What is a multi-channel network?
Multi-channel networks fill a vital role in the new social media ecosystem.
Life as a professional YouTuber isn’t as simple as it used to be. From negotiating with sponsors to dealing with SAG’s new influencer agreement, modern YouTubers face an ever-increasing number of responsibilities that extend well-beyond content creation.
But what if someone out there could take the load off? What if there was an organization that could seek brand partnerships, promote content, manage resources, and enable creators to focus on the act of creating as much as possible?
As it turns out, such organizations do exist. In fact, there are enough of them to create a multi-billion-dollar industry.
They’re called multi-channel networks (or MCNs, for short).
The best place to start is with YouTube’s official definition of the term:
“Multi-Channel Networks (“MCNs” or “networks”) are third-party service providers that affiliate with multiple YouTube channels to offer services that may include audience development, content programming, creator collaborations, digital rights management, monetization, and/or sales.”
YouTube multi-channel networks are business organizations that serve multiple content creators (whether individual YouTubers or teams on a single YouTube channel) by leveraging their collective power. MCNs take a percentage of each channel in their network’s earnings in exchange for performing services like seeking sponsors, cross-promotion, and providing crucial resources (like software or the best stock footage licensing) that reduce a creator’s personal expense and, hopefully, increase their income.
MCNs are management organizations for content creators. They make money when their clients make money. Their best financial interests are in serving their clients’ best financial interests.
MCN YouTube channels originated as a convenient way to aggregate separate content streams with a similar target audience, but they’ve evolved into something far more ambitious.
With the acquisitions of high-profile MCNs (like Maker Studios and AwesomenessTV) by major corporations (like Disney and DreamWorks Animation) for amounts in the hundreds of millions of dollars (like $600-700 million and $159 million), it’s safe to say that multi-channel networks have become a notable force in the entertainment industry as a whole.
As it turns out, there’s an even shorter answer to “what is an MCN?” It can be summed up in a single word:
Powerful.
Let’s take a look at why.
Why are MCN YouTube channels so important?
MCN YouTube channels are important because they’re perfectly positioned to bridge the gap between individual creators and the media landscape at large.
To earn this position, successful MCNs must create value both for their clients and within themselves.
What is the value of working with a multi-channel network as a client?
For creators, the value of working with an MCN YouTube channel boils down to the services that the MCN provides. An average multi-channel network list of services might include the following:
- Marketing
- Audience Development
- Cross Promotion within the MCN
- Access to the Best Software and Content Creation Tools
- Content Programming
- Monetization and Sales Assistance
- Sponsor Outreach
- Branded Content Opportunities
- Creator Collaboration Opportunities
- Digital Rights Management
- Expansion Opportunities into Traditional Media
- & More
Regardless of specifics, the goal of an MCN’s service mix is to amplify their clients’ voices. The primary advantage of working with a multi-channel network, in theory, is that the MCN can substantially grow a creator’s audience, reach, profile, and access to financial opportunities with minimal added effort from the creator themselves.
What is the value of working with a multi-channel network as an owner?
If you’re trying to figure out how to make a YouTube multi-channel network, it’s critical that you understand how to create a multi-channel network’s value. It’s tempting to think in straightforward terms of dollars and cents, but a modern MCN’s worth can be determined by so much more than that.
But we’ll cover the basics first.
On the most fundamental level, an MCN YouTube channel generates income from each individual creator or channel in their network. The separation of these income streams means that multi-channel networks are inherently diversified, which can grant some degree of stability in an otherwise fickle industry.
On a slightly more advanced level, YouTube multi-channel networks generate income through the synergy of their entire network. If one creator within the network sees significant growth, an adept MCN will use it to drive even more growth among its other creators, leading to greater profitability for the network as a whole.
Effectively managing these two areas of action will drive most of a typical multi-channel network’s early success, but they’re only a starting point.
If you’re wondering how to make a YouTube multi-channel network reach its full potential, you have to think beyond the bounds of becoming the best MCN for YouTube. A multi-channel network is not just an aggregate of YouTube creators but a brand in and of itself.
With high-profile TV ventures like PEN15 now under its belt, AwesomenessTV has proven that MCNs have the power to break beyond the YouTube space. Through original content creation, intellectual property development, and brand-building, Awesomeness unleashed a new world of possibilities for themselves and propped open the door for other MCNs to follow.
Today, the future of multi-channel networks is only limited by the imaginations of those creating them.
Speaking of which…
How to create a multi-channel network
The exact method followed in building a multi-channel network will vary according to the founder’s goals. The basic shape of the process, however, will usually remain the same.
Here are seven steps to building your own multi-channel network:
1. Make a business plan
The first step in creating a multi-channel network is to figure out how to create a multi-channel network.
…And then write it down.
In other words, before you do anything else, you’ll need to craft a business plan.
A business plan is a document that outlines the goals of your business and how you plan on achieving those goals. You can think of your business plan as a roadmap to your future MCN’s success.
Like any good road map, your business plan needs to be detailed and well-designed in order to be effective. The exact contents of your business plan may vary according to your goals and your audience, but strong data and thorough market analysis are always a must.
2. Develop infrastructure
Next, you’ll need to develop infrastructure in order to be attractive to potential clients and investors alike.
In the case of a multi-channel network, “infrastructure” may refer to any quantifiable resources that make you and your company an asset. It could be technology, personnel, relationships, intellectual property, or even physical space.
The bottom line is that infrastructure creates value within your company. Therefore, anything you can acquire or develop to create value will contribute to the health of your infrastructure.
Even something as simple as a relationship with a payroll company can contribute. And no, we’re not just saying that. If your company employs solutions with smart features to streamline your internal processes, you’re only strengthening this infrastructure.
3. Develop content strategy
The key to being the best MCN for YouTube arguably lies more in scope than it does in volume. While having many clients is desirable, it’s also important to develop a content strategy capable of building an audience for the brand itself.
If you were to look at a list of the top 10 MCN networks at any given time, a little research would reveal that most of them began by specializing in a particular content niche, referred to as a “vertical.”
Whether it’s fashion, photography, lifestyle, gaming, travel, or any other type of content, specializing in a specific vertical or set of verticals will allow you to develop critical expertise and the positive reputation to go with it. Narrowing down from the entire YouTube ecosystem to a handful of verticals will also facilitate analysis, helping to ensure that the positioning of your multi-channel network makes good business sense.
4. Seek investors
At some point, you’ll need to seek outside investment in order to grow your MCN.
Think of a young multi-channel network in the exact same way that you would any other startup: in the beginning, when the company is building its product, funding requirements may be minimal. Eventually, however, investment will become absolutely necessary to produce and sell the product at a competitive, profitable scale.
If your MCN is successful, you’ll likely find yourself seeking investment at several different stages of the company’s lifecycle.
5. Grow
Healthy growth is the key to any multi-channel network’s value.
In the beginning, the foundation of an MCN’s growth will be split between the volume and quality of its client base, meaning that network owners can drive growth through two basic strategies.
First and most obviously, you can scout creators who fit into your content strategy and sign them as new clients. More clients mean more income streams, which in turn likely means more income and more opportunity for expansion within your MCN.
However, it’s important to be aware of your limits. It is possible to expand a client base too quickly, stretching your resources too thin to be effective.
That’s why the second strategy is so important.
In addition to signing more creators or channels, a well-run multi-channel network will focus a large percentage of its resources on cultivating its current roster. Because an MCN’s success is directly tied to its clients’ success, you could say that the MCN’s growth is likewise tied to its clients’ growth.
Helping clients succeed is critical for both a young multi-channel network’s reputation and its bottom line.
6. Seek MCN status from YouTube
Once you have a reasonable client base and a firm understanding (including analytics) of the services you provide, you’ll need to seek multi-channel network status from YouTube.
In other words, you’ll need to get YouTube’s permission to do business through the site itself.
Stricter YouTube policies have made the requirements for seeking MCN status somewhat opaque in recent years, but the gist is that you need a solid business plan and enough of a track record to back it up.
The process of attaining MCN status may seem too cumbersome to be necessary but seeing it through will grant your multi-channel network access to a set of enormously useful features within YouTube itself.
You may have heard, for instance, of YouTube’s Content Management System (CMS).
The Content Management System is exactly what it sounds like: a built-in system for managing content across multiple channels. It provides vital tools for asset allocation, analytics, troubleshooting, digital rights management, monetization, and more.
7. Keep growing
Once you’ve established a client base and attained MCN status, the only thing left to do is continue growing.
Easy, right?
With the evolving state of multi-channel networks in the entertainment ecosystem, the definition of “growth” for an MCN is evolving as well.
While you’ll undoubtedly want to continue expanding and polishing your roster of creators, you’ll also want to begin considering opportunities for expansion in infrastructure, original content, intellectual property, brand identity, and other business practices.
Wrapping Up
Multi-channel networks have come a long way since the dawn of the YouTube era, and their evolution shows no signs of stopping. Without a doubt, the future of MCNs will be here faster than you can say, “like and subscribe.”
If you’re interested in learning more about the changing landscape of how work gets done, be sure to check out our breakdown of the modern gig economy.
