6: Useful subcategories of hosted media businesses

We’ve long had subcategories of the licensed media businesses tied to medium (print, video, audio), whether they operate continuously with salaried media makers (much of print, radio, television news) or on a project basis (movies, series, freelance writers), how they were paid for/revenue model (advertising, one-time consumer purchase, subscription to a package). Hosted media is similarly multifaceted, although the ways we organized licensed media don’t uniformly apply well.

A ‘hosted’ relationship between the media makers and distributing service generally overlaps with what has been understood as the ‘creator’ economy, but hosted provides a clearer distinction between segments with different industrial norms. By 2020, a range of business structures created variation within hosted media – especially among video makers – also causing category errors. Or more simply, there are too many different businesses within hosted media to talk about it as a coherent whole beyond the reliance on hosted distribution. In the interest of advancing conceptualization, I suggest subcategorizing commercial hosted media based on:

enterprise structure  

• sole proprietor
• small-to-mid size business
• licensed extension

and

content strategy/features

• personality
• expert/rare talent

These structures and strategies are independent of each other; they are different lenses by which to more precisely organize the sector into comparable media businesses. To be clear, none of these categories is evaluative – there is no suggestion some are ‘better’ or more important. Rather, they help to clarify that there are some quite different businesses within what is largely regarded as a homogeneous sector. Creating subcategories tied to business features that shape operation helps reveal differences in commercial possibilities and content strategy.

Beginning with enterprise structure, ‘creator economy’ evokes – at least in my mind – what I suspect is an increasingly diminishing subsector of commercial hosted video: the entrepreneurial individuals who eke out paid work. These are sole proprietors that may dominate our imagination of the hosted media economy but cannot stand in for the hosted media economy as a whole. Keep in mind that I’m aiming to build broadly useful business/economic subcategories, not focus exclusively on video; the opportunities available to sole proprietors are likely far more extensive in written and audio media making.

By the 2020s, the hosted video economy grew increasingly corporate, as in, dominated by SME business organizations rather than sole proprietors – at least if we were to organize the sector by revenue. [This is reasoned perception, I haven’t found comprehensive data that proves this]. Many of the examples held up as models of the hosted video environment are running small-to-mid sized businesses. They too are corporate media.

Also, many of the most high-profile small-to-mid sized businesses that started in media making are pivoting away from revenue based on content creation in scaling their enterprises. This is not a critique, but a note of a pattern needing more investigation. When most of the company’s revenue comes from selling chocolate or other goods, they stop being illustrative of a business based in media making (see Coda). Others are taking on investor funding that introduces fiduciary responsibilities very different from those facing the imagined sole-proprietor ‘creator’ – even if still distributing hosted content (more on this in distinguishing content strategies).

We need concepts and approaches that help us track how the commercial hosted media sector – especially in video – is becoming ‘corporate’ so that we can then explore whether (and if so, how) it operates differently from licensed media historically. Relying on the distinction of creator v corporate hides that reality and prevents us from appreciating the factors of business operation that shape media making and the content that can be produced.

A third enterprise structure derives from the expansion of media companies using hosted services to extend the reach of content made under licensed relations, or licensed extensions. This has become a significant part of YouTube viewing – whether Channel 4 in the UK, the Canadian Broadcasting Corporation (CBC), or countless others (many in non-Western contexts that have distributed this way for much longer – though perhaps without revenue sharing). Licensed extensions may be particular to video media. This is one of many reasons that speaking of ‘YouTube’ also now suffers from category errors (see 7) and why we need distinctions based in aspects of business operation and content characteristics.

At least three quite different structures of operation exist within hosted media that must be acknowledged in claims about the sector. Drawing the lines between sole-proprietor and small business isn’t simply a matter of a number of employees but ties as well to reaching a point where revenue is reliable enough to justify taking on added costs to grow the enterprise. In many cases it involves a lot of revenue diversification (including non-media) and may include doing some licensed work. A separate category of large company may be warranted if companies that have enough capitalization to fund their development in a way typical of legacy licensed media emerge – essentially this is what movie studios, record labels, and book publishers have done for decades. But at this point, that level of scale and revenue seems to involve significant business diversification out of reliance on hosted media or media making at all (media making may continue as a loss leader or marketing function). Major investments such as Dude Perfect’s $100m raise, or Beast Enterprises’ search of venture investment are further cases to watch and potentially contrast with large operations such as Complexly that have remained focused on content-based revenue streams and independent of external investment [best I can tell, little public financial data].

Crucially, this helps break down the wall that has put innovators like Duplass Brothers Productions (DBP) in a different category because of reliance on licensed media revenue or cobbling together funding in a different way (distribution of The Long Long Night on Kinema more typical of consumer-funded hosted distribution). DBP is notable for its development of models for scripted fiction that haven’t been viable on YouTube, although experiments continue. Dhar Mann Studios is another key example of corporate media producing for hosted distribution. 

Hosted content strategy subcategories
Switching now to identifying different content strategies that help build more sophisticated understanding of variation in hosted media. Of course there are many different content strategies; I call out one general distinction because the nature of the business models and related business strategies are so disparate that they warrant being considered as fundamentally different subsectors even though both create hosted media content. Let me again stress that there is no evaluation intended in this distinction; both are legitimate and economically and culturally significant enterprises. But there are differences between them that warrant separate conceptualization in understanding contemporary media businesses and their possibilities. There is a bit of a ‘chicken or egg’ dilemma in this categorizing: I suspect within the decade we’ll see this as a difference of being driven by ad/brand-funding logics versus consumer-funding logics. Right now ad/brand-funding is so much more pervasive, but there are different business opportunities in hosted media just as there have been in licensed media.

First, the subsector of ‘personalities’, or what are sometimes referenced as ‘influencers’ (intentionally moving on from that term). These content makers engage in work that is primarily the terrain of marketing or made in service of marketing (as the case of much ad-supported television). Some are characters (perhaps bearing semblance to a person’s identity) that perform ‘living’ or other fun activities for attention and/or sponsorship. They aim to be generally entertaining and create content that optimizes for attention and the needs of brands. Seller creators – though still less common in the US – also fit here.

Second, the subsector of ‘experts/media talent’ offer content that delivers value to consumers because of their interest in that expertise or skill. This subsector is less optimized to attention (likes, followers) but to delivering value to the users who seek their uncommon knowledge (finance, history, English Premier League) or skill. Of course the value of their content is also moderated by their approach to the topic and aspects of ‘personality,’ but there is an underlying skill beyond being ‘themselves’ or doing aspirational things that roots their enterprise.

Yes, there is much possible fluidity – the point is to highlight general differences that correlate between content and business model. This is also to make the point that all hosted media makers aren’t running the same race. The content strategy that works best for chasing attention and brand support is not the same as the one that delivers long-term relationships with users willing to spend in support. Many makers earn from a variety of revenue sources, but decades of media operation have shown that there are core differences between ad/brand and consumer-supported media, and a lot of those lessons apply to hosted media as well.

Both content strategy sectors can manifest as sole proprietorships or small businesses. Licensed media extensions may be rarer. In many cases the expertise-and-talent-based entrepreneurs turn to hosted media because they do not generate the scale of interest needed for the economics of licensed media; but their specific content has its roots in the general lifestyle content offered by daytime talk, DIY channels, and magazines.

There are always border cases with categories, and the point here is to improve our understanding of the business and content possibilities of hosted media by identifying the variation. The value of making this distinction – one that already exists in a lot of general conversation – is tied to the different routes to revenue and content strategies that align to these distinctions. Personalities are ready-made for advertising, brand sponsorship, and direct sales. They tend to attract many followers and what they offer users suits the ‘spending’ of time and sharing with friends; they are more typical of predigital ad-funded media and its content. And to be sure, a few may also be so valued by some users that consumer revenue also becomes possible, but this business model generally optimizes to scale (albeit, scale within micro media norms).

The business of experts/talent is different. In many cases, what they offer has limited scale. This requires a trade-off in strategy: less scale requires providing more profound value, so much so that consumers become a significant revenue source (or advertisers who offer quite specific goods). Personalities’ pursuit of vast attention makes attention-attraction strategies (being outrageous, surprising) more useful while experts need to compensate for smaller reach. This also might lead media creation to be only part of a broader vocational portfolio or side hustle. Or making media may be more central – it is about making media more than building the celebrity needed to have the audience reach needed for ad/brand reach.

We don’t need more work estimating the size the of an imagined ‘creator economy’ – or even the hosted media economy – that conflates media-making operations of vastly different sizes and complexity. It’s big and of course it is growing faster than sectors that have been mature for decades. What we need is to understand hosted media’s different components, what is complementary and what is competitive, and what compels users to change how or what they consume. We’d also be well served to remember that distribution has been more reliably and richly rewarding (financially) than content making. 

Coda: On 'cultivators'
[The chapter of Media Industries in the Digital Age that talks about work in hosted media businesses proposes the sector can be organized into leveragers (those seeking to access licensed media work), builders (those seeking to make hosted businesses), and cultivators (those who use hosted media in support of non-media core revenue).]

If most of a company’s operating revenue comes from something other than making media, should it be regarded as a media maker? Maybe yes, if it makes media, but if it isn’t in the business of making media, then surely it shouldn’t be held out as an exemplar of the future of media making as a business.

So what do Beast Enterprises or Jake Paul’s corporate portfolio tell us about the opportunities of hosted media? On one hand, personality-driven hosted media can be leveraged into celebrity and that celebrity can lead to an array of paydays for everything from appearances tied to celebrity, to licensed media work, to investment opportunities where that celebrity is leveraged as marketing. There is a long history of making a living from celebrity, and hosted media arguably expands the opportunity to create that celebrity; but let’s return to the question of media making.

It would be foolish to claim that media making is not a part of the ongoing success Beast Enterprises or what might be captured as ‘Paul Enterprises’. Both companies were created upon media making. These may be good models for those interested in the business of celebrity. They are also interesting lessons in using unpaid marketing (hosted video) as the future of marketing and promotion for high-margin consumer goods, but that does not mean we should use them as a blueprint for a future of media making.