosmetics brand which wants to push its products online. While it is common sense that such a brand would fit perfectly with a creator who generates beauty-related content, how exactly the video needs to be created is something that can be arrived at using CM’s technology. Should it be a high-production video? Could it be told in the way of a product unboxing? Maybe a make-up and skin care tutorial? Thanks to the tech on who’s watching, how many are watching, where are they watching from, how many dropped out at what specific point and who is the target audience, both the creator and the brand can figure the exact video, which for the lack of a better phrase, will give the best bang for the buck.

Pitalwalla believes these are the ingredients to build a successful MCN.

To give credit where is due, this strategy has worked for CM. Only last month, CM crossed 500 million monthly viewership on YouTube and 50 million monthly views on Facebook. CM’s technology platforms are called Intelligence Machine, Video Machine and Business Machine, which can create data-backed content, content creation on scale, and management of digital content for brands and channels.

Another matter altogether that there exists a completely contrarian view. One which goes something like this—all this tech business of creating content is a whole load of crap.

Tanmay Bhat, the co-founder of comedy group All India Bakchod (AIB), says that he is not a big believer in tech-driven content. And that if an aspiring artist needs to get on YouTube, it should be done the old-school way—set up a channel, read the YouTube playbook thoroughly, set up a camera and do what you do best. “We barely use tech at AIB," he says. “First, the content has to be good. If you are telling me that you don’t know the keywords to put on a video. Look up hot, sexy, woman, cleavage exposed. Or man, woman making out in cyber café. Click on it and you will go to a Fardeen Khan song.

“See, I think people are making it sound too complicated than it actually is. If you need to be in on the trend, read Mashable. You don’t need to sign up with an MCN to know your audience retention rate. Audience on the Internet has a low attention span. And YouTube will tell you how to optimize your channel. It doesn’t take a genius to know all this. I think the data only really helps the MCN. To sell to brands. The last tech insight I would have got is that on a Monday morning, at 11am, most people log into Facebook and watch your video."

AIB is managed by Only Much Louder (OML). Mint reached out to Ajay Nair, chief operating officer of OML, to understand the firm’s role with the comedy group. Does OML play a role in content creation? Nair denied that it does. A creator knows what works and that’s why they are signed on.

“See, Sameer (Pitalwalla) is one of the best guys in this business," he says. “But I have a different view. In this whole business, the only thing that matters is the creator’s creativity. Everything around it is incidental. A creator’s vision translates into good content. And good content finds an audience. Then there is virality, which generates monetization."

Nair doesn’t stop at that. He believes that the key, when working with creators, is to ensure that they are happy. “And they are happy when they have independence," he says. “When they own the content. That is, the intellectual property belongs to them. That is the democratization of the Internet. Where the broadcaster has no influence."

Do MCNs feel the same way? Well, yes and no. Govindraj Ethiraj, the founder of Ping Digital Network, says that MCNs play the role of an intermediary between YouTube and creators. Issues crop up, specifically in the entertainment space, where a creator’s expectation goes up. And this happens elsewhere in the world too.

“In our case, for instance, home chefs, we do long tail content," he says. “Most of them see this as a long-term relationship, like creating a food ecosystem. So, over time, they will do well but it will be slow. The expectation is somewhat limited. The equation is quite different for entertainment."

Ethiraj doesn’t believe though that technology is a differentiator. Or that someone can sit down and create a viral video. “Your editorial ability to build content is the defining factor. There is enough outside intelligence on technology. If you’ve built something in-house, great but that’s not the defining factor," he says. “And on viral, the definition is something that had no chance and goes big. Viral is not something you plan. And more often than not, it is user-generated content."

At this point, it will only be fair to ask, how does YouTube feel about this? Mint reached out to Satya Raghavan, head of content operations at YouTube India, for perspective. In a fairly candid chat, he agreed that there are interesting dynamics playing out between creators and MCNs in India. The way he sees it; it has a lot to do with the fact that the ecosystem is in the toddler phase.

“In India, pretty much till the general elections 2014, YouTube was a place synonymous with catch-up TV, movie trailers and maybe a little bit of food content," says Raghavan. “Around that time, this breed called a creator emerged. The tip of the spear was comedy.

“When you start a YouTube channel, you have access to all your analytics. Long, short, when people left, all of this, creators can figure out at an individual level. What can happen with an entity who manages more than one channel is that they can then compare within channels and then learn from each other. So, let’s say you have 10 comedy and 10 beauty channels. You have the option of collectively learning. In that sense, you can move to insights and trends. So, can you create content on the basis of what’s trending. Like doing content around Indian Premier League (IPL). Or IPL and the drought. Having tools and technologies to do that is all the better."

Raghavan says that YouTube values both content creators and MCNs. It is not either or.

“Both are absolutely fine in their viewpoints," he says. “I don’t think there is one success mantra. I work even harder with both camps. MCN and creators. Lot of people come and tell us, should we join this or that MCN and we tell them, look it is your decision. Figure out what works best for you and then decide. I don’t spend any time to try and find out what is wrong. For me, the opportunity itself is so huge man. All of this, I think will be smooth. Everything has a rhythm. Which isn’t matching right now. I think it is one of the reasons for the discontent. It is just a matter of time. Because everybody is here to do well and make money. Nobody wants to not grow."

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