MCNs Are Happening. They’re Also Evolving (And That’s a Good Thing).

Forbes digital media contributor Tom Ward recently made some observations on the evolution of multi-channel networks or MCNs–“Stop Trying To Make MCNs Happen (It Ain’t Working)”–that got our attention here at Paladin, and we would like to add another perspective to the conversation.

We maintain that MCN isn’t a dirty word, and–to invoke Mark Twain–reports of its demise are greatly exaggerated. While there are market corrections taking place that are improving the business model, that doesn’t mean it has failed.

The Semantics of MCNs

In his op-ed Mr. Ward notes that some are critical of the term MCN because video has been embraced by social platforms outside of YouTube, where a creator profile is dubbed a “channel,” rendering the “multi-channel” aspect antiquated. A popular alternative is to label a social video-focused company as a “multi-platform network” or “MPN.” This is a semantic distinction that can, in fact, be a misnomer. A network, digital studio, or combination of the two that is built around online video creators can certainly exist solely on YouTube or include social platforms like Instagram or Snapchat.

Further, MPN is sometimes used to describe companies that are building their own distribution platforms. While a few, such as Fullscreen, are focused on creating their own subscription video on demand (SVOD) services, most leverage existing platforms from major social media companies. They work with creators and content across multiple distribution channels. Thus, multi-channel still fits just fine.

The Good, The Bad, and the Great of the MCN Model

When YouTube was new, MCNs were conceived as collaboration groups where emerging video influencers could create content together and help promote one another. Each creator contributed a percentage of advertising earnings to support funding of the MCN, which in turn provided talent management infrastructure and production resources. A rising tide lifts all boats.

This model gained momentum quickly, catapulting nascent channels into stardom and producing unheard-of growth in views and engagement. In time the paradigm shifted to provide such benefits at scale, and seemingly overnight MCNs went from small groups of several dozen influencers to VC-funded hot commodities aggregating tens of thousands of channels.

These huge MCNs found that collaboration, production, and creative services are difficult to provide at that scale, and pivoted to providing services in tiers. Entry-level creators could join and benefit from technology to help them create and grow, and larger creators could benefit from white-glove services. But the cracks in the scaled model began to show.

Here are a few:

●      Most MCNs do not have technology in their DNA, and that’s a key component of providing talent with financial transparency and creative tools as well as managing a scaled business.

●      Smaller creators have felt burned after signing multi-year exclusivity contracts with the expectation that they would get hands-on services from their network and interact with their favorite YouTubers.

●      Scaled networks made of small creators also mean smaller revenue share contributions to the MCN’s bottom line, and only a minority of signed creators grow substantially.

Luckily, markets evolve. It is now common for an MCN to derive most of its revenue from a combination of talent agency services, branded content sales, and digital entertainment production and syndication. Cultivating multiple high-margin revenue streams in the influencer economy is the name of the game.

MCNs continue to provide hands-on services to creators, but are focused on making these high-value and scalable. This can mean releasing talent from their network who are inactive or not growing. The total number of influencers in a network is now seen as a vanity metric of little importance, as a few top influencers can often have more reach and engagement than the combined low-viewed masses.

On that note, the recent reduction in the Maker Studios network has given way to naysaying about influencer networks. The fact remains that an MCN can have 100 creators or 50,000. Both are valid, and there is still viability for the scaled model.

Many networks run a successful scaled business on revenue share margins – even if they are small – driven by volume. The key to their success is transparency in the services offered, and being a responsive and well-intentioned operator. The value proposition is assistance with growth and helping a burgeoning creator become a creative professional. It is not uncommon for small creators to outgrow a scaled MCN and move on to another with more high-touch services, and in fact this is a signal that the scaled network has done its job well.

International Expansion is Huge

The global MCN business is robust, demonstrating continued growth in EMEA, APAC, and Latin America as mobile broadband and smartphone usage grow internationally. Often these MCNs are focusing on geographic, language-specific, or content-specific niches to better corner regional audiences and appeal to local brands.

These boom markets are catching up to where some of the first (U.S.-based) MCNs began, before they became investment or acquisition targets for traditional media companies, while taking key learnings from successes and failures of the model in Western markets.

Higher Standards Are Not a Bad Thing

At this stage in the evolution of MCNs, influencers have the right to expect high quality service from any network they sign with. They are increasingly aware of this, and some choose to flex their muscle if they’re not getting enough in return for a revenue share. This forces MCNs to compete on value added. When this happens, both the industry and creators win.

The Influencer Economy Isn’t Going Anywhere

We agree with Tom Ward that the influencer business is changing, but it’s not going anywhere. MCNs continue to provide services that creators are buying, and to offer a reasonable business proposition for online video entrepreneurs. As long as there are viewers, brand advertisers, and creators who interact in the social video space, there will be an ecosystem around it. Don’t count out MCNs playing a key role in the video future.

If you’re looking for tools to help manage and scale your MCN, click to learn more about Paladin’s Network Management Suite.

If you’re looking for tools to help find influencers for brand campaigns and network recruitment, check out our Talent Locator.

If you’d like to track and monetize your IP across YouTube, click for details about our Rights Monitor.

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Video Platform Expansion, Meet Video Platform Convergence

It’s not news that since 2012, nearly every new or existing social network of significance has made video the central offering of its platform (or at least deeply ingrained in it).

It seems like each platform has thrown a different video experience at the wall, seeking both to differentiate itself and to nail the video formula that is most sticky with consumers. Call these the social video platform boom days, when everyone and their mom got into the online video game.

The end result is that several species of social video have emerged from the pack.

While the last five years have undoubtedly been years of expansion in the space, winners and losers are starting to emerge (RIP Vine), and the winners are scrambling to incorporate some or all of these sticky formats.

So what are these sticky formats?

3 Most Relevant Social Video Product Evolutions Since VOD

Auto-Play — Or, the new channel surfing

Where would your Facebook News Feed be without auto-play? For the uninitiated, auto-play starts a video as soon as it appears on your screen, as opposed to click-to-play, which requires a user click to start playback.

Auto-play was an essential change to support the consumption of many videos in a feed environment, and was successfully adopted by Facebook, Twitter, and Vine to hyper-inflate view counts and speed platform adoption.

It also fundamentally changed the way content is engineered for these platforms: aspect ratios changed to square or vertical frames that dominate a feed’s real estate. The use of captions propagated due to muted playback. It created a critical need for the content to hook a viewer within seconds or less before they scrolled past the video and it was lost to social oblivion.

Auto-play is used in another innovative way by YouTube and others, programmatically starting suggested videos after a given video is watched completely. This has the benefit of keeping audiences on a platform longer and serving up content they may not have otherwise sought out that is highly targeted to the viewer.

Mobile Live Streaming — Or, @#$% it! We’ll do it live!

Live streaming was available early on YouTube with the use of professional encoders, and adopted en masse by gamers on Twitch, but it wasn’t until improved mobile cameras and data speeds came along that creating live video content became something anyone could do at any time.

Live streaming is a time-in-app darling. While an auto-played video in a feed can be as short as a few seconds and is easily moved away from, streams are a captivating mechanism for having an extended conversation with a large audience or showcasing marquee events in real time.

Instant many-to-one audience feedback is the true power of the format. Personalities can have a seemingly intimate conversation with thousands of people at one time, by responding to individual comments and questions as they happen. They can also acquire instant feedback at any point in their content by way of reactions, making it easier than ever to double down on content that hits, or proactively excise what doesn’t.

Another adoption driver for streaming is that it has a dramatically lower barrier to creation than VOD content. No production or editing experience required, simply click to create.

Disappearing Media — Or, the best things in life happen in 10 seconds or less

Known as Stories on Snapchat and Instagram, this format is notable for having an expiration date, being visible for a limited window of time (typically 24 hours) or for a limited number of total playbacks.

Story experiences are viewed in sequence, which brings an entirely new dimension to creation. It has become suddenly possible to create multi-shot, multi-angle videos, complete with special effects in the form of interactive AR lenses, or text and sticker additions. It is not unlike having a movie studio in your pocket, even if most of the content is constructed in the moment and without reverence.

If live streaming has lowered the creation barrier, Stories have lowered the self-consciousness barrier. Creators who feel pressured to measure up to a perfect aesthetic or lifestyle are able to express themselves without fear of future criticism. Unbound by permanence, they are creating small pieces of content dozens of times a day. Quite the leap from a format that started as a medium for risque selfies.


What do each of these 3 product evolutions have in common?

All of the sticky features mentioned above can be replicated and integrated into existing platforms with relative ease, given the budgets and world-class product teams across the major social video platforms.

It stands to reason that in the coming years many platforms will have relative feature parity, and that further platform consolidation will occur. We’re already starting to see this in action today. In Instagram’s case, they’ve adopted live streaming and Stories within the last six months, and Snapchat’s active user growth has noticeably declined in the face of competition. Platform expansion, meet platform convergence.

It seems that sticky product formats benefit those large platforms that have the speed and the savvy to adopt them while they’re hot, so to speak. But how does a platform know when to act?

When to load up on video features (or not)

Of course, packing a platform with every sticky video feature may not be a great idea. It’s important that any feature additions are elegantly executed so as to not bloat the platform, and not end up costing a platform its identity.  Authenticity is an over-used buzzword in social video, usually in relation to an influencer’s persona, but it applies to platforms too. Users have specific reasons why they enjoy each platform, and there are risks to altering that format alchemy.

That said, the current essential 3 or future sticky features must be opportunistically integrated for platforms to remain competitive. Some have already failed to capitalize on first-mover advantages. One example is Twitter’s purchase of Periscope and their failure to immediately bake live video into the main Twitter app. This gave Facebook an opening to develop their own live streaming solution, which they pounced on. It is undeniable that Facebook is now the dominant force in mobile live streaming.

When do we reach singularity?

All three of the major product evolutions listed above came from new entrants to the space, and new creators tend to seek out nascent platforms where there is less competition and it is easier to stand out. That is likely to keep the social video space lively for some time.

Even as the larger, established platforms gobble up new entrants (or each other), there are obvious benefits to fewer major platforms: Creators have less to juggle. Data is typically available at a high quality and more readily accessible via APIs from established players like Google and Facebook. Less audience fragmentation is another bonus.

The innovation of sticky formats and the interplay between large and small platforms are changing the game for creators, platforms, and users. The social video boom days aren’t over yet – here’s to watching what happens next.

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