Pubs Deepen Relationship With Independent Creators
As the individual has continued to rise and gain more attention, major publishers are trying to figure out ways to stay relevant. In some cases, that just means accepting this new scenario and finding ways to partner.
Case in point: Yahoo. According to Bloomberg:
Yahoo has signed up nearly 100 YouTube, TikTok and Instagram creators to draw traffic to its website, recognition that millions of people rely on social media influencers to stay informed.
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Under the program, Yahoo is offering contributors half of the advertising sales their material generates. The company doesn’t disclose how much it’s making from advertising or how many page views are being driven by creators.
Page views can vary widely, but a high-performing article can get upward of 300,000 views, several creators said. They earn income from advertising revenue and affiliate links, which send readers to websites where they can purchase products.
There are pros and cons to this. Yahoo wants people to visit its website because that’s where it can maximize ad revenue. By having these creators publish content on Yahoo.com and then giving them a big chunk of the ad revenue from those page views, it incentivizes the creator to promote the content. At the same time, Yahoo doesn’t carry any fixed costs since these creators are independent. These are clear pros.
On the other hand, Yahoo isn’t the first to give independent creators the chance to distribute their content on a widely trafficked website. About.com used to give independents a flat fee plus a page view bonus to manage a specific topic. Demand Media paid a flat price per article. This strategy of relying on independents to create all of your content comes with inherent quality issues. It becomes a game of writing as quickly as possible to maximize revenue.
And so, Yahoo will have to weigh those pros and cons. It’s a very Web 1.0 strategy, which isn’t inherently wrong—it’s just risky. If it can balance content quality with the growth in distribution from these creators, it might work out for Yahoo. But that’s a hard balance to get right.
I am more interested in the recent Fox acquisition of Red Seat Ventures, a podcast company with shows from Megyn Kelly, Tucker Carlson and others. According to the Financial Times:
Red Seat, which offers production, distribution and marketing services for creators out of its New York headquarters, will be folded into Fox’s Tubi streaming unit.
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Chris Balfe [co-founder of Red Seat] on Monday said the Fox deal would allow his company to “expand the services we provide to our creators, while continuing to maintain the independence and integrity of their brands”.
This is an interesting deal because the two companies complement each other. In the case of Fox, it has an incredible amount of distribution, infrastructure and sales capacity, while Red Seat has all of the talent that consumers are gravitating toward.
You can imagine how both parties win. Red Seat produced individuals might be invited onto mainstream Fox shows as a way of growing additional audience. These same shows would also see growth in ad revenue since Fox can include them on large-scale advertising buys. At the same time, Fox doesn’t have to pay multi-million dollar anchor contracts to the talent. It’s all performance based.
This is a good structure for these sorts of partnerships. Fox might not own the IP of the individual shows, but I suspect it has the exclusive when it comes to monetizing. The creator can then focus on what they do: create.
But what is even more interesting is the potential for finding new talent at a much lower cost. What does it cost to spin up a new show for an up-and-coming host? Rather than trying to fit them into an already-running Fox show, they can be given a podcast and see what happens. Fox can get in on the ground floor, so to speak, without needing to front a ton of money. And if it starts to work, Fox can put more of its resources behind it.
What I like about this model is that everyone wins. It’s replicable in other niches, both in the consumer and business world. Let’s say you run a whiskey publication. You could partner with a creator that has a YouTube show reviewing various whiskeys to have them bring their own show onto your platform. They get to focus on continuing to grow their audience while you bring your sales and marketing operation to the front.
There are two major downsides/arguments against this. First, if you help someone grow, at some point, they may outgrow you entirely and leave. Second, isn’t it better to focus on growing your owned & operated versus working with partners?
Both are valid. But they assume we operate in a vacuum. If the media ecosystem is evolving, we need to be comfortable evolving with it. Yes, focusing on owned & operated is better since you own 100% of it, and yes, the creator may decide to leave after a while, but in both cases, you benefited from their distribution for the time they were working with you. If you structure agreements correctly, you can introduce their audience to your products while generating margin on something they already built—and your risks are lower since you’re not carrying much fixed cost.
Consumer behavior is evolving. They want to hear from individuals. As publishers, we have the infrastructure to adapt to this, but we need to be willing to share in the upside. It’s not a radical change, but it is a necessary one.
