Several of YouTube's biggest partners have criticized the company in recent weeks, upset that they aren't making enough money from their massive networks on the world's largest video site. Entrepreneur Jason Calacanis and Alloy Digital executive Barry Blumberg both publicly questioned whether companies will ever make substantial money from YouTube, and advocated looking for new opportunities off the platform.
Ashley Mackenzie founded his company, Base 79, to attack this very conundrum. He wanted to help sports leagues, record labels and other entertainment companies makes as much money as possible from YouTube.
Five years later, Mackenzie (left) is YouTube's biggest partner in Europe.
TheWrap spoke with Mackenzie about whether he makes enough money from YouTube, why competition is so light in Europe and the company's growth plans.
How did you start Base 79?
My background is in advertising and my business partner Richard Mansell was a technology consultant. We saw YouTube coming up and Google pay $1.65 billion for it and we thought content owners and producers of great content would need a partner to make sure they made the most amount of money from that content as possible.
Many prominent YouTube partners have complained recently about not seeing enough money from their channels. Do you have the same complaint?
There is a short-term issue with YouTube's monetization strategy. It needs to own monetization on its own platform. We would be big supporters and advocates of YouTube building out its own advertising sales team internally rather than it being cross-sold out of Google teams.
There is a bit of bickering going on and some people chucking big grenades, but I can tell you if it wasn't for YouTube our business and businesses like ours would not exist.
Are you looking to build your business beyond YouTube?
We have an off-YouTube strategy. We syndicate to others and work with other video platforms. We have been focused on connected TVs, which are the next great frontier. YouTube has two billion viewers but that's nothing compared to the audience enjoyed by traditional linear TV.
What businesses do you have on connected TVs?
We can autocreate applications and when we distribute to YouTube the videos are also made available by those apps. We do that for IMG, Golfing World and just published one for Ministry of Sound.
Everything we publish into our apps is also published on YouTube. It's easy for us to ride the YouTube horse, but YouTube itself is challenged. I haven't yet seen a great UI for how they are going to be as dominant in the living room as on the desktop or tablet. I haven't seen a great reason for staying with YouTube In this environment.
Your claim to fame is being YouTube's biggest partner in Europe. Do you have much competition?
Very little thankfully, which is why we're doing it. LA is the epicenter where the senior Youtube content managers are based. That's a competitive marketplace. Once you start moving out to the UK and continental Europe, you find, maybe 2 multi-channel networks in any given territory. It's hard for them to hit scale. They become hemmed in by language and culture. It's just a fact that not many people globally speak Germany.
How did you first build the business?
We started partnering with rights holders in sports, music and entertainment -- a lot of electronic dance music labels, production companies and sports rights holders. The question we were asking ourselves is how do we make the most money out of content on the world's biggest video platform.
The key difference between us and some of the networks on the west coast is we believe networks should be optimized internationally. We need to look at this world internationally.
We raised some new capital from Chernin at the end of last year and are deploying that capital in a rapid rollout of this company largely across Europe. We now have offices in Madrid, Spain Paris, Syndey and LA as well.
Isn't it expensive to have offices and sell ads across Europe?
Advertising sales people in the United States cost two to three times more than in Europe. People just get paid less or the market worth is less. We've spent the last five years building a team and scale and technology to let us build organically. We never buy traffic.
So what is the growth plan? Are you focusing on identifying the content from those entertainment companies, producing content of your own or both?
Originally we founded as my video rights. Managing fan activity or unauthorized use of content for certain types of rights holders is a big part of the puzzle. For any given video we have upwards of 60-100 copies of that video that we've claimed on behalf of rights holders and we link those videos back to official channels.
But we didn't want to overemphasize content identification so then we rebranded a few months ago.
And got into production.
We've been a big partner of YouTube around original programming they rolled out across Europe. We got five parternships ourselves. They don't use the word commissioned but we got five different grants to build channels – one in soccer, one in action sports, one in Briths Comedy another entetaiment one and one in motor sports.
We also partnered with Simon Cowell's company Syco for 'You Generation' (a talent competition), which is being run by us. We're not making content but doing platform management.
But you do make content?
We have a production team internally that lead and manages our progmraming channels. YouTube is akin to DirecTV or BSkyB. It's a platform upon which content channels sit and we manage and run a large number of channels. Outside of North America, we are YouTube's biggest partner for generating revenue on the platform.
So what else should people know about Base 79?
We're growing quickly with several hundred channels. We get 700 million views a month and increase our partners' viewing in six weeks by 170 percent. We try to position ourselves as the international MCN. In the United States there are some great companies doing amazing things. Outsie of it we sort of own the space.