Here Is What You Missed At VidCon 2013

image001A version of this article previously appeared in Forbes.

If you were not walking the halls of the Anaheim Convention last week, you missed a whole lot at the VidCon 2013. What follows is a blow-by-blow account of the convention’s Industry Day keynotes, which focused on the current and future status of the online video ecosystem.

Never heard of VidCon? Think “Consumer Electronics Show meets E! Entertainment.” In the mold of ComicCon, VidCon is an annual convention centered around the online video community. The event was created in 2010 by Hank and John Green, when they hosted approximately 1,400 industry insiders and fans. The current year’s event drew over 11,000 people and has been sold out for months.

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Opening Keynote

Friend, uber-popular startup blogger and investor extraordinaire Mark Suster took no prisoners in his opening remarks. Dropping his first F-bomb at the 20-second mark, Mr. Suster proceeded to explain to the YouTube haters why they should stop the hate.

Mark noted that YouTube is simply a large and powerful distributor, akin to WalMart. If you want to sell a lot of candy bars, to establish your brand and achieve economies of scale, then you must work with WalMart, despite the relatively paltry margins you will generate.

Once WalMart has helped you establish your brand, it will then be possible to sell premium products via other channels, such as boutique shops or even directly to consumers. This WalMart-to-specialty-store distribution strategy allows physical goods manufacturers to generate a healthy blended margin.

In the same way, video creators and Multi-channel Networks (MCNs) must utilize YouTube’s distribution clout to gain subscribers, views and brand awareness. However, to move beyond the average 16.5% margins offered by YouTube, MCNs must drive fans to purchase merchandise, experience videos on wholly owned (non-YouTube) sites and directly negotiate sponsorships with advertisers, rather than solely relying on YouTube’s ad network.

Fighting Nerds

image002VidCon Co-Founder and best-selling Author John Green followed Mr. Suster in his ongoing effort to “decrease world suck.”

He encouraged YouTube creators to continue creating meaningful (albeit virtual) relationships with their viewers, despite the fact that advertisers consistently fail to properly value such “audience connection.”

John noted that online video creators must give fans a reason to pay them, rather than forcing payment, because of the myriad of ways in which content can be legally (and illegally) obtained.

To this end, he and his brother Hank recently launched Subbable, a platform by which content creators can directly marshal their fan’s financial support. Mr. Green disclosed that his Crash Course web series received over $70k of pledges ($30k in the form of monthly, recurring grants) within the first 7-days the site was launched. As I write this article, Crash Course stands at 83% of its pledge goal, with nearly 10,800 fans funding the show’s production costs for its upcoming season.

Border Run

image003Next up was Nick Tran, Taco Bell’s “Social Media Lead.” This sponsor-driven presentation had the makings of a boring, self-serving talk. However, Nick was able to pimp tacos and hot sauce, while informing the crowd how Taco Bell’s “no strings attached” collaboration with YouTube personalities has driven significant brand attachment.

The highlight of Nick’s talk was his introduction of Tyler Oakley, who is a self-proclaimed “Professional Fangirl” (spoiler alert, Tyler’s a guy). Never heard of him? Ask your 14-year-old niece.

Nick’s love of Taco Bell, combined with his passion and witty Tweets, has resulted in a marketing marriage that most Madison Avenue executives would give up their third lunchtime martini to replicate. Unfortunately for Madison Avenue, Nick’s effectiveness is due to his “authentic friendship” with the Taco Bell brand and authenticity remains as scarce to modern-day Madmen as a politician without a sex scandal.

Filling The Screen

The final keynote presentation was given in a cool, yet deliberate fashion by George Strompolos, former YouTube executive and current CEO of Fullscreen, an influential MCN.

George’s message was that “Hollywood is everywhere,” and he predicted that the future holds more, not fewer, Gangnam Style hits, which effectively traverse cultural and language barriers.

For instance, he noted that low dialog, high visual videos, such as MisterEpicMan’s“How Animals Eat Their Food”, will dominate global video consumption. How Animals Eat Their Food generated nearly 2.5 million subscribers in 60-days and has been viewed nearly 80 million times.

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John Greathouse

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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