How do YouTubers support themselves? Usually, a combination of retail sales, membership programs, or even a custom product is used. However, YouTube ad revenue accounts for a large portion of the pie chart. The historical library of a YouTuber becomes a financial advantage, since they know they’ll be paid every month from ever-increasing engagement on their previous video. Spotter, based in Los Angeles, now wants to help creators develop their channels faster by paying them huge sums of money up front in exchange for future ad revenue from their existing uploads.
Spotter has signed relationships with some of YouTube’s largest producers, like MrBeast and Like Nastya, since its start in 2019. Spotter claims to have licensed content that produces over 40 billion monthly watch time minutes across its portfolio of customers, which includes Dude Perfect, Aphmau, Smokin’ & Grillin’ wit AB, and others. The company reported today that it has received another $200 million in Series D funding from Softbank Vision Fund 2, valuing the company at $1.7 billion. Spotter had previously raised $555 million in three undisclosed rounds of fundraising. Access Industries, HighPost Capital, CoVenture, GPS Partners, and Crossbeam Venture Partners are among the investors in these three rounds.
Spotter’s business strategy is a modernized version of David Bowie’s “Bowie Bond,” which is gaining popularity among creative economy firms. It’s comparable to venture capital investments in that you give a promising firm (or person) the money they need to expand, with the expectation that you’ll repay your money and make a significant return someday.
Jellysmack, another Softbank Vision Fund 2-funded creator-focused firm, has just set aside $500 million to license back catalog on YouTube. Jellysmack’s back catalog license contracts are five years long, the same as Spotter’s, and the company utilizes an algorithm to decide whether or not to invest in a creator.
By the middle of 2023, four years after its founding, the Spotter Corporation claims to have invested a total of $1 billion in inventors. Spotter aims to spend $500 million licensing authors’ back catalogs in 2022 alone, according to COO Nic Paul of TechCrunch. Spotter has done roughly 200 of these arrangements so far, with some creators, such as YouTube’s top U.S.-based creative MrBeast, doing numerous partnerships with Spotter over the years. “Creators have done second and third deals with us,” DeBevoise explained, “so it’s not a one-and-done thing.” “They [make another deal] six months later because they realize the benefits of reinvesting in themselves.”
MrBeast reportedly utilized his advance payment to fund a Spanish-language channel, where his viral videos are dubbed for a Spanish-speaking audience, according to Spotter. MrBeast’s audience has increased by over 300 percent since they began working with him a few years ago, with 1.35 billion monthly views across all of his channels, according to Spotter. If a creator wishes to partner with Spotter, the company will look at the stats of their channel and make them an offer for their back catalog. According to DeBevoise, engagement indicators such as how much time viewers spend watching a creator’s material and what proportion of a video they actually watch before dropping off are the most important to Spotter.
Spotter also takes into account measures that are directly rewarded by the YouTube algorithm, such as the number of likes, shares, and comments. Another factor to consider is the type of content — for example, Spotter will not invest in YouTubers who make videos on news and politics. After a creator signs a partnership with Spotter, the company will utilize the data to advise them on how to expand their channel. This is good for Spotter, because more traffic on a creator’s channel means more ad revenue from the back catalog that the firm licensed – even better, the creator might want to license even more of their content to Spotter, which might perform even better than their previous uploads.
