Maker Studios’ Next Act

How Courtney Holt is building a media empire for the YouTube age.

“Instead of me looking at the artist on stage, I’d watch the audience,” says Holt, whose intellectual demeanor is accentuated by a substantial beard. “I was trying to figure out: Are they relatives, are they fans, are they friends? Is it a real audience? Is the reaction real?” Over the years, he developed a finely tuned sense of what audiences love.

That knack for assessing the depth of an artist’s bond with his or her fans comes in handy in his new job. Nine months ago, Holt, 48, became the head of Maker Studios, a company that rocketed to 11 billion video views a month by harnessing the connections between fans and a whole new generation of artists — YouTube personalities.

A handful of young YouTube creators and entrepreneurs started Maker Studios in 2009 to vault the barriers of fame erected a century ago by the studio and network systems. One was Shay Carl, who’d amassed millions of YouTube subscribers with a delightfully quirky channel starring his family of five. Co-founder Lisa Donovan made a name for herself with parodies of figures like Sarah Palin and comedic skits riffing off web and pop culture. They recruited dozens of other independent YouTube personalities to open a studio in Culver City outfitted with blue screens, cameras, a small art department, and editing bays. Among their sign-ups was Swedish comedian and gamer Felix Kjellberg, better known by the name of PewDiePie, who today is the biggest YouTube star in the world.

PewDiePie is just one of Maker Studios’ 50,000 content creators, who hail from more than 100 countries. The billions of views they rack up each month dwarf the audience of most primetime television shows. Together, Maker Studios creators have more than five billion followers on social-media platforms, and more than a billion subscribers to their YouTube channels. That scale makes Maker Studios one of the biggest media operations affiliated with YouTube.

Two years ago, Disney bought the company for a final price tag of $675 million — a sum that astounded many and gave legitimacy to a new medium that seemed poised to upend the traditional cable industry. Since that purchase, other well-heeled media companies have taken significant stakes in some of Maker Studio’s main competitors. Warner Bros. invested $42 million in Machinima, a YouTube talent network focused on gaming. AwesomenessTV, which reportedly does around 1 billion video views a month, is owned by DreamWorks Animation, Hearst, and Verizon. AT&T has a significant stake in Full Screen, which now claims more than 75,000 creators. Legacy media companies’ rush into the YouTube market can be seen both as a defensive move and an investment in the future.

Holt joined Maker Studios in 2011 as chief strategy officer and took the reins of the company late last year. In July, Holt sat with Traffic for two extended interviews, the first significant ones he’s given since his promotion, to discuss how he plans to lead the world’s most high-profile and successful YouTube community out of its adolescence. As part of Disney, Maker Studios is now backed by the resources of one of the largest media companies, but Holt must also satisfy the demands of executives and stakeholders above him. He must decide which parts of the freewheeling spirit that made Maker Studios successful in the first place he needs to defend, and which parts he should jettison. What he ultimately does with Maker Studios may very well serve as the model for the future of video programming online.

Anyone with a camera and a computer can create a channel on YouTube, but making real money isn’t so easy. Maker Studios innovated bundling those channels into verticals organized by theme, such as gaming, sports, fashion, and comedy. This made it easier for viewers to navigate the ocean of YouTube content, while also making it easier for Maker Studios to sell advertising against those channels. This network of multiple channels inspired the term “multi-channel network” (often abbreviated as “MCN” by industry insiders). Holt prefers to simply describe Maker Studios as a media company. “If you think about what a media company does, it produces programming, it invests in original intellectual property, and then it distributes it broadly,” he says. “That’s the core of our business.”

Q: Do you see any parallels between Maker Studios and the record labels where you started your career?

Courtney Holt: They’re very similar. When I first got to Interscope Records, I remember Eminem coming into meetings. He was just a kid with ideas. And then you saw what he became over the course of six or seven years as he scaled his career. You saw an evolution of the person, the persona, the process.

I was lucky enough to work for Interscope Records co-founder Jimmy Iovine during that time. Jimmy swept floors at the Record Plant in New York, became friendly with guys like Lennon and Springsteen, and ended up getting to work on records. “When I start a record company,” he said, “I’m going to be the anti-record company because I’m going to put the artists first.” Interscope was founded on that ideology.

When I first met with the founders of Maker Studios, they spoke the same language. It reminded me of watching Nirvana in a small club. And then you see how it translates to a stadium. You see an Axl Rose, a Joey Ramone, those people who have something that could influence culture. There’s an energy and an authenticity to it. I saw that in the early days of Maker Studios.

So how does working with YouTube creators compare to working with musicians?

We enable talent. We partner with them. The relationship we have with creators is similar in that not every creator comes in with a fully baked idea — the same way not every songwriter has a finished album in his head. You’ve got to work with them to bring it out. We’re helping creators make investments in new ideas and intellectual property. But the goal is to also be very talent-friendly in terms of revenue splits and participation.

You’re one of a handful of people to bridge the divide between legacy and digital media. Are they more similar than some people realize?

They are. At the end of the day we make content, we distribute content, and we focus on building an audience and driving revenue. Most traditional media companies do that, too. And most traditional media companies are investing in the digital space. There are traditional media companies developing short-form content, and there are emerging companies in the media landscape playing around with longer-form.

You worked at Myspace after News Corp. bought it. Are there lessons from that time you’re applying to the relationship between Disney and Maker Studios?

One thing I noticed at Myspace is that within Fox there were people who really didn’t understand what its purpose was relative to the strategy of the larger company. There wasn’t a clear understanding of how Myspace was going to help Fox properties or how Fox was supposed to help Myspace.

Myspace was a discrete product solving a discrete problem — which was social networking — in an organization that produced, made, and distributed content. Maker Studios makes video. We’re really close to the core business of the Walt Disney Company, and so a lot of what we’re focusing on are ways we can leverage our creators and do things that are more broadly strategic for Disney.


In an ideal world, how would you like Maker to work with Disney?

We’re collaborating with virtually every division of Disney. We’ve collaborated with ESPN. We’ve collaborated with the studios. We’re helping Disney understand how to work with this new breed of creative talent. Last week, one of our creators did a great program for Disney XD around “High School Musical.” That type of programming feels organic. And these are the types of opportunities that are happening by virtue of our presence within the company.

Three years ago nobody knew who PewDiePie was. I’d go into meetings and I’d be like, ‘Let me explain to you what this guy does.’ Now he’s been featured in Time magazine and it’s a different conversation. A number of years ago, I would go to advertising conferences where we’d calibrate our viewership against those of other online networks and against TV, trying to show that we have an audience that matters. And now, years later, there’s a clear understanding of the role that a company like Maker plays.

What kind reception do you get from advertisers now?

Brands are starting to really value what influencers can mean in terms of an advertising campaign. A number of years ago, I walked around with presentations describing what an influencer is. And today you’re unlikely to find a single brand not using influencers in some way, shape, or form. Maybe not successfully, but they’re at least trying. Maker Studios is marrying multiple social platforms with media. And we can package it up with influencers and scale. That is a unique offering.

With your billions of monthly views, Maker now has scale that would make most media executives drool. What do you do with it?

The scale is great, and I’m really proud of what the team has done. But we’ve focused on revenue from day one. We always thought about commercialization because that’s one reason the creators are here — they want to make money. They want to get bigger and they want to be afforded opportunities that they wouldn’t have as independent creators.

You have distribution deals with streaming services like Dish’s Sling TV and Verizon’s Go90. What’s the calculus there?

I believe that people who have pipes, screens, and boxes are looking to differentiate their products through content. What I always say is we’re building programming where there are commercial opportunities and audience demand. And the nice thing is we’ve built a great audience business. So we’re sitting on a lot of audience demand.

We’re not trying to check every box in every content type. We’re focusing on a select number of categories. And if it makes sense for us to be distributed on these platforms we’re going to be there with a great product.

You’re also now distributing across a number of social platforms, not just YouTube. How has that changed what you do?

It hasn’t inherently changed what we do. YouTube is still the center of our universe because it’s the place where you have the most predictable monetization. And it breeds a certain type of creator community. Facebook’s rise in video can’t be denied, and we were able to react very early on to Snapchat and Instagram. We have creators who might be predisposed to one of those other platforms. Maybe they’re not on YouTube at all. And we’ve built the infrastructure to support that.


What do you see as Maker’s biggest hits? And misses?

Our hits stem from taking a creator who has an endemic base, who has creative ideas that need a little bit more. That “more” could be money, development, access to resources, marketing. Look at “Scare PewDiePie,” a show we did with YouTube’s subscription service, Red. Or “Wonder Quest,” a show we did with a creator called Stampy. Those are good examples of hits. They were commercially viable. They were critically viable. And we’re now doing multiple seasons of those shows.

Where we haven’t had as much success is producing or buying programming that didn’t tap into what we were focused on. When it wasn’t tied to a creator, when we hadn’t really thought about the reach of the influencer, and we made programming that, in theory, could have been on any digital platform. That wasn’t the right approach because then we were just like everybody else.

As part of YouTube Red, the PewDiePie show lets fans support him directly through subscriptions. What difference does that revenue stream make?

It allows us, because the economics are different, to invest more in programming. The predictability of monetization, the ability to invest long-term in content is definitely enhanced by having enhanced revenue streams that come with paid subscription and transactional video.

How do you strike a balance between developing programs for your biggest stars and adding new talent?

There isn’t really tension between them because the team that scales the network and the team that looks at original programming are separate. Spark by Maker, our piloting program, allows us to go and make a pilot for a single concept or idea with a creator in our network. We’re not making a full-season commitment — we’re trying something. We ended up producing 34 pilots over a three-month period last year. We got some great shows out of it. And then we put them online and were able to greenlight some of them based on the data.

Does data always determine which projects you greenlight?

Data is the benchmark of how we make business decisions. But I can’t say data is the only way we make creative decisions. Data is one component. The other has to be gut. I learned that from working with guys like Jimmy Iovine. He would believe in artists independently of whether they were guaranteed to be commercial. And he would tell stories of Tom Petty and Bruce Springsteen in the early days of working with them. Springsteen didn’t have a hit on his first two records. In today’s music climate, he probably would have been dropped by a major label before he got to “Born to Run.”

I watched Jimmy give artists permission to try things over a longer period of time and to find their audience without spending huge amounts on marketing. Because if you push an artist too hard and consumers don’t react, it’s way harder to recover from that. There are very few artists that I can think of that had a big marketing push and got dropped and then did okay. A lot of it is understanding how artists and audience can feed off each other.

You divide your creator community into hobbyists and professionals. Do you see parallels to music, where most professionals start out as amateurs?

I do. We definitely have converted more hobbyists into professionals than any other company based on volume and the fact that we’ve been doing this the longest. I’d look at a professional creator as someone who can do it full-time. The average working musician probably has a day job. A limited number receive a living wage from their craft. That’s somewhat true in our world, too.

The content some of your YouTube creators produce seems to be profoundly important to younger people and somewhat incomprehensible to anyone over 30. Do you recognize that disconnect from music?

It’s not uncommon that there’s a divide between generations in terms of taste, right? It goes back to Elvis Presley. But you’ve got to remember that this generation is the first to grow up totally connected. The access to devices and self-expression are at the core of this. My kids, who are 10 and 12, are growing up on Instagram and Snapchat. The barrier between that and actually being a publisher is actually pretty fuzzy. The only differences are aesthetic and commitment. That’s changing the notion of what being a professional means.

Intimacy is such a key component of what celebrity means now. How are notions of celebrity changing?

I remember the first time I saw “The Real World” on MTV, I was like, “Holy shit, these people are like versions of me and my friends on TV.” Today, YouTube has a lot of that. Variety did a study a while back that showed a disproportionate number of online celebrities were the celebrities that young people identified with most.

An actor can be a different person in every film. Many of the biggest YouTube creators are themselves or play an exaggeration of themselves. So you’re identifying with people. It’s very hard to have that experience with traditional celebrities because you don’t really see most traditional celebrities being themselves.

What do you think Maker Studios might look like in ten years?

Ten years is hard to envision in our world. The company is wired to move fast, react to the market, and try innovative things. What might change are platforms. I can’t tell you if, all of the sudden, virtual reality becomes a huge focus for us in five years because there’s a huge market demand and we have creators that really want to explore it. Our core is video, and our core is to find influencers and marry them with the right creative energy and help them achieve their creative and commercial goals. The company was started back in 2009 to provide a foundation for emerging talent to create and distribute programming. And we’re going to keep doing that.


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