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July 12, 2010

YouTube to Award $5 Million in Grants to Video Producers in Pseudo-Production Fund

I poked fun at YouTube in the previous post, but this announcement is much more significant. YouTube, it seems, is no longer content in its role as indiscriminate distributor, and has announced a Partner Grant program to fund the production of original content. The program is fairly unique in its structure, however, as it's not really a traditional grant nor a bona fide production fund. In their own words:

We’ve been amazed by the creativity and resourcefulness of many of our partners. Some, operating on shoe string budgets, have been able to produce incredible videos, generate substantial revenues and command an audience that rivals that of network television. This new creative class often manages 360 degrees of their business operations, from the writing filming and producing of their content to the marketing, post-production and distribution of their videos. Despite their success, many partners lack the resources and deep financial backing available to studio-backed production houses. The goal of YouTube Partner Grants is to act as a catalyst by infusing additional funds into the production budgets of a small group of YouTube partners who are at the forefront of innovation. Funds from YouTube Partner Grants will serve as an advance against the partner's future YouTube revenue share.

That last sentence is interesting. "Funds from YouTube Partner Grants will serve as an advance against the partner's future YouTube revenue share." So this is similar to a production fund, but with a unique structure thanks to YouTube's advertising-based business model. YouTube is expecting to earn back their Partner Grant via ads run against the videos -- after which point the content creators will resume normal revenue sharing with YouTube (which, if it's anything like their AdSense program, is a 2/3 share to the content creator). "Proposals are evaluated by YouTube based on signals which include projected performance, distribution plan, marketing plan, cost requirements and appeal to advertisers" -- i.e., YouTube will only be investing in projects they expect to be successful, which sort of makes their Partner Grant program less of a Grant and more of a traditional Investment. Regardless, it's interesting to see YouTube making so many efforts to spur on higher-quality content lately -- perhaps they want to make sure Google TV is stocked with quality content at launch?

[via TubeFilter]

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