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PewDiePie’s Business Deal Implosions Show That Digital Celebrities Are Now Mainstream

PewDiePie has lost his deals with Disney’s Maker Studios and YouTube in the wake of his ill-advised pranks to pay random strangers to spout anti-Semitic sentiments. Perhaps counter-intuitively, one of the key takeaways from the turmoil is this: Digital stars have arrived.

The backlash PewDiePie is experiencing now is the same wringer that TV and movie celebs who’ve said dumb and racist things have gone through — whether that’s Mel Gibson, Paula Deen or Michael Richards (Kramer from “Seinfeld”). For digital influencers, in a way PewDiePie’s misfire is an encouraging development, because it illustrates that internet celebs have enough respect to be held to the same standards.

“It’s a clear sign that YouTubers have arrived into the mainstream,” said Joost van Dreunen, CEO of video-game research firm SuperData Research. “Had [PewDiePie] done this five years ago, nobody would have cared.”

The traditional Hollywood establishment, for a long time, hasn’t taken YouTube creators seriously despite their massive fanbases. “They said, ‘Look at these kids with computers in their basements, how cute,'” said van Dreunen. But now, PewDiePie is enough of a high-profile personality that companies like Disney and Google actually care about the content he produces. And when that material crossed the line, they kicked him to the curb.

PewDiePie — the internet handle of 27-year-old Felix Kjellberg — tried to clear the air in a Feb. 12 post on Tumblr, saying he was pointing out how ridiculous it was that he was able to pay someone $5 to say horrible things. “I think of the content that I create as entertainment, and not a place for any serious political commentary,” he wrote. “I know my audience understand[s] that and that is why they come to my channel. Though this was not my intention, I understand that these jokes were ultimately offensive.”

But the damage was already done, and Maker and YouTube felt compelled to cut their ties to PewDiePie over the controversy. “As these digital stars continue to become bigger — and become industries unto themselves — their business partners are going to constantly evaluate and look closely at whether the values of an artist align with the values of the company,” said Brent Weinstein, UTA’s head of digital media.

Like the pioneers in the early days of other media, digital influencers have had the freedom to experiment and push societal boundaries. That used to be because internet stars didn’t really make much money. The independence of YouTubers and other digital creators has allowed them “to be truly authentic, and to move quickly,” said Brendan Gahan of social-media agency Epic Signal. But many often lack professional experience: “They’ve never had to deal with an HR department or a direct supervisor, and oftentimes, shocking behavior is what helps draw eyeballs to their channel to begin with.”

Now PewDiePie has shown that as more dollars flow into the sector, digital creators will increasingly need to adopt the quality-control measures of traditional media companies. “In PewDiePie’s case, his brand was built on being provocative and unexpected,” said Marc Becker, CEO of the Tangent Agency, a creative marketing and strategy agency. “But when one guy goes from being a person making YouTube posts to a major brand… there need to be checks and balances to ensure it doesn’t go too far.”

In short, it’s a wake-up call for all YouTubers, said Gahan: “If PewDiePie, who is at the top of the influencer food chain, is not above losing a deal because of a controversial statement, then nobody is.”

As for what’s next for PewDiePie, it may be that no media company or brand will be interested in teaming up with him in the near future. (An industry source says Disney and YouTube will not try to shop around the second season of “Scare PewDiePie,” which had been set to be released on the YouTube Red subscription service.) So unless he funds it himself, “PewDiePie: The Movie” will not be coming to a screen near you.

Furthermore, many of PewDiePie’s sponsorship deals with game publishers likely were brokered via Maker Studios, so that’s “a hard stop” for now, van Dreunen noted.

Still, Kjellberg is by no means out of business. He’ll still earn a boatload on the ads that YouTube serves on his channel (although YouTube has removed PewDiePie from the higher-priced Google Preferred inventory). Unlike traditional entertainment-industry talent, he doesn’t need a studio or TV network to earn a healthy paycheck.

The salty-tongued Swede has a massive 53 million-plus subscriber base on YouTube, and expect him to keep pumping out outré videos on a regular basis that cater to his legion of “bros.” But at this point, he’ll likely reflect a bit longer before he hits the publish button.

Pictured above: Felix Kjellberg in his Jan. 11 YouTube video detailing the “Death to All Jews” prank.

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