Three-day convention celebrates raucous subculture surrounding site

One by one, the top executives at YouTube took turns taking the stage Friday at Century City’s Hyatt Regency Century Plaza Hotel to give an overview of their business.

But this presentation wasn’t for entertainment execs or shareholders; it was made to a mostly teenage crowd of 2,500 who rarely let a minute go by without unleashing screams of delight. Though YouTube CEO Salar Kamangar might have hoped they were cheering him, the deafening peals were more likely directed at some of the site’s biggest draws, from Buck Hollywood to Mystery Guitar Man, who joined him to tout YouTube’s latest developments.

Welcome to VidCon, a three-day convention that ended Saturday celebrating the raucous subculture surrounding YouTube, where the consumers and producers of the Web’s most popular videos are often one in the same. Which is why dozens of YouTube employees made the trip down from San Bruno, Calif., to both teach and learn from the site’s most fervent users, whom Google plied with everything from free smoothies to T-shirts.

“You guys don’t just watch the news, you make the news,” Kamangar told the crowd, predicting they would give rise to the next CNN or MTV.

That’s a lot of love to lay on a core constituency that doesn’t need much more coaxing to use YouTube, which averages 3 billion views per day worldwide. But the Google-owned property is keen on keeping VidCon attendees creating content because the cream of this youthful crop represents a promising segment of its business.

While across town the ongoing Television Critics Assn. press tour was drawing far more media attention, the audience for many of the cable series being discussed there actually pale in comparison to what the so-called YouTubers get each week — and at a fraction of the budgets at even the cheapest TV shows.

Yet the YouTubers are still making money. Of the estimated 20,000 in YouTube’s Partners Program, which splits ad revenue between the site and these amateur content producers, hundreds are making six figures a year. The most-subscribed attraction on the site, Ray William Johnson, is said to have cracked seven figures, though it probably earns far less than Daniel Tosh, the Comedy Central star whose hit series “Tosh.0″ attracts fewer viewers to an average episode (4.2 million) than Johnson, who grabs over 6 million — twice a week. Yet their shows are somewhat similar, aggregating and mocking viral videos.

These YouTube phenoms aren’t to be confused with viral videos, which are typically one-off sensations. With a sophisticated understanding of the YouTube platform, these talents manage to bring viewers back again and again. And this isn’t the largely passive experience of TV; YouTubers are engaged in an interactive loop grounded in social media.

Most of what passes for entertainment on YouTube is tween-friendly silliness, whether talking animated fruit like “The Annoying Orange” or video bloggers — call them vloggers — like Shane Dawson who essentially spout off directly to the camera on all manners of subjects.

But they’re not just here for hero worship. Many VidCon attendees split their time between paying homage and paying attention to training sessions and peers who can educate them on everything from proper lighting to balancing their production responsibilities with homework.

YouTube has taken an active interest in grooming its user base beyond VidCon, which it sponsors but doesn’t own or operate, announcing Friday at the event the launch of an online “creator hub” to spread the gospel of DIY video production.

That could take some pressure off VidCon, which having had to wait-list 1,500 attendees this year, is moving to the Anaheim Convention Center in 2012 in anticipation of doubling to serve 5,000.

Another contingent active at VidCon is the cottage industry of mini-studios that have emerged and signed up stables of YouTube talent looking for help with everything from production to advertising sales.

Maker Studios fancies itself as the second coming of United Artists, giving the talent full creative freedom that many of the 200 partners signed up can exercise at the company’s Culver City production facility. Maker’s true power comes in the cross-promotion put to use on YouTube that exposes users who come to see some of its better known partners such as Johnson, LisaNova and ShayCarl to other acts they might not know. That kind of savvy audience circulation amounts to 400 million monthly uniques across the Maker family, which helps attract advertisers.

“We can monetize better by being in a network because of the scale,” said Danny Zappin, co-founder of Maker, which attracted $1.5 million from venture capital heavyweights like Greycroft in April.

But for all those eyeballs, companies like Maker struggle to get even a fraction of the revenue that comes to TV shows with similar sized audiences. YouTube still isn’t considered the proverbial “well-lit street” free of copyright infringement and user-generated rabble that would make Madison Avenue even think about dipping into TV dollars to spend above experimental levels.

“There is a stigma around YouTube because there aren’t these walled gardens around premium offering,” said Dan Weinstein, partner at Collective Digital Studio, an offshoot of the Hollywood management/production company The Collective that guides digi-stars like Annoying Orange and Lucas Cruikshank of “Fred” fame.

Like Maker, Collective keeps its talent open to select product-integration arrangements. But to wring more revenues out of its properties than it can make on YouTube, it exploits the IP offline everywhere from merchandising to concerts. Annoying Orange is even packing its bags for TV, already producing six episodes in anticipation of landing a deal with a TV network.

That said, anyone working in this space sees it as just a matter of time before marketers get comfortable enough to start spending real dollars.

Even though Hollywood largely ignores VidCon, the industry has taken note of this budding business. At its higher end, scripted webisodes are being made at Vuguru or Machinima.com, where the production values of shortform series like “LXD” and “Mortal Kombat: Legacy” are virtually indistinguishable from what’s on TV, where some of these will likely end up after being stitched together into longer versions and resold.

Some congloms have already dabbled and departed this territory including Disney and NBCUniversal, which shut down its digital studio just last month. YouTube is determined to maximize the homegrown movement playing out on its own platform, even buying NextNewNetworks, another company that specializes in grooming YouTuber talent, earlier this year. That said, it’s also been hedging its bets by ramping up acquisitions of premium content, exploring commissioning original content with established Hollywood players and mulling buying Hulu.

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