Investment firms buying rights to old material from singers like Bruce Springsteen and Bob Dylan is nothing new—but now they’re looking to do the same with younger YouTube stars.
- YouTube stars are now receiving million-dollar offers from companies like Spotter and Keli Network in exchange for ad revenue from archive videos.
- Now, firms are approaching YouTubers and suggesting that selling the ad revenue rights could be a needed cash infusion into the YouTuber’s business.
- Recently, Jellysmack offered YouTuber Justin Watkins $2 million for the rights to his video catalog’s ad revenue, the Wall Street Journal reports.
Why it’s news
In the past, investment firms have obtained the rights to songwriter catalogs from stars like Bob Dylan and Bruce Springsteen—buying them from the artists for hundreds of millions of dollars.
The firms are taking somewhat of a gamble—assuming that the YouTubers’ popularity will lead to video catalogs continuing to bring in ad revenue. Companies offer content creators cash in exchange for ad revenue over a certain time period. The length of that time period depends on the contract negotiated.
Since 2019, Spotter has spent around $740 million on securing content licensing agreements. In February this year, it announced plans to invest $1 billion by mid-2023. Competitor Jellysmack has reserved $500 million for similar projects.
Agreeing to one of these contracts isn’t always simple for the creators. Often, these deals include clauses requiring strict upload schedules and pressure the YouTubers to expand their brand by reaching into areas such as food and merchandising.
In Watkins’ deal, for example, Jellysmack would receive the earnings of the YouTuber’s archive videos for five years, and Watkins would be required to upload 41 videos monthly.
Since announcing plans for further investments, Jellysmack has improved its offerings. The contracts it now offers are for shorter lengths of time and have more flexible terms, the Wall Street Journal reports.
YouTube owner Google typically pays content creators about 55% of the earnings from advertisements on videos. This year, experts anticipate that advertisers will spend $29.5 billion on YouTube, the Wall Street Journal reports.
Like many other Tech Giants, however, advertising may slow down on the video platform. Ad revenue declined has declined in the last year.
In response, Jellysmack has predicted an even greater revenue decline and announced its second round of layoffs this year.