MBA Exclusive: Rapid Rise For Manila’s MCN Freedom
A different business model, without long-term channel contracts.
Most of the world’s biggest online video aggregators, commonly known as multichannel networks or MCNs, are based in North America, having grown on the back of YouTube, the world’s largest video platform, as well as ensuing interest from advertisers chasing hard-to-reach young millennials.
One of the world’s largest MCNs however, Freedom, is headquartered far away from New York and Los Angeles in Manila, following a distinctive strategy based on open channel contracts and open software that sets it apart from its peers.
The name refers to the absence of multi-year contracts that MCNs typically offer video creators, explains Freedom’s founder and CEO, George Vanous, a Canadian who now resides in the Philippines.
Indeed, beyond a standard 30-day disconnection period mandated by YouTube, people with a YouTube channel can join and leave Freedom as they please.
This has prompted Freedom to focus its energies on developing broad-based tools, including some for channels outside the Freedom network, as well as a white-label solution allowing people to run their own MCNs, supported by Freedom tech.
“I would not classify ourselves as a typical MCN,” Vanous says. “Our biggest differentiator is the no lock-in contract, but that no lock-in contract leads to many other things.”
For example, while most MCNs focus on developing tools for their own networks, Freedom has created a YouTube dashboard that’s open to everyone, Vanous explains.
“You need to give unique value to justify multi-year contracts," he says. "Because we chose to do an open contract, that led us to open tools and open services.”
This approach has made Freedom the world’s biggest MCN by creators on its books since launching just over year ago, although not always those with the most followers.
“On average, these channels are a lot smaller than most MCNs, although we do have larger channels as well,” Vanous tells Media Business Asia. “We found that to be a very healthy model because no-one else is focusing on the smaller channels, as we can tell.”
Some of these will grow, to become big stars and channels in their own right, Vanous adds, banking on Freedom’s philosophy as much as the tools it offers channel partners to retain their loyalty.
“We would rather have a long-term growth strategy, rather than just keep competing for the same big channel and offer them slightly higher revenue, a better ad deal,” he says. “That’s a saturated market in my opinion.”
So far, the strategy is working out well, with Vanous reporting US$10 million gross revenue in Freedom’s first year. This has paved the way for investment in a studio and video school, as well as additional recruitment for developers and an ad sales team to expand revenues beyond AdSense, YouTube’s auction-based ad system, over the course of 2015.
Churn rates meanwhile are fairly low, with about 3% of Freedom’s creators waiting to quit the network at any one time. Most channel partners live in English-speaking markets, with just 10% closer to home in Southeast Asia.
Language localization (including Chinese and Japanese in Asia so far) is in response to local demand, rather than a particular rollout strategy, but more YouTube creators from the Philippines may join once Freedom’s planned production facilities open in Manila.
At the same time, Vanous is eyeing new offices in Singapore, London and New York as Freedom expands.
“We are a global MCN,” he says. “The reason we chose the Philippines is because there’s a lower cost base for office space, for developers, for hiring a technology team.”
The MCN has around 140 salaried staff around the world, including 20 in the Philippines, although Vanous wants to grow that latter number to about 100, mostly focusing on software developers.
“At our core, we are a technology company,” he says. “We are not an advertising focused company, we are not striking big ad buys. We are building tools that allow YouTubers to grow faster, so we want to focus on that core competency and hire developers in the Philippines.”