United States: Show Me The Money: Are Social Media Celebrities And Other Online Content Creators Really Raking In The Cash?

Social media has allowed aspiring authors, musicians, filmmakers and other artists to publish their works and develop a fan base without having to wait to be discovered by a publishing house, record label or talent agency. And that seems to have made at least modest celebrity easier to achieve. The financial rewards that we usually equate with fame, however, might be just as elusive as they were in the pre-Internet age—perhaps even more so, in an era where content, once posted online, can be exploited by others in ways that typically don't generate money for the creator of the content.

Sure, some hard-working social media stars are scoring big profits based on their popularity. The YouTube channel CharlisCraftyKitchen, for example, which features videos of a young girl making treats and which boasts 29 million views a month, averages monthly ad revenue close to $130,000.

The Swedish gamer PewDiePie's net worth is estimated at $61 million—a big sum for a guy who is unknown to most people over 40 years old.

And, having secured a book deal and endorsement contracts with brands like L'Oreal, self-taught makeup artist/vlogger Michelle Phan is now at the center of a true life rags to riches story.

I suspect, however, that a far more common tale is the one told by Gaby Dunn, co-star of the YouTube comedy sketch channel Just Between Us, in a fascinating article entitled "Get Rich or Die Vlogging: The Sad Economics of Internet Fame."

Dunn reports that, despite her channel's "more than half a million subscribers" and "hungry fan base," she's broke and has to take menial jobs to make ends meet.

Dunn says that she and her vlogging partner, Allison Raskin, make money from the "ads that play before [their] videos," and by freelance writing and performing, "but it's not enough to live, and its influx is unpredictable."

Almost as frustrating as brands not believing that Dunn's channel is big enough to sponsor are her fans' reactions when she does score a patron. Dunn's and Raskin's third branded video in more than two years resulted in viewer comments such as "Enough with the product placement" and "Gotta get that YouTube money, I guess." And, as we've discussed in past blog posts, if a vlogger or other content producer is being paid to endorse a product or service, he or she is generally required to disclose this material connection to his or her followers.

In any event, Dunn is hardly the only online content creator feeling the pinch. Even writers who've enjoyed full-time positions at large journalism outlets are finding themselves out of a regular paycheck. The popular digital media website Mashable, for example, laid off 30 members of its staff—including several high-level editors. The current affairs website Salon recently cut back on the number of people on its payroll, too—20 percent of the publication's editorial staff lost their jobs in April.

Things are equally discouraging in the music business; one revealing statistic from the RIAA is that, in 2015, record companies received more money from vinyl record sales than from ad-supported online streaming.

A real challenge for social media celebrities and other content creators is that online ad rates have been declining for years; despite the continued growth of online advertising, there are not enough ads to support the ever-expanding pool of Web content seeking advertiser support.

Another threat is the rise of freebooting—that is, the practice where a video specifically created for and posted to YouTube is, without the authorization of the video's creator, copied and uploaded to Facebook, where it may generated millions of views without compensation to the creator.

And perhaps the greatest concern for content creators is the increasing popularity of ad-blocking technologies. The use of ad blockers has grown by 41 percent over the past 12 months; there are now nearly 200 million active users of such technologies worldwide. In the United States, an estimated 45 million Americans are surfing an ad-free version of the Internet, resulting in an estimated $22 billion in lost ad revenues in 2015.

All of this adds up to form a rather bleak picture for content creators seeking to make a living online; a million social media followers may result in fame, but not fortune. And fame without fortune doesn't pay the bills.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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