YouTube, by and large, is an ephemeral outlet. Creators post videos and, with a few very rare exceptions, then move on to the next one. But a growing number of investment firms are betting that there’s money in those old videos.
Investment firms, which have spent the past few years buying up the catalog rights for successful musicians, are turning their attentions to the modern rock star: Influencers. And YouTube creators are being offered millions of dollars for the advertising rights to their older videos.
The Wall Street Journal reports multiple personalities on the social media/video short site are receiving offers from Spotter Inc. and Jellysmack. The idea is along the same lines as music royalties. Creators are given a large, up-front cash payment, while the investor takes the long bet that revenues from royalties (with music) or ads (with videos) will ultimately more than cover that investment.
Jellysmack and Spotter use separate algorithms to predict the value of creator catalogs over a time period, often five years, based on the 55% share of ad revenues Alphabet usually pays to creators. With that number in mind, they then offer creators 80% of its value up front. Should ad revenues drop (or the ad market crash), the investors take the hit.
The bet is that as YouTube personalities become more popular, their older videos will find new audiences. One creator, whose game commentary channel Thinknoodles is popular with young kids, was offered $2.1 million for the back catalog’s earnings over the next five years, but it also required him to create an average of 41 videos a month. The creator refused the offer.
While YouTube has seen its popularity wane against competitors like TikTok, it’s still a monster for advertisers. Last year, advertisers spent $29.5 billion on the platform.
