The signs of entertainment network Defy Media’s decline began early 2018, when it laid off eight percent of its workforce and left many of its employees unpaid. Months later, they sold two of their popular channels – The Escapist and Screen Junkies – to other networks. Early in November, Defy Media announced that they were shutting down operations by next year due to “marketing conditions”, however, they announced the next day that operations were shutting down effective immediately.
Following the announcements, the YouTube channels, content creators (or “YouTubers”), and other people involved with Defy Media took to social media to express their concerns. They talked about something few YouTubers have ever discussed: the business behind the content we enjoy. Those who didn’t know that channels such as Smosh and Clevver were actually brands and a part of parent companies soon learned that there was more business to Smosh Games’ goofy videos than what they watched. And following the vlogs and announcements that followed, it showed the viewers and aspiring YouTubers what it meant to follow a YouTube career.
How Do YouTubers and Their Networks Make Money
For those who don’t have an idea of how marketing and advertising works for the media, YouTube works similar to the television programs you see on TV, but with a few modifications to retain its natural and casual style.
Have you ever wondered why you can visit YouTube for free, but your favorite YouTubers still make a lot of money? That’s because, like television, they work with sponsors and advertisers. Except while TV stations work with brands, YouTubers work with YouTube, a division of Google, which handles Google Ads for businesses.
One way of earning (though not a lot) is through AdSense. If a video is ad-friendly, meaning it doesn’t contain profanity, nudity, or anything that could get a video flagged, YouTube places ads on it. These are the ads that you can or can’t skip, but brands pay money so they get their ads in videos their target consumers are more likely to watch.
It’s not a very lucrative option, considering that you only get paid for every thousand impressions. Plus, YouTube takes around half of the overall revenue you get from AdSense. A million views might earn you between a thousand to five thousand dollars, so it’s a more lucrative income source from channels like PewDiePie and Jenna Marbles than it is with less popular channels.
Some YouTubers make extra buy featuring their Patreon account. This is like a virtual tip jar where fans can leave money if they want to help support a YouTuber continue their channel. Though YouTubers open Patreon accounts, they’re not forcing their fans to donate. However, they offer exclusive content for people who choose to donate a certain amount.
Instead of running ads on their video, YouTubers turn their video into an actual ad for a product. YouTubers are asked to feature a specific product or service on their video and leave an affiliate link to below the video. Every time a user clicks on the link and makes a purchase, the YouTuber will make money from it. This is a popular way to get money in YouTube’s beauty and fashion community.
YouTubers who are popular enough will have a big enough fan base to start making a profit from their channel’s merchandise. PewDiePie, for example, has been selling the usual merchandise – t-shirts, bags, phone cases – with his logo on it, and once published a book, This Book Loves You. On the other hand, beauty vlogger Jeffree Star started his own makeup brand and makes millions from it.
Most money come from brands sponsoring YouTubers to feature their products in a video in exchange for money. It can pay 12 times more than what they make in AdSense. Sometimes, the YouTuber will have to negotiate because that will mean acting a certain way that may be different from what they do, but usually the YouTuber will have enough leeway to feature the product the way they want to.
When a YouTuber starts out on YouTube, obviously they’re not going to make any money or not a good enough living until they’ve built a fan base large enough to start attracting ads and sponsors. Once they do, they become a profitable channel. A network – such as Defy Media, Alloy Entertainment, Vevo – notices this and strikes a deal with the YouTuber. The network can choose to “buy” the channel, and they’ll get a say in what videos get churned out and how to make the most profit out of the brand.
In exchange, the channel gets a larger budget to create videos. Originally, YouTubers use money from their own pockets to create content. Under a network, however, they get salaries or a share in profits, as well as a budget and a professional team to produce better-quality videos.
When Fun and Passion Become a Business
However, at what point does a YouTube channel created for fun and the passion of creating content become a business? Anthony Padilla, the co-founder of Smosh, built the channel with co-founder Ian Hecox in 2005. In 2011, they were acquired by a company that would soon be known as Defy Media, which then allowed them to expand to more videos, multiple channels, and even a movie and a mobile game.
By 2017, however, Anthony left, citing he felt a lack in creative freedom compared to before they were acquired by Defy media. He also claimed Defy Media was mismanaging the Smosh brand and treating their employees unfairly. Following Defy Media’s shutdown, he claimed that there were instances that he and Ian were not included in the thought process and were forced to do things – such as garner support for an undeveloped mobile game concept – that they weren’t comfortable with. Upon his departure from Smosh, Defy Media had even attempted to take his personal Twitter account from him to keep him from speaking out as well as to control the narrative Smosh was producing.
Unlike businesses where the obvious point is to make money, YouTubers are walking the fine line between what is business and what is personal. Beauty gurus, for example, are making themselves a brand by being (or at least pretending to be) real and honest about a certain product because it is their honesty over a certain product review that rakes in more viewers. And in a business that relies on viewers to make money, a YouTuber’s job doesn’t start and end when the camera runs.
In mid-2018, Laura Lee celebrated her five million subscriber milestone when she was caught in the middle of a Twitter scandal. People found old Tweets of hers making racist jokes and, as a result, she lost over half a million subscribers. That accounts to hundreds of thousands of dollars from views and ads gone, but it’s nothing compared to the brand partnerships supposedly amounting to over a million dollars a year that pulled out.
Laura’s incident shows how easily a YouTuber’s career can fail with one mistake. While we sit in our day jobs wishing we could earn money by uploading videos of us play Minecraft all day, it’s a lot harder than that. We get job security and labor laws to make sure we get our rightful salaries. YouTubers earn by the mercy of their viewers and how good they can attract more people to their channel.
Not Just a Passion Project
Defy Media’s announcement, as well as the reaction of YouTubers associated with the network, showed people unaware of the behind-the-scenes in marketing and advertising what goes on behind a simple five-minute video. And I think, for the aspiring YouTubers who dream of joining the leagues of Shane Dawson and Markiplier, they have to consider the job security.
The successful YouTubers are the ones who are willing to forego job security to pursue their passion of making videos. This isn’t a get-rich-quick scheme, and the recent announcement shows the ugly side of the YouTube industry that many YouTubers never talk about. This isn’t a career for just anyone with a camera and a blank wall in their room; it’s for people who genuinely want to be seen and express themselves on YouTube.
While Defy Media’s shutdown shouldn’t dissuade YouTubers from vlogging and sharing their ideas, it gives YouTubers aspiring to be famous and make a living out of producing content a good idea what goes into making a video. At the risk of putting their life out in public, having very little space for themselves, and not having the same job security regular jobs do, some people are willing to pursue their passion in videomaking to reach their YouTube dreams.