Late on a Friday night in 2012 Salar Kamangar phoned Francisco Varela, a deputy who handled YouTube’s relations with business partners. YouTube’s chief was uneasy. “Are you sure about this?” he asked.
The company was preparing to make a huge gamble. Years earlier, it had struck a deal with Apple to preload YouTube’s app on every iPhone (outside of China), which practically guaranteed YouTube millions of eyeballs. In exchange, Apple took a small cut of YouTube sales and, since the deal occurred under Steve Jobs, a design obsessive, Apple dictated the design of YouTube’s iPhone app. (Jobs died in 2011.) YouTube staff felt that Apple didn’t add new app features YouTube wanted fast enough, or sometimes ignored them entirely, and with internet usage quickly shifting to phones, YouTube worried about being at the mercy of Apple’s whims. Kamangar’s troops lobbied him to ask Apple to relinquish the out-of-the-box iPhone slot for control of the app, betting that consumers would download YouTube all on their own.
Varela’s team had made a similar wager with YouTube’s app on smart TVs, and it paid off. But iPhones brought in millions more viewers. “Salar,” Varela replied when his boss asked for reassurance. “You’re not going to lose a single user.”
It worked. After Apple pulled the plug, YouTube’s usage on iPhones barely budged, a sign of YouTube’s centrality in people’s lives. The following year the site would claim a billion monthly visitors. Soon shopping malls selling iPhones and smart TVs started stocking speakers and refrigerators with internet connections, video displays, and new ways to watch YouTube.
Getting YouTube distributed on a range of gadgets wasn’t easy—the entire company was roped into the rushed effort to remake and market its own iPhone app, and negotiating with most electronics partners felt like pulling teeth.
By all accounts, however, those episodes were far less stressful than dealing with other parts of Google.
At the time, Google could best be described as a collection of fiefdoms running various internet utilities: search, maps, browsers, ads. Most divisions were run by alpha executives, type As, who sat on Larry Page’s management council, the coveted “L Team.” No fiefdom was as insular and absolute as Android. Its leader, Andy Rubin, a brilliant programmer and robotics nerd, built his Google fiefdom by giving free operating software to the legion of phone makers trying to rival Apple. (In return, Android required phone makers to preload Google apps.) Android staff ate in their own special cafeteria at Google—with custom Japanese fare, Rubin’s favorite—and practiced a work culture, like Apple’s, maniacally centered on one man. Tall and lean, with a bald pate and glasses, Rubin even looked like Jobs. Stories emerged of Rubin’s similar tech-genius tirades. Far worse would come later.
Rubin had recruited a few staff from YouTube, including Levine, its first lawyer, to create a digital store for music and movies, a foil to Apple’s iTunes. Rubin’s coders also controlled YouTube’s app on Android phones. Several directors at YouTube felt that it should run Google’s music service instead—music videos, after the watch-time transition, were exploding—and that YouTube should control its own app. They pushed Kamangar, who usually avoided confrontation, to confront Rubin. When Kamangar did, deputies saw him return to San Bruno drained of energy.
By 2013, YouTube had become enmeshed in wearying fights with practically every other part of Google. Android fought over music and apps. Networking fought over bandwidth. Search fought over engineers. Sales fought over control. Google’s sales team wanted to sell ads as a package, including video, which YouTube brass didn’t want to surrender. YouTube wanted to sell ads like TV did, with rebates and upfront deals. Debates could turn into loud pissing contests. The L Team, at the time, had few women. One former director described Google’s leadership as a “big swinging dick room.”
YouTube’s absolute worst fight, though—one that sucked the life force out of the people running the company—was over Google Plus.
Once upon a time Google’s social network was its absolute top priority. Facebook was growing like a weed, and every moment people spent there was one not spent on the broader internet, Google’s bazaar. Starting in 2011, Page steered his entire ship toward Google Plus (shorthand: Google+). Like Facebook, Google+ invited people to share emotions and inanities, add friends, and interact online using real names. Google had a deep concern that the web—and web advertising—would gravitate to social connections and networks, leaving Google behind. Everyone’s bonuses and OKRs were tied to their contribution to the growth of Google+.
Google+ descended upon YouTube as a plague. It started with redesigns—feeds and videos tailored just for you. Then YouTube coders were required to add tiny G+ widgets to the site, encouraging people to share ads, because Facebook had “shareable” ads. (Virtually no one shared YouTube ads.) Certain projects, like the YouTube for Good effort to incorporate tweets and online chatter on the home page, were shelved to make way for Google+. New orders arrived as stone tablets from on high. At one point, higher-ups held a serious conversation about porting the entirety of YouTube.com onto the Google+ video tab, effectively ending YouTube. Kamangar successfully shut this down, but the debate itself demonstrated that although he wore the title of YouTube chief, he lived under Google’s thumb.
Years later, after Google+ died, its postmortems varied. Once it became clear that it wouldn’t rival Facebook, Google+ lived zombielike as a “collective hallucination,” recalled Hunter Walk, YouTube’s former product director. Some faulted the top-down commands. Others blamed the genetics of the company, where social connections did not compute. Googlers had nicknamed Google the Borg, after the unfeeling cyborg mass from Star Trek. “The Borg-mind doesn’t understand emotions and community,” recalled Laszlo Bock, Google’s HR chief at the time.
The Borg also entirely ignored the social media it already owned. Technically, much of YouTube operated like standard, one-sided broadcast media, or as a parasocial network—a psychological phenomenon where an audience finds intimacy with a performer it doesn’t personally know. YouTube had jettisoned some of its Web 2.0 social features but certainly remained a place where millions interacted every day, forming deep social networks of trust and fierce allegiance. Such considerations weren’t part of Google’s plans. In late 2013, YouTube began requiring viewers to sign in online with Google+ accounts to write comments and placed comments from frequent Google+ “power users” higher under videos. YouTubeland’s ire was immediate. Jawed Karim, YouTube’s third co-founder, who disappeared when he left for grad school, returned to the site’s first-ever video, his own, to type below it: “Why the fuck do I need a Google+ account to comment on a video?”
YouTube creators also needed to sign up for Google+ accounts to manage their channels. Google touted the social network’s success—“300 million monthly active users!”—without mentioning how many of them were forced to join. “It was all YouTubers!” recalled the VidCon founder Hank Green. “They could not see what they had. They could only see what they didn’t have.” Many of YouTube’s early team members viewed this neglect for the site’s residents as a stinging rebuke of their culture. Some saw it as a dire turn for the wider internet, which had begun to put growth above the concerns of everyday people. (Facebook would later become a case in point.) “That’s the fate of all social media,” said Julie Mora-Blanco, an early YouTube moderator who went to work for Twitter. “You start with a small group, you cultivate a community, you get really big, you ditch the community. You’ve got a platform.”
Another darker reality surfaced during the Google+ heyday. Yonatan Zunger, a Google programmer who ran the machinery for its social network, made frequent trips to San Bruno to deliver the Google+ mandates to an increasingly unreceptive audience. While working on Google+, Zunger noticed a disturbing trend: people wrote ugly posts there, either in rage or just to troll—posts that came close to violating rules on hate speech without breaking them. He saw the same thing happening on YouTube. If a video broke the rules, YouTube removed it; otherwise, all videos were on a level playing field. Footage that claimed the Holocaust was fake, for instance, flirted with YouTube’s rules on speech but wasn’t deemed a violation. During a discussion with YouTube’s policy team, Zunger proposed adding a third tier for these debatable clips: keep them up but note internally that they were close to the line. If accounts came close too often, pull them from video recommendations. Policy staff argued that such interventions would violate YouTube’s commitment to free speech and, maybe worse, threaten its liability protections. Engineers, the company’s ruling caste, seconded this. Cristos Goodrow, an engineering director, later explained that the company then strove to treat any videos kept on the site equally. “Look, if it’s not good enough to recommend, it just shouldn’t be on YouTube,” Goodrow said at the time.
Later, when catastrophe struck and YouTube had oceans more footage to handle, Goodrow and his colleagues would finally heed Zunger’s advice, years too late.
As Google+ chipped away at one part of YouTube, the multichannel networks wreaked havoc on another.
George Strompolos, the YouTube manager who started its partner program, had plunged into this gold rush early. In 2010 he left Google to go solo. He moved to Los Angeles, crashed on Danny Zappin’s couch for a while, and considered joining Maker Studios. Instead, he created a rival MCN called Fullscreen, setting up offices a few miles east. Compared with Hollywood types, Strompolos was staid, Googley. And unlike Zappin, who ran a renegade studio, Strompolos wanted a well-oiled machine. Max Benator, an early digital media executive, likened the pair to their industry’s Steve Jobs and Bill Gates. Strompolos pitched investors on his network’s “flywheel,” a beloved tech term, wherein he would sign YouTube channels, give them software doodads to grow—like a pop-up square inside videos for plugging prior clips—and use money from that growth to sign more channels. He imagined subnetworks, where star creators could recruit others, like how Dr. Dre went from rapper to hip-hop mogul.
Not long after launching, Strompolos caught up with an old colleague at YouTube, Jamie Byrne, and shared that Fullscreen had signed tens of thousands of channels. Byrne had no idea. Fullscreen and the other networks had exploded right under YouTube’s nose.
Fullscreen’s Dr. Dre strategy, though, quickly smacked into the unwieldy, unpredictable reality of YouTube.
FPSRussia: “TOP 3 WEAPONS TO SURVIVE THE APOCALYPSE.” November 10, 2012. 6:15.
“So the first weapon I want to go over is the Remington 870 12-gauge shotgun.” A YouTuber named Kyle Myers stands in a field and speaks in a clumsy Russian accent. The table before him displays three massive guns. Myers settles into his zany shtick as Dimitri, a bantering arms instructor. “Most superstores, not even gun stores, carry firearms in the United States.” Loyal viewers know he will soon blow something up. He does not disappoint. He aims the sniper rifle and kaboom.
At the start of 2013, FPSRussia was the ninth most popular channel on YouTube. The channel was the brainchild of Kyle Myers and Keith Ratliff, a firearms enthusiast with a bumper sticker on his car that read, “I ♥ Guns and Coffee.” Strompolos connected with Ratliff and sold him on an ambitious project: FPSRussia would form a YouTube subnetwork with Fullscreen, focused on rugged outdoor sports like hunting. Brands like Yeti would sponsor it. Ratliff was on board, only he asked to be careful not to reveal his location and identity, because he ran a gun store in Georgia and didn’t want to jeopardize that business.
It was an unusual request but seemed reasonable. Strompolos prepared paperwork for the business venture.
Then he woke up to the news that Ratliff had been shot dead.
Fullscreen’s staff were understandably rattled. Sometimes they had to field distressed calls from creators, but that came with the territory, and most days were spent in the whimsical world of YouTube skits, parodies, and antics. Not this. Worse, Ratliff’s murder remained unsolved. “Are we part of organized crime now?” wondered Phil Ranta, a Fullscreen executive. Internet conspiracies about the murder started to swirl, taking seed on a fertile ground for conspiracies, YouTube.
None of Fullscreen’s other network deals were this jarring, but they all increasingly made less economic sense. Scale made sense. Strompolos had learned that at Google; the company worshipped software and business models that scaled, working the same way widely, with minimal cost and interference. The MCN recipe for scale was as follows: add as many channels, views, and ads as possible. Repeat. At Fullscreen scale occurred in its “boiler room.” Rows of twentysomethings worked in its two-thousand-foot warehouse in Culver City, just south of Hollywood, sprawling out across long tables stacked with computer monitors. Each screen showed a spreadsheet of the top 100,000 channels on YouTube. (Eventually, the top million.) Each recruiter had to reach out to a thousand channels a day—cold emails, texts, and phone calls. At one point almost half the fifty-person staff were working as channel signers.
By then YouTube had created a simple software process that let YouTubers join Fullscreen with just three clicks. Trouble was, other MCNs also had this three-click tool. And so a war began, a battle for scale that did little to benefit the actual creators making videos.
At YouTube, Andy Stack, the payments director, noticed the brewing conflict when he saw the paperwork creators showed him. Machinima, the gaming network, sent out contracts that claimed YouTube paid $2 CPMs—a couple bucks for every thousand video views. If the creator signed with Machinima for multiple years, they would get $3 guaranteed. Great deal, right? (Machinima staff then measured success by the number of YouTubers quitting day jobs.) Stack clicked a few links on YouTube’s internal system to discover these creators actually earned more on their own, without giving a cut to an MCN. Bad deal.
But most YouTubers didn’t have access to concerned YouTube personnel. They had only the whisper network and MCN recruiters, who constantly upped the ante. In Hollywood, managers and agents took a standard cut for every production deal. MCNs initially did so with YouTube’s ad payouts (70 percent to creators, 30 percent to networks) but ditched that pretty quickly once competition heated up. Machinima gave its guarantees. Maker tried countering those by offering gamers better ad split terms. New MCNs suddenly appeared with even sweeter deals. Eighty percent to creators! Ninety! Ninety-five! Each one wrestling for a thinning slice of YouTube’s pie. Networks were often willing to lose money signing creators just to keep them away from rivals.
When Dan Weinstein tried to recruit a YouTuber to his MCN, he discovered Machinima paid the star twice the amount earned from YouTube ads. That’s crazy, Weinstein thought. How are they doing that?
This business model seemed plausible so long as YouTube’s ad rates kept going up, as advertisers kept coming over from TV, and MCNs remained one of the select few with access to this gusher and other business perks like endorsement deals. But when YouTube opened its ads program to the masses, MCN economics combusted. All the new videos running ads sent prices way down, and MCNs could no longer afford to throw money around wildly or justify their middleman role. Thousands of young creators who joined them, often with little or no legal guidance, suffered. Kaleb Nation, a Texas vlogger who had signed with Machinima, got a call from the network informing him that his payments would be cut down to a sixth of his current amount, despite guarantees of a fixed rate. “You can’t do that,” he complained. “It’s in my contract!” But the fine print read that, indeed, the network could. Burned creators nicknamed the company Ma-shit-ima. Nation got out of his contract, but others couldn’t.
Many at the MCNs felt it was YouTube that had the lousy terms. The company constantly rearranged the ground beneath the networks, tweaking an algorithm or upending economics without any notice. Sometimes YouTube copied them. After Fullscreen released its screen pop-up feature, YouTube released its own version six months later. Eventually, YouTube added a button on its back-end site for creators to exit an MCN with a simple click. These networks, once considered the next vanguard of media and Hollywood, found that it was impossible to build such a business on YouTube—at least by playing it straight. “It was as close to a Ponzi scheme as I will ever get in my life,” recalled one MCN executive. “We were just aggregating other people’s work and channels, telling them that we were going to help them make more money. A few of them did. Most didn’t.”
At one point Dan Weinstein convened a gathering to call a truce on the network race to the bottom. He invited four other top MCNs—“the five families,” he called them, a nod to the industry’s mafioso feel. The group met several times around Los Angeles, attempting to settle on a workable commission and competition model. One never stuck. Too many of the networks, Weinstein realized, were primed on investor capital and looking for exits, acquisitions that could pay investors back.
Meanwhile, the network built to give YouTubers power and control was falling apart.
Mark Suster, an investor who funded Maker Studios, had initially put money in on the condition that Danny Zappin, as an ex-con, couldn’t be Maker’s CEO. But Suster, a venture capitalist who preferred keeping company founders in charge, had changed his mind about the unconventional hustler and let him return to the role. Better to have him inside the tent pissing out, the investor thought.
The tent still got messy. When Suster emailed his renewed CEO about holding a board meeting, Zappin gave a one-line reply: “Don’t tell me what to do.”
Danny Diamond was no stranger to business disputes. He had had frequent heated bouts with Robert Kyncl, YouTube’s Hollywood chief. Zappin’s plan to let YouTubers own and operate the studio was divisive from the get-go. Several stars left Maker early on, citing disagreements over the business; another member sued Zappin; Ray William Johnson, the brash YouTube comic, exited Maker in an epic explosion, accusing the studio of demanding he hand over more money and intellectual property control. When Johnson refused, ugliness ensued. Late at night in December 2012, Zappin thumbed a text to Johnson: “You’re [sic] lack of integrity and character are sad. Fuck you. Prepare for war . . . bitch.”
Johnson went public, documenting the fight in a blog post and on Facebook, and berating Zappin’s “thuggish tactics.” Zappin responded in a letter to Maker staff disputing Johnson’s charges and noting how formative his prison sentence had been. “I couldn’t be more thrilled to be given a second chance,” he wrote. But by then, that second chance was nearly up.
Zappin had split with Lisa Donovan, his girlfriend and Maker co-founder, and co-workers watched as he became increasingly emotional and erratic. The stakes were much higher now as serious money flowed into YouTube networks. During the Johnson spat, Maker was preparing to raise money from Time Warner and other investors valuing the studio at $200 million. Having Danny Diamond at the helm no longer suited the monied interests. Suster had brought in Ynon Kreiz, a hard-nosed Israeli TV executive with a reputation as a turnaround artist, and on April 16, 2013, Zappin submitted his resignation and voted with Maker’s board to appoint Kreiz as CEO. Afterward, however, Zappin panicked. By his telling, he discovered that Kreiz and the board had colluded in secret with his co-founders to push him out in exchange for more shares. (Kreiz and others would deny this.) Zappin sued Maker, its board, and his ex-girlfriend, charging them with constructive fraud and a “scheme to oust” him. The lawsuit failed, and once all the creators left Maker’s management, so did Zappin’s vision for a United Artists of YouTube.
He also lost another prized possession amid the ordeal: soon after Maker’s new leaders took over, his old YouTube channel was scrubbed from the site.
Maker’s brightest star, however, was only getting bigger.
PewDiePie: “THINGS YOU DIDN’T KNOW ABOUT ME.” August 9, 2013. 5:48.
Felix Kjellberg is in a well-lit close-up, all smiles. Today he is sharing twenty facts with his fans. He sold Photoshop art to buy a computer to start on YouTube; at fourteen, he won a tennis championship; he doesn’t eat vegetables. “I get my nerdy side from my mom.” He likes Radiohead and “rarely swears” in real life. “My girlfriend knows more about football and cars than me.” He plugs his charity drive and ends with his signature maneuver, the “bro-fist,” a friendly bump straight to the viewer.
Six days later PewDiePie toppled Smosh to become the most-subscribed channel on YouTube (11,915,435), an honor Kjellberg would hold for six very eventful years to come.