The maturity and discipline of sports rights holders offer numerous lessons for digital media.
While the billion dollar rights deals secured in recent years by the NBA and NFL get all the headlines, it was only a few decades ago that the NBA Finals were tape-delayed. (For those of you under 30, "tape-delay" is like DVR except it wasn’t your choice.) Only since the growth of cable-television in the late 80’s and the necessity of securing exclusive content rights over the last 15 years has the explosion of rights fees truly become awe-inspiring.
What can today’s Multi-Channel Networks (MCNs - aka YouTube Networks) and digital publishers learn from all of this?
It’s tough to monetize content when you don’t own your distribution platform
The business plan for MCNs like centers around aggregating YouTube creators into one large channel that can drive millions of views. They then take 45% of YouTube’s robust ad sales against their content. MCNs then work to sell brand integrations to partners looking to align with the influential creators on said channel. Profitability is still an issue as margins are slim.
The problem is none of the MCNs own their distribution channel. They’re essentially paying YouTube to host their content.
Imagine for a moment that after acquiring Barclay’s Premier League rights, NBC Sports took all the live matches, shoulder programming, and original content, placed it on someone else’s network, then gave up 55% of the ad revenue. That’s what the MCNs are doing.
This not only costs MCNs revenue, but it also limits their sponsorship sales inventory and the opportunities for partners to activate around their investment. They are also limited when selling brand integrations into the content. (Arguably the most valuable asset, but still also limited. You can only have so much product placement in a video before it becomes a commercial. There’s a fine line between branded content and an infomercial.). Finally, to help drive views of the video - and thus value to the brands - the MCNs have to advertise on YouTube.
What’s the solution? MCNs need to slowly move off YouTube and create their own branded channels that they can control.
By creating and hosting your own digital channel you control the consumer experience, create new sales opportunities, deliver true video engagement, and retain 100% of the gross revenue!
But Chris, what about all the viewers going to YouTube to find us?
First off, if they’re really fans, they’ll follow you to your site where, hopefully, you’ve built a premium experience that will keep them coming back. How many of those views are organic and how many are paid? How many subscribers are truly engaged?
Second, don’t you want to be using your financial and human resources to promote viewers on a platform you own and control? Why spend ad dollars on YouTube or social media platforms, just to drive people to YouTube. (For more on the perils of putting all your eggs in the YouTube basket, read Multipop CEO Josh Lamb’s post, Don’t Let YouTube Own Your Audience.)
Next, I’m not advocating that you leave YouTube entirely. I’m merely suggesting that if you’re serious about monetizing your content, YouTube isn’t the best platform to accomplish that. Look at all the sports team and league sites. Their strategy is to drive as much traffic to their websites in order to deliver a great experience, understand their audience, and maximize revenue. MLB Advanced Media is the premier example. They were a decade ahead of everyone in aggregating their digital platforms and creating original content.
Finally, you can always return to YouTube once you’ve built a profitable digital presence. Look at the NFL. Just yesterday they announced that that Yahoo paid $20 million to be the first internet platform to stream a game live. This is only possible because they have maximized their other revenue streams and have the flexibility to expand. The NFL isn’t going to give up the billions of dollars that ABC / ESPN, CBS and NBC are paying them and move online completely, but because they have a long-term collection of media partners, they can experiment with new technologies to plan for their future.
The bottom line is this: MCNs have the right idea in aggregating original YouTube content. They just haven’t developed a mature partnership sales strategy that allows them to move away from YouTube and create their own networks. Don’t worry. They will. When they do, we’re going to move from an era of 500 cable channels to thousands of digital channels only available online.
First, however, they have to own their channel.