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Google's YouTube buys Next New Networks

March 7, 2011 |  1:41 pm

Hoping to "supercharge" the next generation of online video stars, Google Inc.'s online video site YouTube on Monday announced it has purchased Next New Networks for an undisclosed sum.

As reported in Company Town in December, YouTube was in negotiations to acquire the New York video producer whose pithy flicks on websites such as Hungry Nation and Barely Political have garnered more than 2 billion views since the company launched four years ago today.

Based in New York and backed by former television executives from Nickelodeon and MTV, Next New Networks has built a network of videos created both in house and by independent filmmakers.

YouTube, which has steered clear of creating its own films, made clear that it has no plans to dive into the content business.

Instead, the San Bruno company plans to use Next New Networks as an incubator for a new class of semiprofessional videographers who are able to make a living from the advertising generated by their online videos.

Hundreds of videographers already collect six-figure annual paychecks from the ads that run alongside their YouTube videos, said Tom Pickett, YouTube's director of global content operations, and a handful have broken into traditional entertainment, including Justin Bieber and Lucas Cruikshank, whose "Fred Channel" on YouTube landed him a contract with Nickelodeon last year for a feature film.

Although millions of people upload videos to YouTube, the company in recent years has focused on cultivating those whose content has large fan bases. It shares advertising revenue with about 15,000 independent content creators, many of whom work out of their homes. Last year, YouTube announced plans to give away $5 million to its top "vloggers" and began hosting meetings to give tips on creating online videos.

"Last year was a good start, but we hope to do more in 2011," Pickett said. "Our goal is to find the next new stars on YouTube and boost their careers."

In some ways, that's what Next New Networks has been doing all along.

"When we launched our company, we were big believers that the next big networks were going to be on the Web," said Lance Podell, chief executive of Next New Networks, which raised $25 million from former AOL CEO Jonathan Miller, former MTV executive Robert Pittman, as well as Goldman Sachs, Spark Capital, and Saban Capital Group.

At first, Next New Networks produced much of its own videos. But in the last 18 months, the company shifted its focus to outside talent, including music video DJ Mike Realm and the Gregory Brothers band. It has a stable of 75 video creators. The shift also helped the 17-person company become profitable at the end of 2010.

"Our goal is to extend what we do to the thousands of creators on YouTube," Podell said.

The market for online video advertising is expected to grow to $2 billion this year from $1.4 billion in 2010, according to eMarketer. Alhough accounting for just 7% of overall online advertising, the segment is expected to grow to 11% by 2013, making it one of the fastest-growing categories in online advertising.

-- Alex Pham

 

 

 

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